8 Customer Retention Strategies That Actually Work
Customer Retention : 7 min read

8 Customer Retention Strategies That Actually Work

The rise of subscription-based businesses has changed the way we handle customer relationships and sales cycles. Because we pay month-to-month for so many services (Amazon Prime, Netflix, Dollar Shave Club, etc.), businesses are more focused than ever on customer retention—you’ve got to keep the customer's revenue coming in every month.

Because of the focus on customer retention, many companies, academics, and organizations have studied the benefits of customer retention—so we know it provides businesses with massive profit potential. This post will explore that research and teach you how to implement retention strategies that make a difference in your bottom line.

What is customer retention?

Customer retention is how well a company keeps its customers over a period of time. It also refers to the actions a company takes to keep customers and reduce the loss of customers (aka. churn).

How do you calculate it?

Here's the formula for calculating your customer retention rate:

(# customers at end of period - # customers acquired during period) / # customers at start of period x 100

Why your customer retention rate matters:

  • According to Marketing Metrics, it’s 50% easier to sell to existing customers than it is to new prospects.
  • Bain and Company’s study shows that a 5% increase in customer retention can increase a company’s revenue by up to 95%.
  • Gartner statistics show that about 80% of your future revenue will come from just 20% of your current clients.

8 Tips for Retaining Customers

Now that you’ve got a solid understanding of what customer retention is, how to calculate it, and why it’s important, let’s take a look at some customer retention strategies by brands you might recognize.

1. Celebrate your customers and clients.

One of the greatest retention strategies is to celebrate your customers. You might celebrate a success they’ve had in their business—or even better, a success they’ve had with your product or service.

You can post about your customers on social media, in your blog posts, or in email newsletters. You can also gather user-generated content by holding a contest or giveaway.

For example, check out this post by Buffer, encouraging customers to share their favorite workplaces:

buffer engagement instagram post that asks followers where they like to work

2. Delight customers with little things.

Anyone in a committed relationship can tell you that small surprises go a long way. So it’s probably not a surprise that surprises work well in customer relationships too.

Keep your delight treat small, something that won’t break the bank—even a spend as low as 10 cents will work well. And if you can make it a surprise, do it!

For example, I recently ordered a folding bike from Citizen, and when the bike was delivered to my house, I was surprised (and delighted) to find a cushy new pair of socks at the top of the box.

Another excellent example of a small, inexpensive delight is Kylie Jenner’s lipstick packaging. Inside each box, there’s a notecard with a handwritten thank-you from Kylie. The notecards are copied, but you can tell that she originally wrote it (even with the grammatically incorrect "everyday"). And customers love it.

kylie cosmetics sends thank you notes to customers to thank them for buying

3. Educate with relevant materials.

Studies show that customers love to learn about your product and services. When you’re selling something, especially these days with the rapidly increasing complexity of technology, it’s essential that you educate your buyers.

If you sell a complicated tech product, make sure your users know how to use it for the benefit of their business. If they don’t know how to benefit from your product, chances are, they’re going to churn.

Some of the best ways to educate your customers are through:

  • Long-form blog articles that address specific problems your users face, either with your competitors or within your industry.
  • Handbooks and guides on specific use-cases for your product/service (like a guide that walks users step-by-step through a helpful feature or tool).
  • Case studies that provide information on how similar customers have used your product or service to their benefit.

4. Articulate the real benefits of your product or service.

The real benefits of your product or service aren’t necessarily what your product or service does for the customers. Instead, the benefits are the results your customer will gain from working with your product or service. Yes, there is a difference.

For example, if you’re an email tool and you’ve just launched a new feature that you want to tell customers about, don’t talk about what the feature does. Talk about how it’ll generate results for your customers.

Don’t say: This feature will help you filter your emails more effectively.

Do say: This feature will help you save over 2 hours per day of the time you’d spend reading unimportant emails.

5. Care about their results.

When you focus on telling customers how they’ll really benefit (results-wise) from using your product, you’ve got to back that up.

Set goals with your customers and equally importantly, help them achieve them. Using our email tool example above, we might set the goal with our customer: save 2 hours of email time this week. Work with the customer, follow up, and make sure they’re hitting that mark, whether it's by providing coaching or offering FAQ articles, webinars, or blog posts that can help them get to where they want faster.

This way, you'll prove the ROI (return on investment) of your product.

Keeping tabs on this can be difficult when you have multiple customers. One good way to make sure you follow-up on your customers' results is to use a customer relationship management (CRM) tool like Copper. With Copper, you can set follow-up tasks for customers and prospects to remind you to check back in with their progress on a specific date.

copper crm lets you set followup tasks to make workflows more efficient

6. Write the right words.

Did you know that words affect customer loyalty—big time? A study by Global-Lingo found that over 50% of visitors wouldn’t buy a product from a website if it had poor spelling or grammar.

We write every day to our customers through message platforms, emails, social media, and more. So, we need to make sure our writing game is on point. It’s important that you articulate yourself well without wasting your customer’s time with redundant or unhelpful text. Here are a few tips:

  • Use plain English. Don't use jargon or overly technical language—the general rule of thumb is to write at a ninth-grade level so that everyone can understand you.
  • Watch your paragraph length. The shorter your paragraphs are, the less daunting the text. You don't want someone giving up on reading because you're giving them a wall of text to read... right?
  • When it comes to grammar rules, there are many—and they're hard to remember. Download Grammarly for quick grammar fixes within your different messaging platforms.

7. Help your customers in the ways they prefer.

Different strokes for different folks. Use this old saying to improve your customer retention strategy. Some people like to look for customer support on social media, which is why many companies, like eBay and PayPal, have Twitter support.

ebay's twitter support gives followers 24/7 access to get questions answered

Other customers might like to receive support via phone, email, or website chat applications.

Try offering a variety of service channels at first (and as you can afford them—don’t overspend), then narrow them down as you figure out what works for your customers and what doesn’t.

8. Partner with another company to give a bigger gift.

It’s one thing to surprise and delight customers with candy, socks, or postcards. But it’s another thing entirely to give away free tacos.

I used this strategy myself about a year ago. I wanted to give my customers something that they’d love, and I wanted it to be more than just a piece of candy or a card. But, I didn’t want to spend an arm and a leg to do it.

So, I found a partner company to help me out. I got a new taco shop, in the same location as my customers, to give me vouchers for a free taco. They agreed to give me the vouchers for free because they were a new company, and getting new people into the shop was huge for them.

You can use this method with your own customers. Here are some tips:

  • Partner with a company in your target location or industry. You want to partner with someone who wants to gain the same type of customer as you. In my case, it was location-based.
  • Make sure you choose something relevant to your customers. If they’re mostly women, maybe partnering with a new menswear shop isn't the best idea.

Ready to start putting your customer retention strategies into action?

Retaining customers can be over 200% more profitable than acquiring new ones. Some of the best ways to keep customers loyal to your brand are:

  • Give them stuff: They can be small delights or bigger gifts that you’ve partnered with another company to give.
  • Communicate effectively: If you notice that customers are leaving lots of messages on Facebook, be more active on Facebook. When you write messages, make sure you’re writing consistently with your brand voice and doing it succinctly.
  • Appreciate them: Above all, show your customers that you care. Feature them on social channels and share their successes (hopefully with your product) in your blog or company newsletter.

What are some of your best methods for retaining customers?