Customer Retention Strategies To Grow Your Business [2024]

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Updated: April 26th, 2024

What Is Customer Retention?

Customer retention refers to a company's ability to turn existing customers into repeat buyers and prevent them from switching to the competition.

Retaining customers is one of the most effective ways to grow your business.

According to Kissmetrics, it’s nearly 7 times less expensive to retain an existing customer than to gain a new one. Therefore, customer retention is a key aspect of business continuity.

Customer Retention Key Takeaways

If you lose a customer, you have wasted 7X the resources used in lead generation
Keeping customers coming back results in greater ROI and costs 5-25X less.
Customer retention is a great branding exercise so that they become your brand ambassadors
Retaining existing customers enables a business to extract more value from the existing customer base.
Your best customers come back again and again for more.

Understanding How Customer Retention Works

Customer retention involves taking actions to minimize the rate of customer defections. Customer retention programs focus on helping companies to retain as many customers as possible.

Companies use the retention rate to determine the percentage of customers who continue to use their products over time.

Customer retention rate has become a popular tool for investors to evaluate the underlying health of a firm. Besides, leading customers use customer retention as the main marketing objective when it comes to lead generation.

In short, customer retention concerns how you build customer relationships and maximize the profitability of each customer.

Therefore, the best customer retention strategies enable you to form lasting relationships with customers. Eventually, the loyal customers become your brand ambassadors.

Strategies To Build More Customer Retention

Send surprise gifts and coupons to your loyal customers
Provide excellent customer service
Send a market research survey survey to gain better insights into what is working and what is not.
Corporate social responsibility
Keep customers engaged through newsletter and personalized recommendations
Appropriate customer onboarding to educate the customer about your products
Use gamification strategies to drive customer engagement
Personalized customer experience
Listen to your customers
Automated email triggers to prevent customers from leaving
Show customers you care through effective after-sale followups

Whatever niche your business falls into should be reflected in your customer retention strategy. In addition, understand what your goals are. That way, you are in a better position to pick the right strategy for your business.

Why customer Retention Strategy Is Important

Here are some reasons to invest in customer retention strategies

Repeat customers spend more
Happy customers are more likely to recommend your brand to their friends and family
Existing and repeat customers generate more data for your business. You can use this data to gain actionable insights that can increase profitability

Examples of Successful Customer Retention Strategies From Leading Businesses

Here are a couple of cool customer retention stories

1. How Starbucks Used Innovation To Drive Higher Retention Rate

Over the past decade, Starbucks has always deployed innovative marketing methods to improve customer experience. One of the most innovative customer retention strategies is the Starbucks mobile order and pay feature.

Using the feature, you can order your favorite coffee before you even arrive at the shop. You send the order through the mobile device and your barista will get your order started while you head over.

Customers can pick up the order at the designated area in the store with the marked signage or in the drive-through.

By making the products and services as accessible as possible, Starbucks has been able to generate a high customer retention rate.

Codeacademy understands that customers are more likely to trust opinions from family, friends, and other consumers more than brand content and ads.

Social proof is a psychological and social phenomenon that leads people to mimic the actions of others because of an inherent need to conform. Social proof is important in customer acquisition and can improve customer retention.

The company has capitalized on social proof as one of the greatest forms of increasing customer retention.

Find Ways to Retain Customers

Retaining customers is one of the most effective ways to grow your business.

Often times, it's easy to find yourself focusing on generating new customers, vs retaining your current ones.

Look at it this way - you are 60-70% more likely to sell a new product to an existing customer, than you are a new customer.

That's not to say that finding new customers and revenue streams is not important, however, the easiest (and most inexpensive) source of new revenue is right there in front of you.

Ryan Milton, founder of TeamFFLEX discusses the importance of bringing customers back, and is constantly finding creative ways to prove value to those customers:

Case Study

I can consistently bring customers back and continue to gather new clients by staying on top of my content creation. I am literally spending time every single day to create content that provides value to my audience. I do daily podcasts, YouTubes every week, 6 posts on Instagram per day and 1-2 on other platforms. The idea is always to provide as much value as I can. Give back as much as I can and continue to stay ahead of the game by constantly providing new and noteworthy content.

Being a fitness coach, a lot of people have all types of fitness questions and typically if you want help with anyone you have to pay for it first. For me to edge out the competition I decided I would offer far higher quality service and literally give away what other coaches charge for. That enables me to get great engagement and really increased my following, shares and etc. Providing valuable content that would help people that don’t even pay me has enabled me to scale far above the coaches that pinch pennies trying to charge for every little thing.

how-i-started-a-48k-month-business-with-an-online-fitness-training-service

Ryan Milton, on starting TeamFFLEX ($82,000/month) full story ➜

meet the author

Pat Walls

I'm Pat Walls and I created Starter Story - a website dedicated to helping people start businesses. We interview entrepreneurs from around the world about how they started and grew their businesses.

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