What is customer retention? How to build a customer retention strategy?

You may have noticed changes in your customers’ decision-making process, their purchasing behavior, and their more critical approach to their purchases. These dramatic shifts can signal that your consumers have reassessed their values ​​and buying mindset.

But did YOU do the same?

With that, you need to reconsider not only customer acquisition tactics but also pay more attention to customer retention as it is even more beneficial for you! As Frederick Reichheld of Bain & Company determined, customer retention is 20% cheaper than acquisition. Furthermore, he is not alone in this observation, because 82% of companies agree that it is much cheaper to retain than to acquire.

Let’s see how customer retention can be less work compared to the acquisition, and how you can apply it to increase your revenue with the new realities of COVID-19. 4 Ways to Increase Customer Retention

What is customer retention?

Before jumping right into the details of retention, let’s start with its definition.

Customer retention is a scope of various activities or strategies that a company uses to minimize churn rate (customer churn rate) and prevent customers from joining a competitor. Your goal is to get your existing buyers to keep buying products or services from you.

According to Forbes, it is easiest to convert a repeat buyer into a loyal customer with a 60-70% probability. Meanwhile, the chances of converting a new lead are 20% at best. As you can see, retention is faster, cheaper, and requires less effort when compared to acquisition.

Plus, by increasing your customer retention rate by just 5%, your profits can skyrocket by 25% to 95%. That means you no longer have to stress about attracting new prospects. Instead, focus on shoppers who have already made a purchase from you. You have everything you need, just put it to good use!

Free retention Tool Tip: It’s a common misconception that customer retention starts after your customer has purchased something from you. This is not entirely correct. Customer retention starts right after their first contact with your business. For example, SaaS companies use retention and acquisition equally to promote and sell their services. SQL vs MQL: What are the Differences between MQL and SQL

To retain or not to retain? This is no longer the question you need to ask your sales team. Instead, ask yourself, which strategy to choose?

How to build a customer retention strategy? Top customer retention examples

The collection of well-planned tactics and initiatives that a company uses to build and increase customer loyalty is called a customer retention strategy. How it is shaped depends entirely on your business model and brand positioning.

Let’s say it right away, a perfect formula to immediately increase customer retention doesn’t exist. It will take some time to conquer, but the good news is that you can start building with what you already have. Your brand positioning and values ​​are the essential ingredients of your customer retention strategy as they show your focal points.

Another misconception is that having an excellent, in-demand service or product is key to high acquisition and retention rates. In reality, it’s not enough because you need to complement it with strong marketing strategies, retention strategies, customer segmentation strategies, and so on.

The following examples of must-have retention strategies are so simple and brilliant that it’s hard to resist using them. Let’s check them out! What is Marketing Communication? How To Do It? What Are Their Strategies?

1. Develop a customer loyalty program

You might think that retaining a lot of customers using loyalty programs is an outdated and overused strategy. Wrong!

Recently, Yotpo asked 3,800 respondents across four different demographic groups (Gen Z, Millennials, Gen X, and Baby Boomers) in the US, UK, and Australia questions related to brand loyalty and found that it has increased because of COVID-19.

Due to the hurdles of the lockdown, consumer behavior has shown any inclination to be more personally and emotionally engaged when buying from their favorite brands:

‘Those willing to spend more on a brand even if cheaper options existed, soared from 34.5% in 2019 to 56% in 2020.’

It’s more than a mere transaction now because people crave a sense of security and stability. More than 70% of consumers are more likely to recommend a brand if it has a good loyalty program, and in times of a pandemic, that number has started to grow.

By creating a loyalty program, you can keep your retention rate and revenue at the desired level. Remember that members of your loyalty program can spend 12-18% more per year than other customers. Plus, acknowledging your buyers’ opinions is an additional reaffirmation and reminder of your values, promises, and agreements.

Depending on your brand values ​​and positioning, you can choose a combination of various loyalty programs that suit your type of business well: points, tiers, paid programs, etc. And for more inspiration and ideas about loyalty programs from the biggest brands, we recommend watching this Learn with Shopify video below:

No matter which loyalty program you choose, maintain a positive engagement cycle by being honest with your customers. How to sell jewelry online: A guide to success

2. Stay true to your values ​​and promises

Most of your buyers chose you because of your values ​​and brand positioning, which match their ideal seller profile. They have likely been witnesses to its development and evolution, so it won’t be difficult for them to notice any deviations from their initial value trajectory.

56% of customers remain loyal to brands that “win” them, so make sure you know not only what they want to buy, but also what they value.

Let’s look at TOMS as an example.

To know how this company does customer retention, you need to imagine yourself in their shoes. Literally.

Tomorrow’s Shoes, better known as TOMS, encourages its customers to build a better future by purchasing a pair of shoes. They launched a ‘One for One’ program where a customer, when buying a pair of shoes, donates another to someone in need.

It’s a perfect strategy to spark people’s interest in buying with the incentive of altruism. TOMS sees that its customers are not just consumers, but also donors who value giving meaningful support by participating in real humanitarian activities such as shoe donation.

Your mission resonates with people and creates strong bonds with your target audience. More importantly, they stay true to their promises, which gives them a solid reputation as donors and influencers.

TOMS is committed to making our world a better place to live. In addition to the One for One program, they began to expand their values ​​by introducing other campaigns related to grassroots efforts, social inclusion and gender equity, mental health, affordable education, and job opportunities.

If you decide to make a change to your brand vision, as TOMS did, you need to assure your loyal customers that they will be cared for and valued just as much as before. And to make sure your shoppers understand and share your potential changes, use surveys and gather feedback from them to make sure they’re on the same page as you. 11 tips to boost your sales

Speaking of feedback…

3. Collect feedback

Knowing your customers’ expectations and user experience challenges gives you a lot of insights into your product, and can significantly help you reduce your churn rate.

Capture the voice of your customers with surveys! But remember that you need to be specific in your questions. Avoid frequent cross-examination surveys as this can cause annoyance and discourage the delivery of feedback. In addition, you can verify your customers’ satisfaction by implementing a rating system, or by using a satisfied/dissatisfied approach after problem-solving.

Also, why not collect customer feedback through social media?

Let’s take a look at another retail giant – Tesco. They have started using Twitter as a source of feedback, where they are openly gathering complaints, wishes, and suggestions, thus creating a discussion.

The fact that customers share complaints on a social media platform puts the customer service team in the spotlight. It can be stressful, but at the same time, it’s a fantastic approach to highlighting your great proficiency in solving problems and handling customer complaints.

Plus, your buyers can see that their feedback is not only perceived, but also important.

But, before implementing this retention strategy, be sure to analyze your target audience and the personality of your buyers, as your communication will take place in public, and you need to add personality to your messages. Nobody likes talking to robots, so make sure you know how to approach your loyal customers.

Don’t forget to include feedback from your customer service team too! They are solving customer problems all the time and are experts at identifying where pitfalls are or could be.

4. Improve your customer service

93% of customers are willing to buy again from companies with excellent customer service. But before you run a marathon of extra miles, think about what your company puts into its customer service.

According to Dixon, Freeman, and Toman, customers are more interested in getting quick fixes to their problems than getting extras. It is a game-changer for many:

‘Delighting customers does not create loyalty; reduce their effort — the work they have to do to solve their problem — yes.’

Improve your customer service

Doing the most can send mixed signals to your customers. Few buyers want to receive extra services or hear how important they are and that help is on the way. The inability to resolve a problem quickly and without unnecessary hassle can be perceived as poor customer service. Or they might even think that solving their problem brings too much inconvenience to everyone involved.

Instead of going beyond the norm, start acting on this research insight, and you’ll see positive changes in your customer retention, your customer service costs, and a decrease in your customer churn.

5. Create onboarding programs

Getting started with a new product or service can be frustrating or even stressful. So save your buyers time by providing them with an informative and personalized onboarding program. Make them feel welcome!

You can achieve this by embedding the following:

  • Welcome emails and greeting messages
  • Academies or knowledge base
  • Tutorials and various instructions
  • Video guides and interactive walkthroughs

Showing your customers how your product’s features work will not only keep them from experiencing negative emotions but will also increase their trust in your brand and their sense of security.

For example, Grammarly does a great job of onboarding its users!

Once you start working with the app, it will open with a learn-by-doing demo document that points out its key features, and provides tooltips, and guides, to customers, in a logical, sequential order. The text is engaging and fun to read, highlighting common errors and suggestions for correcting them.

With an easy and fun onboarding program for your customers, they’ll know that you value their time and that you’re ready to help them no matter what. It will also show them that you’ve analyzed the potential difficulties your customers might face and have worked to make their first interaction with your product as smooth as possible. How to use Google Discover to attract new users to your website?

6. Spread Brand Awareness

This strategy helps kill two birds with one stone—retain existing customers and convert new prospects!

Constantly telling your prospects that your product is the best doesn’t work as well as you might think. 69% of people don’t trust ads and 71% don’t trust sponsored social media ads.

So stop convincing your prospects that they should buy from you! Let your loyal customers do it. HubSpot, in its research, revealed that 81% of people trust the advice of their friends and family far more than the advice of companies.

It is a fact that a happy and satisfied customer will come back to you, increasing your lifetime value by 10 times compared to your first purchase. And if your long-lasting and fruitful relationships with your loyal customers are genuine, they will start to spread the word about your product.

They can become advocates for your brand, which is a win-win situation. Or you can encourage them to be your brand ambassadors. Make sure you recognize that they are promoting your product in a positive way, and provide them with the tools they need, such as:

  • Referral programs
  • Depositions
  • Social proof
  • Affiliate programs

For example, Payoneer uses a referral program that is very hard to resist. They reward both parties involved – the one who brings a friend and the newcomer. It’s a great retention strategy that benefits loyal customers, giving them extra cash, and supporting newbies who may be hesitant to use the service in the future.

7. Benefit from email marketing automation

The above strategies are all widely used and sometimes even interconnected. But what if we told you that there is a universal tool that can bring all the best retention strategies together?

With email marketing automation, you can track your customers’ feedback, create loyalty programs, remind customers of your values, make your onboarding program quick and easy, incentivize your brand advocates, and much more – all this just by creating email sequences.

Benefit from email marketing automation

So far, it’s the most agile tool to strengthen your retention game. The only question left is which platform to use.

More than a million users choose the Free retention Tool as an automation tool that helps them boost their retention rates. With it, you can schedule email sending and create email drip campaigns to send exclusive rewards and offers to your loyal customers, or welcome emails to your newcomers.

And if you don’t know how to put it down on paper, don’t worry! There are email templates for any occasion, such as re-engagement emails, follow-ups, and more.

It’s easy, free, and greatly optimizes your work.


As leading brands demonstrate, sustainable retention is sustainable growth.

In most cases, companies prioritize customer acquisition because they are too afraid to reshape their retention strategy, or too scared to let their investors down. But the approach where a brand only focuses on acquiring as many new customers as possible is totally outdated.

The acquisition is nothing without retention. Take online retailers as an example: 8% of their loyal customers generate more than 40% of their revenue! Impressive, isn’t it?

The solution to skyrocketing your revenue is not out there somewhere. Your loyal customers are the key to your success and they are here for you.

Free retention Tool too! No matter which customer retention strategy you prefer to use, its free CRM and integrated email service come to your rescue.

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