The ideal customers of a brand or company aren’t the ones who buy your product or use your service just once but the ones who come back to you, time after time. Accordingly, the top-performing companies in every field are the ones that know how to measure the lifetime value of a customer, choosing to focus more on retaining existing customers than on acquiring new ones. Customer retention strategies defines a company’s ability to retain customers over a specific period of time. In the long run, the customer retention rate is an important metric that highlights the extent to which a company understands and serves its clients. 

What is Customer Retention?

Customer retention represents your ability to retain your customers over a specified time period.  

When you know that the customer journey doesn’t stop at acquisition, you look at the customer retention as part of a growth mindset.

Customer retention strategies are the means of engaging customers in order to build strong, lasting relationships that promote customer loyalty.

In this article, we discuss the importance of customer retention management, while also emphasizing the most significant elements to include in your customer retention plan.

Keep reeding if you want to learn more about growing in a smart, sustainable way, get customer retention strategy examples, and advance further in your journey towards customer-centricity.

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Importance of having a Customer Retention Strategy

First things first- why do you need to focus on customer retention?

Let’s answer the question with another question: did you know that the probability of selling to an existing customer is 60-70%, compared to only about 5-20% in the case of new customers?

Not to mention that the first category is 50% more likely to try out your new products, spending on average 31% more than the latter. So, in short, improving retention means increasing the overall profitability of your business.

According to a study by Forbes Insights and Sailthru, companies that invest more of their budget in customer retention over a period of 1-3 years are 200% more likely to increase their market share, as opposed to those focusing mainly on customer acquisition. Moreover, retaining customers costs five times less than acquiring new ones and increasing customer retention by as little as 5% can increase your profits anywhere between 25% and 95%.

US companies lose about $137 billion per year due to consumer switching. Customer experience is the most powerful driver for switching: 86% of buyers are willing to pay more for a better experience. 2020 is the year when customer experience is predicted to overtake the price and the product as a key differentiator. This will be the battleground on which you have to compete in order to improve customer loyalty.

This is when customer retention management comes in handy, as it encourages you to maintain the post-purchase relationship with your customers by delighting and empowering them long after they have bought a product or service from you.

Customer retention strategies help you create loyal and engaged customers who, in turn, are a great source of referrals, as they will gladly recommend your brand to their friends and family if they are satisfied with the experience you offer.

customer retention

Excellent examples of Customer Retention Strategies

The best customer retention strategies are the ones that are built on extensive knowledge about your consumers.

The only way to delight and engage them is by knowing how they tick and what brings value to their buyer journey.

If you use the right CRM (Customer Relationship Management) platform or Business Intelligence Platforms such as Reveal, you will be able to discover a lot of useful insights related to buying patterns, shopping and communication preferences and so on. 

What is and how to build customer retention strategy

As we discussed, retention means keeping your customers loyal over a longer period of time.

Keeping this in mind, you can understand that the Customer Retention Strategy represents all your endeavours to build customer loyalty, prevent customer churn, and improve overall customer lifetime value

To build such a strategy, you must first research your customer base to gather insights about their needs and wants, then deliver to your findings.

Here are some examples of small gestures you can make to improve the overall experience and reinforce the emotional connection customers have with your brand.

  • Welcome them to your community

Send personalized emails thanking them for their purchase or congratulating them on starting off with your service. Make them feel that they are part of something bigger, offer them a familiar experience.

This will lay the groundwork for all the upcoming communication, while also capturing the goodwill of your new customers. If you start off on the right foot, you will increase your chances of keeping these newcomers close for as long as possible.

  • Surprise your customers on various occasions and events

Add a personal touch to the communication: send handwritten notes or small tokens of your appreciation to your most valuable customers in celebration of special occasions like birthdays or specific milestones on their journey.

LinkedIn, for example, offers premium members special congratulations packs when they start a new job. This is a good way of showing your appreciation, while also letting customers know that you deeply care about them.

  • Level up your customer retention marketing strategy

Once you identify different types of buyers and their interests, target them with relevant and personalized content offers. Consider creating different kinds of newsletters or blog posts, responding to the specific needs of every stage of the buyer’s journey: the content new customers need is not the same one regular buyers expect from you.

Following the same logic, it may be easier to up- or cross-sell to regular customers than to new ones, so warm them up a little before you start targeting them with additional offers. Don’t forget that the main purpose behind all this is to deliver additional value to your customers, not to burden them with unnecessary details or uncalled-for information. 

  • Give your customers something to look forward to

It may be fast delivery, excellent customer service, great social media communication or creative packaging- anything that might enhance their experience. This is a great customer retention solution, as it unveils your brand’s personality gradually, while also keeping them coming back for more. 

Fast delivery is one of the main premises of Amazon Prime’s program. The Ritz Carlton is famous for the way its employees deal with clients’ demands and problems. Netflix has a spot-on social media communication strategy, which entertains each and every fanbase, making outsiders wish they were part of the club. Apple’s famous packaging offers customers a sensory experience they’re eagerly anticipating long before the purchase.

Customers’ impulses are rather emotionally than rationally driven. As long as you offer them pleasant surprises along the way, they won’t find any reason for switching brands.

  • Redefine the user experience

From the design of your website to its functionalities and your communications- everything has to be on point.

Conversion rates are largely influenced by all these little things and if you want to boost customer retention, you have to make sure that every detail is consistent with your brand strategy.

Make things as smooth and as pleasurable as possible: use attractive copy, persuasive product descriptions and strong visual elements.

Make the navigation process as easy and intuitive as possible. Turn every user interaction into a micro-experience and delight your customers with every occasion.

There’s a key element in nailing the UX – listen to customer feedback. Your customers know best where the friction points lay, so instead of assuming and relying on gut feeling, set up surveys and interviews with your customers to identify opportunities for improvement.

  • Reach out to your customers regularly and use automation to re-engage them

Leverage every opportunity to talk to your customers and find out more about them. Test out multiple newsletter formats, send follow-up emails and ask for their feedback through the means of customer surveys to identify the main areas for improvement. Keep on refining your communication and never settle for a format that seems to work over a specific period of time. Things change pretty quickly in the online industry, trends emerge faster than ever and people need you to constantly meet and exceed their expectations. 

Hear people out whenever possible, then check the potential alternatives inspired by consumer insights with A/B testing and implement the changes. Being customer-centric is the smartest and most rewarding customer retention solution. Use your CRM software to discover the most active buyers, as well as the ones who haven’t made any purchase during the past few months and get ready to re-engage them in a meaningful way. Marketing automation can be particularly helpful in this case, as it allows you to implement your data-driven decisions in a seamless, faster and more cost-effective way.

  • Implement loyalty programs

No retention program can work without a strategy to promote loyalty. Consider offering customers points for every purchase they make on your website. Establish a specific threshold for different prizes and let them know at all times how close they are to getting their reward. Or, better yet, allow them to choose the item they want from a list of selected products once they gather enough points. This is what Sephora did with its Beauty Insider program, which gathered more than 17 million loyal customers. 

You can also incentivize social shares, by offering rewards for each step completed by your customers: when they like your Facebook page, follow your Instagram account, share one of your articles on social media, recommend the product or service to their friends and so on. Loyalty and referral programs are a key part of your marketing planning efforts, mainly because they give customers a reason to keep doing business with you, thus increasing their lifetime value.

Customer Retention Tactics

The things we talked about are examples of best practices in customer retention strategies. Yet they are a bit too general, so let’s get more in-depth with this useful list of examples of the best customer retention strategies:

  • Convenience: people know what they want and they want it delivered fast and conveniently. This is the insight on which Starbucks’ Order & Pay platform was built. It allows people to place in-app orders as if they were talking to a barista and have them ready to be picked up in a Starbucks coffee shop of their choice. They can pay directly through the app, change their order or add other items to the list before they get to the shop. This solution is an answer to the busy lifestyle of Starbucks consumers, by adding value to the whole coffee experience.
  • Educational resources: credibility has a huge influence on brand commitment. You can use content marketing to your advantage, by helping customers make the most out of your products and services through tutorials and how-to guides. White papers, ebooks or in-depth articles that can be downloaded as PDF documents to be kept by users and read later are a great way to boost customer retention. Know your audience and their preferences: make your best-performing content available in text, audio or video formats, to better match the way they usually consume content.
  • Gamification and referral programs: gamified customer experience and loyalty programs is a faster way to get to your customers’ hearts. Tracking their purchase history and setting milestones, while also rewarding them with discounts, free shipping or freebies as they complete certain steps can increase customer retention. Plus, it’s fun and it appeals to our competitive side. Here is a list of the most memorable gamification programs from some of the all-time favorite brands. Referral programs are extremely effective as well: people may already be inclined to recommend your products or services if they are fully satisfied with the experience you’re offering but if they are rewarded for each new customer they bring in, they will feel even more willing to do so.
  • Smart discounts: shoppers expect more personalization from the brands they trust- that’s a fact. But what if we take it up a notch by offering smart discounts, that answer to specific problems of our customers? You can use their purchase history to see what they are interested in and offer discounts to products they actually need, rather than using the same discount approach for everybody. Other great ideas for coupons that people may find useful and look forward to are those based on customers’ value for money and their lifestyle (back to school offers or holiday specials for people who have children, one-off deals based on where they live and what’s happening at that time of the year).
  • Social proofs to build trust: reviews and video testimonials are excellent ways to show customers exactly how the product or service you’re offering can fit in their life. Success stories of people who use your products are welcome as well, as they indicate the extent to which your brand empowers them. User-generated content is an excellent way to improve customer experience and boost client retention, any content marketer can tell you that. 
  • Webinars and live events: build a community around your products and services and connect with your people at all times. Talk to them as directly as possible, help them discover more about your values, your work culture, your experience and expertise. Engaged customers are more likely to stay loyal to your brand and these live events are a great opportunity to humanize your company, inspire your public and interact freely with all those who are interested.
  • Add dynamic or interactive content on your website: furniture and clothing retailers use AR tools to help people visualize how products from online stores can fit in their living rooms or wardrobes. More and more brands add videos of their products next to the traditional product photos, as they showcase more details and functionalities. Some of them use AI-powered tools, such as chatbots, to help users better navigate their websites. This increases the chances of people purchasing from your online store and innovation is a phenomenal retention tool.

Which Customer Experience Strategy will help your business?

While there is no universal recipe for success, here are a few points you should check off your list while building your retention strategy for customers:

  • Make their navigating process easy and intuitive. Your customers have to be only 3 clicks away from finding what they are looking for, regardless of the part of the website they are on.
  • Create a user-friendly experience for everybody. Some people buy online all the time, while others are more reluctant and only come to a company’s website for research before visiting its brick-and-mortar stores. Some people are comfortable using AI-powered technology to find answers to their questions, while others prefer to do it the old-fashioned way, by talking to an operator. Keep this in mind when you design the experience.
  • Know your audience and the most relevant trends among them. Some people use voice search, others don’t (yet). People prefer interactive content on eCommerce websites, such as videos, rather than pictures of products, and tutorials. Some people want to engage more with brands on social media, while others limit their interactions to the brand’s website. Go where your audience is. 
  • Understand your customers’ problems and concentrate your efforts towards eliminating or ameliorating them. Pain points are a brand’s deadliest enemy, not the competition. People don’t necessarily go away because they didn’t find products or services that satisfy their needs, they are willing to stay as long as their experience is positive. As soon as they encounter an obstacle, they will move on to the next available option.

Gamification may not be for you, especially if your audience is made up of older consumers. CSR campaigns may not be a great fit unless you are a huge, international brand.

And those premium memberships? Unless you are a streaming platform or a great retailer, like Amazon, they may not be of much use. But the points highlighted above, along with personalization and a human touch can be adapted to each and every business strategy, regardless of the field.

How to evaluate a customer retention strategy

As a rule of thumb, you should be looking at the customer retention rate, which is calculated as the percentage of customers that stick around at the end of a given time period, relative to the number of customers you had at the beginning of the same time interval.

You can also identify your best buyers and check if their number increased after you changed the marketing approach. Additionally, you can look at the number of people who unsubscribe from your newsletter, at the email open rate and click-through rate, while also trying to find out more from those who stick with you.

Qualitative methods can be used to analyze customer loyalty in terms of perception or behavior. Customer participation/engagement and price elasticity can be determined much in the same way and the whole process will offer you in-depth information you can later use to refine your customer retention strategies.

How to calculate Customer Retention Rate 

To measure Customer Retention, you need to apply the Customer Retention Formula:

CRR = ((E-N)/S) X 100


E = the number of customers at the end of the defined period
N = the number of customers acquired during the defined period
S = the number of customers at the start of the defined period

What does this mean specifically? If you started the year with 1300 customers and end it with 2000, yet you acquired 900 customers, your CRR is:

(2000-900)/1300 x 100 = 84.6% retention rate

Yet you don’t have to remember this formula by heart, there are numerous online tools that can calculate your CRR and NPS (Net Promoter Score) automatically, such as our Reveal platform.

By using it, you can gain insights on the profile of your ideal buyers, discover buying patterns and the frequency of purchase, monitor the retention rate and the lifetime value of your customers and nurture the relationships with your most valuable buyers through prioritization and increased personalization.

If this sounds interesting, know that you can book a demo whenever you like and see for yourself how easy, useful and intuitive it is.

Customer Retention KPIs

The KPIs in Customer Retention Strategies vary from business to business. Maybe your customers don’t churn, but you’d like them to buy more often. Or they buy often, but the bring low monetary value.

However, here are some general KPIs you can monitor, to get an overall understanding of your Customer Retention Rate.

  1. Customer Retention Rate – the percentage of customers sticking with your brand over the specified time period.
  2. Customer Churn – the percentage of customers leaving your brand over the specified time period.
  3. Revenue Churn – the percentage of lost revenue from existing customers (refunds, order cancelation, downgrading their subscriptions plan, etc.)
  4. Existing Customer Growth Rate – the rate of generated revenue from your existing customers.
  5. Product Return Rate – the percentage of products that get returned post-purchase.
  6. Net Promoter Score (NPS) – the percentage of customers willing to recommend your products or services to their peers.
  7. Time Between Purchases – how many days pass between different transactions from the same customer.
  8. Customer Lifetime Value – the overall revenue generated by a single customer. 


Like all the other marketing processes, customer retention strategies are subject to continuous change and improvement. There is no right or wrong approach, you just need to know your audience and build your programs around customer insights. When implemented correctly, these tactics will help you retain customers for a longer time, while also significantly increasing your sales.

Keep in mind the Pareto principle: 20% of your customers are responsible for 80% of your sales.

Treat them right, personalize your communication, show your appreciation on special occasions and always give them a reason to choose you over any other competitor. It’s the safest and most effective way of creating strong relationships that stand the test of time.

And also the shortest road to increased customer retention rates.

Frequently Asked Questions about Customer Retention Strategies

What is a Customer Retention Strategy?

A Customer Retention Strategy represents all your endeavours to build customer loyalty, prevent customer churn, and improve overall customer lifetime value

What are the four retention strategies?

Solve multiple customer problems with excellent customer support, add new products with your existing offerings, offer exclusive insights and provide proof of performance through testimonials and reviews.

What are the methods to improve Customer Retention?

There are various tactics to drive customer retention: loyalty programs, personalised email marketing, customer accounts, customer support, social media presence. Choose the tactics that you can sustain and the ones that are more likely to work best for your business

What are some Customer Retention examples?

Discounts and special perks, offering convenient, personalised experiences, early-access to new products, access to exclusive events, or educational resources.

Why Customer Retention is Important?

Customer Retention helps you create loyal and engaged customers, provide more value and bring more revenue, and recommend your brand to their friends and family.