Customer retention strategy

What is Customer Retention?

Customer retention is the ability of a company or a product to retain its customers over a specified period. Having high customer retention means that customers don’t purchase a competitor’s product or service and continue to buy from your business. 

Even though many businesses agree that customer retention is important, not many businesses focus their attention on customer retention.  Many businesses still believe that it is cheaper to acquire new customers than it is to retain current customers. 

This is not correct, however. Research has shown that it is up to 5x cheaper to retain customers than it is to acquire new customers. This is a statistic that surprises many businesses. When a clients is here that increasing customer retention rates by 5% can increase profits by 25% to 95% they are shocked.  

There are many strategies that businesses can use to keep their customers engaged and to improve their customer retention. Below we will provide you with some strategies that will provide you with the tools to increase your customer retention. 

Understanding your customers

We discuss Buyer Persona’s and the Buyer’s Journey in detail in this blog Buyer Persona’s . But a short summary.

A buyer persona is a semi-fictional representation of your ideal customer. This will have facts such as Their job position, demographic information and education. But it also involves items such as their pain points, their dreams (personal and work), their preferred method of contact etc. 

A buyer’s journey is the way that the buyer persona goes from knowing they have an issue they need to solve to purchasing your product. All of this will help you realise more about your customer and make you able to have more personalised experiences for every customer.  

To really understand your customers and how to help retain them as a client you also need to know how to calculate your current retention rate. 

How to calculate your customer retention rate

There are many ways to calculate your customer retention rate. But the basic idea is as follows: 

You want to know the customer retention rate your business has. You have 100 customers before the starting period. During the period you run the test you gain 20 customers, at the end of the run you have 70 customers. 

To calculate the customer retention rate we will do the following: 

We will subtract the 20 customers from our starting number of 100. So we are left with 80 customers. Now we divide our 70 current customers by 80. This gives us a number of 0.875. If we multiple that number by 100, we get a customer retention rate of 87.5% 

One of the primary things to do is to set sales goals. After you have calculated your customer retention rate set yourself a target. 

If you start with 20% customer retention rate, it is not feasible to expect your retention rate to be 60% after the period ends. Just like anything in business, this is a gradual process of improvement. 

The type of product you sell also has an effect on what is a realistic retention rate. If you sell a fast-moving product such as household supplies your retention rate goals can be more ambitious than if you want customers to purchase more of what they already have. 

Whatever the case may be. The below tips will hopefully help you increase your customer retention rate. 

11 Customer Retention Tips

  • Be Increasingly personalised
    • This means to have as much of your interactions with your customers personalised. Keep your contact database updated so that you are able to provide clients with personalised messages. For example: remember that Jess had a big thesis to write and ask her how her thesis went. Or that she is a fan of Muse or Coldplay. These little tidbits of personalisation keep a client happy and stop them from feeling like a number.
  • Empower your customers with convenience
    • Many customers feel like having a small amount of friction when using your product or service will ruin their experience. If you can remove as much friction from your product or service as possible than customers are more likely to return to you. This means, for example, having a flawless customer service experience. Letting customers order their meal or coffee before arriving at your cafe or restaurant. Anything that reduces the barrier of entry or purchase.
  • Use social proof
    • Social Proof is a very powerful tool for marketing. Prospects are more likely to trust their family, friends and other customers than they are to trust your word. The benefit of Social Proof is that it also gives a sense of FOMO, or Fear of Missing Out. People on Kickstarter can use FOMO as a very powerful tool for success. Often users will see that a project has been funded for more than 1,000% and by using “Stretch Goals” (Additional content) creators try to lure in more users. The fact that this product has reached such a big milestone must mean that the project is good, right?
  • Educating your customers
    • HubSpot is a great example of educating customers to increase customer retention. HubSpot Academy is a free learning tool that allows users to learn about Inbound Marketing and digital marketing content in general. You can get official certifications and some content is gated for HubSpot customers and partners. It keeps their customers engaged and wanting to know the most recent information. Educational content doesn’t mean that you need to create an entire learning resource. It can be things such as free eBooks, whitepapers, infographics and other learning resources that are for paying customers only.
  • Delight your customers, give them personalised experiences
    • Many businesses stop thinking of their customers after the purchase. However, some businesses do go the extra mile. Free samples are a very popular method that businesses use to delight their customers. A smart way of going about personalising experience is to do with reciprocity. There is surprise reciprocity, meaning it is genuinely not expected like free overnight delivery. Then there is trumpeted Reciprocity, a famous example is Rackspace’s customer service employee ordering pizza for a client that had been on a call with their customer service for a long time already.
  • Embrace complaints
    • Many businesses fear to receive complaints and try to avoid complaints as much as possible. We believe that a complaint is actually a gift and should be embraced. Many clients either feel embarrassed to complain, don’t feel comfortable complaining or don’t know where to complain. Complaints are not scary, they are your customer showing that they still care about your product or service. They are still looking for help and want to remain as a customer. If you are able to create a complaint system that is as easy to use as possible, you will receive more complaints and retain more customers.
  • Have extraordinary customer service with an employee courtesy system
    • A good rule of thumb for life is to treat people how you want to be treated. The same counts for working with your colleagues. If you and your colleagues treat each other politely and talk to each other pleasantly you will treat your customers the same. This will make your colleagues do the same to clients, and making customers happier. This will be a part of extraordinary customer service, meaning that each employee should have customer satisfaction as their primary goal; providing immediate responses and going above and beyond the call of duty. Lastly, deliver on what you promise a customer, don’t retract your statements.
  • Frequently communicate with clients
    • Making a calendar with a schedule that will let you know when to communicate with clients. Sending personalised thank you notes, follow-ups, special offers, events etc... this can all be done automatically using Marketing Automation or a CRM system. Adding these touches makes customers feel important, valued and off-sets post-purchase doubts. This can also be used to re-contact dormant customers. Setting up an automated system that contacts dormant customers and asks them why they stopped using your product and providing personalised discount options will help regain some lost customers. 
  • Reach customers on their preferred platform
    • This sort of ties back to point 2, empowering customers through convenience. If you make your customers able to reach you on various channels then you are reducing the threshold for receiving questions and feedback. This will make your customers more likely to reach out and ask for help and it makes customers trust that you are always there for them. In Europe, there are businesses that allow communication via Facebook Messenger, Twitter, LinkedIn and WhatsApp. Even recruiters are using WhatsApp to communicate with job searchers. By reducing the barrier you are able to reach a bigger audience.
  • Thank your customers
    • Many businesses feel uncomfortable thanking their customer, but some businesses have embraced it. Zappos has a system where customer satisfaction is incredibly important. Every new hire goes through customer service training no matter their role. They sometimes even have a customer call that lasts multiple hours. They even have a culture of employee independence, leaving some customer service team members to make personal “Thank you cards”.
  • Admit when you make mistakes

Marketing Automation and a Customer Relationship Management (CRM) systems

The methods we described above can seem time consuming and expensive. But it all comes down to personalising your message to the client and keeping in regular touch with your client. These are all relatively easy to do if you have Marketing Automation and a good Customer Relationship Management system. 

Create a great customer database by having both the sales and marketing team enter the relevant data religiously into the database. This allows you to make every interaction with a customer feel personalised. Have special places where the sales and marketing team can enter personal information such as: 

  • Big events coming up for the client, both work and personal 
  • The client’s birthday 
  • Favourite sports team 
  • Relevant articles or links that you can send to the client. (Maybe an interesting article related to their industry or job position) 

It is also important to note that communication should still fit within your brand guideline and brand voice. If you have a younger client you might be able to communicate in GIFs. But if your brand voice is serious, don’t start sending too many GIFs that move away from your brand voice.  

Talking too much out of your brand voice can make you appear in-genuine and can cause your client to believe that you are trying too hard. 

Be personal and kind

If a client has emailed, you three times to get the answer to a question it could even be better to just pick up the phone and give the client a call. Many clients would prefer a more personal touch and answering a question over the phone is easier and more personal. 

Google has done research on the click-to-call services and found that 61% of customers want the ability to call a business when they are ready to make a purchase. This research was done in 2013 and these numbers have most likely increased. 

Personal touches are important, and speaking to someone on the phone and having them hear you talk is more personal than going back and forth with emails. 

Even though clients can be frustrating and difficult to talk to. Never be petty to your clients. This means that you have to be attentive to trivial details because these will change the perception that people have of you. Repeated petty behaviour, such as ignoring customer calls or having an angry demeanour on the phone, will make people dislike you. 

Even if the results are going to be negative for the client, such as delayed delivery, being transparent and non-petty about it will deliver great results. Clients understand that things happen. They also work, or study, and know that life happens at times. Not everything is under your control. 


There are many ways to improve your customer retention rate. These changes don’t appear overnight however. 

The first step is to understand what your customers want, need and where their pain points are. 

Next you need to find a way to delight these customers and take away their pain points. Motivate your clients by providing excellent service. Ask for feedback and testimonials. Help them realise you value them as a customer. 

To achieve the above: 

Make sure your database is clean and up-to-date and personalise as many messages as you can. Provide a near frictionless experience and great customer service.  

Do a lot of A/B testing to make sure your communication with your customers is near perfect and keep testing. The more you test, the stronger your customer retention program will become. 

And remember: a happy customer is the best advocate for your business. 

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