The Importance of Customer Retention

It's much harder to keep a customer happy over time than to sell them on a one-time deal. The hard work really starts once the sale becomes a relationship. Customer retention strategies revolve around improving metrics for customer lifetime value (CLTV), customer satisfaction (CSAT), and Net Promoter Score (NPS).

• Customer retention describes the ability of a company to maintain its current customer base after acquisition.
• The goal of customer retention is to increase revenue by generating repeat sales from current customers rather than sinking costs into acquiring new customers.

Benefits of Customer Retention

There really aren’t any downsides to customer retention. But seeing the benefits spelled out might make you stop what you’re doing and create a customer retention plan right now.

• Decrease acquisition costs
• Increase CLTV
• More stable growth predictions 
• Increase overall profitability
• Increase word of mouth referrals

Customer Retention Metrics

Customer retention metrics guide your analysis and the success of various strategies. They can help you decide which retention strategies to put more effort into and which ones to put aside. 

• Customer retention rate quantifies the ability of a company to maintain its current customer base after acquisition.
• Customer churn describes the drop off in engagement with a customer, whether they no longer actively use a product or formally end a service agreement.
• CLTV or CLV (Customer lifetime value) measures the potential amount of money a customer could bring to your business over the entirety of their relationship.
• CSAT (Customer Satisfaction) surveys reveal customer happiness as it relates to a particular interaction.
• NPS (Net Promoter Score) measures a customer’s desire to recommend your product or service.
• CES (Customer Effort Score) defines the amount of effort a customer needs to exert to resolve an issue with a product or service.

15 Customer Retention Strategies

The best customer retention strategies pull from your unique brand voice and customer experience. Take these examples as a starting point, then spin them to work for your company. 

• Provide proactive customer support
• Reduce customer effort
• Educate your customers
• Make it easy to reach you
• Regularly send and evaluate Net Promoter Score (NPS) surveys
• Surprise customers with delightful experiences 
• Reinforce your value
• Deliver excellent customer service
• Review CSAT scores and incorporate feedback
• Go above and beyond with onboarding
• Delineate channels for acquisition vs retention 
• Handle angry customers with care 
• Automate retention messages
• Take advantage of thoughtful upsells
• Offer e-commerce discounts

Proactive Customer Support

Most customers who have a problem with your product won’t tell you about it—they’ll just churn. In fact, one study suggested that on average for every customer who complains about an issue, there are 26 who don’t say anything; they simply leave.

• Identify high-risk events (like cart abandonment or unanswered surveys) that typically lead to churn.
• Engage with those customers as soon as you notice the warning signs.

Reduce Customer Effort

The Harvard Business Review published some findings which suggest that the single greatest factor in customer loyalty isn’t “WOW’ing the customer” so much as reducing customer effort. Make life easier for your customers, and they’ll have a great reason to stick around.

• Use a fully packed customer support platform to eliminate unnecessary (and frustrating) back and forth emails.
• Reference purchase history, previous messages, and more without needing to leave the inbox.

Educate Your Customers

We’ve slowly veered away from “lowest common denominator” advertising over the years. Consumers are as savvy as ever. And if you want to reel them in, it’s worth treating them with respect and honesty.

• Use a knowledge base to house all the answers to customer questions about your product or business.
• Lean on both marketing and customer service teams to create copy that’s compelling and educational.

Make it Easy to Reach You

When a customer wants to get help or ask you a question, they’re already having a less-than-perfect experience. Don’t make it any worse by forcing them to work to figure out how to get in touch.

• Make it ridiculously easy to reach you, either by prominently displaying instructions for getting in touch, or with a support widget on every page that’ll let the customer get help from anywhere.
• Offer support wherever your customers can be found: Facebook, Instagram, WhatsApp, etc.

Regularly Send and Evaluate Net Promoter Score (NPS) Surveys

NPS (Net Promoter Score) surveys measure a customer’s desire to recommend your product or service. By tracking this score, you can get a handle on two things: (1) How likely you are to attract new customers and (2) How likely you are to retain your current ones.

• Set up an automated email to reach out to new customers after a few days, weeks, or months. Then touch base with them again after their next purchase.
• The survey questions are simple enough:
  • How likely are you to recommend our store on a scale from 0 to 10?
  • Optional: Why did you choose this rating?
• Results from the first question tell you how many of your customers are promoters (those who respond with a 9 or 10), passives (7 or 8) and detractors (0 to 6). Results from the second question tell you why, and most importantly, give clear direction on what to do to increase customer retention, both for individual customers and across the board for all users.

Surprise Customers with Delightful Experiences

In today’s e-commerce landscape, great customer service needs to be the norm. But exceeding expectations is a powerful way to get your customers talking. After all, one survey found that 69% of people would recommend a company to others after a positive customer experience.

• Surprise your customers with small customer appreciation gifts, handwritten notes, or even a personal email to say thanks.

Reinforce Your Value

You work hard to deliver big value for your customers through your products or services. And if you’re doing your job, then your customers should see that. But a small reminder never hurts.

• Delight your customers with “candy,” either through surprises like the examples above, or simply by reminding them of the value you deliver.

Deliver Excellent Customer Service

When it comes to customer retention, the importance of customer service is clear: 89% of consumers begin doing business with a competitor following a poor customer experience.

• Match your customer service orientation with your brand voice, mirror your customers’ tone, and offer support wherever your customers live to deliver excellent service.

Review CSAT Scores and Incorporate Feedback

CSAT (customer satisfaction score) reveals whether a customer experience was good or bad. A customer satisfaction survey is typically presented after ticket resolution to gather customer sentiment. It asks the customer to rate their support experience on a scale ranging from good to bad.

• Your help desk should track this score automatically.
• Use CSAT to help you identify what customers love about your customer service and what needs improvement.

Go Above and Beyond with Onboarding

If you’ve ever gone through the sign-up process for a software product and then simply been dumped into the app with no guidance, then you know how frustrating poor onboarding is.

• Optimize your onboarding to score a few more retention points.
• Follow this one simple rule to design an onboarding flow that works: your users should never be left wondering what to do next, or why.

Delineate Channels for Acquisition vs Retention

It’s important to separate out the channels you plan to use for acquisition versus retention. You’ll be able to put the right team members on the right channels and present your offerings in the most helpful way.

• Look at your own data to determine where your current customers are and where you’re finding new ones. Then, tailor the content on each channel to speak to the right person.

Handle Angry Customers with Care

The “service recovery paradox” presumes that angry customers can be converted to loyal customers if they experience a positive customer service experience. Meaning angry customers can actually increase retention rather than contribute to churn—if you handle it the right way.

• A quick response to customer requests could make all the difference in customer retention. Pay attention to your customer service team’s response time when working on retention strategies.

Automate Retention Messages

Automated messaging presents a low-effort, high-reward tactic that can save customers and revenue. Advanced automation does the heavy-lifting, rather than account managers manually reaching out to individual customers.

• Create a set of automated emails to target retention for current customers.
• Use all this data to pinpoint certain customers who could benefit from more retention tactics and product education.

Take Advantage of Thoughtful Upsells

After customers have been buying from you frequently and responding positively to your engagement, it’s time to upsell. Not because you want to squeeze more money out of them, but because they could genuinely benefit from more of your products.

• Send these emails only once you know customers are happy and would actually want to upgrade.

Offer E-commerce Discounts

E-commerce discounts are a great way to incentivize customers to stay loyal. Pop-ups on your website provide a quick and easy way to capture leads while offering a discount to new customers.

• You can set up an autoresponder to immediately send over a coupon to your customer’s email address.