Google Digital Garage Certification Practice Exam

Which method could help improve customer retention for e-commerce businesses?

1. Increasing the prices of popular products

2. Offering loyalty programs to returning customers

3. Limiting the variety of products available

4. Reducing the quality of customer support

The correct answer is: Offering loyalty programs to returning customers

Offering loyalty programs to returning customers is an effective method for improving customer retention in e-commerce businesses because it incentivizes repeat purchases and fosters a sense of appreciation among customers. Loyalty programs often include rewards such as discounts, points for future purchases, exclusive access to new products or sales, and personalized offers. This not only encourages customers to continue shopping with a particular brand but also enhances their overall experience and satisfaction. By implementing a loyalty program, businesses can create an emotional connection with customers, making them feel valued and encouraging them to choose that brand over competitors. This long-term engagement can lead to increased customer lifetime value, as satisfied customers are also more likely to refer others, further enhancing the business's growth. In contrast, increasing prices on popular products may alienate customers who might seek better value elsewhere. Limiting product variety can lead to dissatisfaction if customers feel their needs are not being met. Reducing the quality of customer support can create a negative shopping experience, leading to customer churn rather than retention. Therefore, loyalty programs are a strategic choice for retaining customers in a competitive e-commerce environment.