$2,000 Free Audit


8 High-Return Customer Retention Strategies

Customer retention is your big-picture strategy for keeping the customers you've worked so hard to convert, but also maximise the ROI of every single marketing dollar spent. This guide defines what customer retention is, along with actionable and high-return strategies you can use for your company starting today.

You’ve invested all that time, effort and money to acquire new customers. What happens when you’ve won the sale? 

You know the drill – it’s cheaper to keep existing customers than it is to find new customers. 

In fact, it's anywhere between:

5 and 25 times more expensive to acquire a new customer than to retain an existing customer.

So your challenge is this: how exactly do you re-engage existing customers and generate loyalty to keep them coming back for more? 

That’s where customer retention comes in.

Think of customer retention as a big picture strategy focused on your long-term business goals of not only acquiring new customers but keeping them. 

So how do you build a rock-solid strategy for customer retention?

Read on to find out why customer retention matters PLUS proven customer retention strategies you can put to work right now. 

Let’s go…


What is Customer Retention? 

Customer retention is about increasing the number of repeat customers and boosting the profitability of each customer you already have. 

So, why should you care about customer retention?

Think of all the time and budget you spent on acquiring the customer. All those customer acquisition campaigns and tactics you use to get their attention, draw them in and eventually convert them. 

Should you be satisfied with just one sale?

No way!

The goal of customer retention programs is to extract more value from every existing customer. In other words, ensuring they buy from you again and again. 

Customer retention is also about stopping customer churn. That is, preventing customers from cancelling their subscription, not returning to your store to buy, or ending a contract. 

For every customer you can keep, you are saving money. You are squeezing more from your original marketing and sales budget, and that means generating a great return on investment. 

There are lots of reasons why increasing customer retention is the linchpin to business growth and success.

Look at the facts...

Repeat customers are responsible for 40% of the average store’s annual revenue.

And that's not all. 

Retained customers spend more and buy more often than newer customers, as they’ve learned the value of the product or service. (American Express)

What's more, small improvements can translate to serious revenue. 

A 5% increase in customer retention can grow company revenue by 25-95%. (HBR)

And of course, there's the most valuable kind of marketing: word of mouth.

Satisfied, loyal customers are more likely to sing a brand’s praises and refer it to friends and family, which brings in new customers, completely free of charge. (American Express)

But not all customers are created equal. 

So, how do you measure which customers are worth keeping? And how do you know how much to invest in your customer retention strategy?

You need to measure Customer Lifetime Value (CLTV). 

Customer lifetime value is a metric that helps you understand what a customer is worth. 

The ultimate goal of any customer retention strategy is to increase customer value. 

If your customers purchase high value items (like tech gadgets) on a regular basis, your customers have the highest CLTV. So, it’s well worth investing in a customer retention strategy to keep them buying over and over again. 

acquisition vs retention graph

Image credit: Shopify

How do you calculate CLTV?

First, review these metrics. 

A. Purchase frequency

How often customers come back to buy from your store. 

Purchase frequency = Number of Orders Placed / Number of Unique Customers 

B. Average order value

This is how much each purchase is worth. In other words, the amount of money a customer spends with your business on each transaction. Your goal is to increase this number. 

Average Order Value (AOV) = Total Revenue Earned / Number of Orders Placed

C. Customer lifetime value 

Multiply these two values together and you can see what you have to gain from a solid customer retention plan.

Customer Lifetime Value = Purchase Frequency x Average Order Value

CLTV isn’t the only metric you should measure to get a handle on your customer retention strategy. 

D. Repeat customer rate 

Another important metric is repeat customer rate. This is the percentage of customers willing to make a second purchase. The higher this percentage is, the more willing customers are to return to your business. 

Repeat Customer Rate = Number of Customers That Purchased More Than Once / Number of Unique Customers 

Measuring these metrics gives you a baseline to work from. Now, you’re ready to improve these metrics and increase customer retention with proven strategies. 

Before we delve into the different strategies, there’s one tool we recommend investing in to make your customer retention plan more effective from the outset: a Customer Relationship Management system (CRM). 

A CRM will help you segment customers into different groups based on the products they buy, or their customer lifetime value. That way, you can work out which strategies are better for different customers. It will also help you identify risk customers – those most likely to leave. 

Let’s dive in. 


Customer Retention Strategies For Winning Repeat Business 


1. Create a standout customer onboarding program

Customer retention starts from the very first experience your new customer has with your company: your customer onboarding process. 

That is, the first steps your new customers go through to use your product or service. 

Think about it: 

If you can make it as easy as possible for customers to use your product from the get-go, they will see the value in product quicker and gain immediate gratification for signing up or buying it. 

So, what’s the best way to onboard a customer?

Delight them. 

Depending on your product or service, an exceptional customer onboarding program may include:

  • Step-by-step tutorials

  • Unlimited guidance and support

  • Milestone celebrations when a customer achieves success using your solution

Amazon Prime are brilliant at onboarding customers. This is the first email subscribers receive:

amazon prime new customer

The email goes on to remind the user of all the benefits they will receive:

amazon prime information email

Another simple yet effective example is from Headliner, the social media video app. They send an onboarding email including a link to a comprehensive Getting Started Guide complete with videos:

headliner getting started


2. Make it easy to do business with you.

If you are easy to do business with, customers will keep coming back to spend more money. 

It’s obvious, right?

Research shows that the higher the effort, the more disloyal a customer would become. 

What we’re really talking about here is the customer experience. Your customer experience plays a significant role in repeat purchase and customer retention rates, as well as preventing customer churn. 

In its customer loyalty research, Facebook found that brand loyalty is fuelled by customer experience. 

Look at it another way – angry American customers will share their negative experience with and give “anti-referrals” to around 15 people, according to American Express.

So, how do you reduce friction for customers?

Look at the whole customer journey and identify any sticking points along the way (you’ll need data and customer feedback to back this up). 

To start, here are some things you can do:

  • Remove unnecessary steps at checkout. Speedier checkouts drive strong adoption, so focus on removing any hurdles you can, whether that’s log-ins or extra form fields.

  • Set up live chat tools to answer any questions immediately.

  • Simplify your options – are you providing too many options to prospective customers? 

  • Anticipate questions and answer them before they are asked. In a study, a massive 95% of buyers chose a solution provider that provided them with content to help navigate through each stage of the buying process.

One way to make it easy for customers is to create an FAQ page. Buffer has filled its FAQs sections with heaps of articles to help customers at every stage of their journey:

buffer knowledge base


3. Keep your employees happy

Fact: Passionate and engaged employees can deliver personal customer experiences that drive customer loyalty.

And customers who experience great customer service are 10-30% more loyal than customers who don’t.

This can impact on revenue, so much so that in a study of 64 organizations, those organizations with highly engaged employees achieved twice the annual net income of organizations whose employees lag on engagement. 

What can you do?

  • Show your employees you appreciate them. If employees feel appreciated and valued, they will be more engaged with their job. 

  • Consistently let your team know what they are doing right. This reinforces the right behaviours, which means fewer customer complaints and higher customer satisfaction.

  • Check to make sure your team has what they need to do their job successfully, whether training, equipment, technology or knowledge. 


4. Build communities around your brand

Here’s an interesting statistic:

86% of Fortune 500 companies report that communities provide insight into customer needs. 

Whether you create your own brand community, or tap into existing communities, the advantages are clear. You can nurture customers’ emotional connection with your brand, which helps them become loyal. 

In fact, consumers with an emotional connection to a brand are also shown to have a 306% higher lifetime value and will recommend brands at a much higher rate than those without (71% vs. 45%). 

A Facebook survey found similar results, saying that “to achieve loyalty, brand relationships should be up-leveled to a more emotional and experiential standing.”

loyalty factors to grow retention

Image credit: Social Media Today

One way to do this is to create communities aimed at testing and piloting products and services.

Around 66% of companies say they turn to brand communities for product development.

In Australia, supermarket chain Woolworths has created a product testing group called The Bunch. Select customers are invited to test products (free of charge) and provide feedback in an online forum. 

leveraging reviews

Another way is to take a leaf out of motorcycle kingpin Harley-Davidson’s book. They have embraced their passionate riders and leaned on their most loyal customers to create an incredibly vibrant community.

The Harley Owners Group (H.O.G.) is a club allowing the brand to connect itself with its customers and the general population. With the help of the group, Harley-Davidson began to sponsor bike rallies, organize charity drives, and offer special promos to its fan base. 

The result? 

The brand now has more than a million members from 25 different countries and half of these regularly attend the branded Harley-Davidson events.


5. Start a customer loyalty program (and make it valuable)

It’s the obvious customer retention strategy, we know. 

But that’s because loyalty programs really work.

Research shows that 52% of loyal customers would join a loyalty program if one is offered to them. 

Loyalty programs motivate customers to purchase more often in order to earn rewards they want – whether that’s points they can trade in for goods, more discounts or exclusive experiences. 

Customers get more value each time they shop, and you gain from their repeat business. 

And the benefits don’t stop there:

Customers who have been referred by loyalty members have a 37% higher retention rate.

But you can’t just set up a loyalty program and expect it to work miracles. 

There are two things a successful loyalty program needs: 

A. Don’t reward just purchases – reward your customers for a variety of actions they take with your brand. 

In other words, reward customers when they watch product videos, engage with your mobile app, share social media content, provide feedback, write a review and subscribe to your content.

These are all valuable signs that customers are actively engaging with your brand — so reward them for it. 

B. Make the rewards something the customer actually wants. 

Provide a variety of rewards, or even tiers depending on the loyalty of the customer. Take a look at Sephora’s Beauty Insider benefits:

2019 beauty insiders for sephora customers

Another example is Lyft. It has a Round Up & Donate program where riders can round up the cost of their ride and donate the change to the charitable organisation of their choice. Because that’s what their customers want.

round up and donate


6. Make memories of success

Customers are more likely to stay with you if your product or service is delivering brilliant results for them. 

But they might not always remember these results when it comes to decision time. 

The answer is to take the time to share your shared successes with customers on a regular basis. 

It doesn’t have to be tangible results – it could be memories of the experiences your customers have enjoyed using your product or service. 

Facebook Memories is a prime example of this at work. 

facebook memories

In an announcement about Memories, Facebook product manager Oren Hod cited research that shows how reflecting on memories can have a positive impact on people’s mood.

Memory also makes customers feel cared for. We all know how good it feels when someone remembers our name, birthday, likes and dislikes. This is a key to building trust in customer relationships. It helps your customers feel valued. 

And if they feel valued, they’re more likely to become a retained customer. 


7. Send value-adding emails to customers

When it comes to customer retention marketing, email is a powerful tactic.

Email marketing has the highest ROI of 122% - over 4X higher than social, paid search, and direct mail. 


Each message you send must add value to your customer’s experience. 

If it doesn’t, you run the risk of losing them completely.

Your customers want content that’s designed for them. According to the DMA, 58% of all email revenue comes from targeted and personalized emails.

Research by Campaign Monitor found that emails with personalized subject lines are 26% more likely to be opened. 

Bottom line? To increase retention, make it personal. 

It’s not just personalized emails that play a part in customer retention. 

You need to make sure your email is worth opening. 

Ask yourself:

  • What content delivers the most value to your audience at different stages of their journey?

  • How can you highlight features of your product/service that users haven’t discovered yet?

  • How can you help them get more from their product or service?

  • How can you prove to lapsed users the value of your product or service?

For example, Mailchimp sent this email to customers which highlights features that they might not know about – thereby ensuring customers continue to realise the value of the app:

mailchimp email customer engagement


8. Offer a discount to return

We don’t tell people to discount their goods unless we have a good reason. And when it comes to customer retention, the rewards pay off.

Here’s the trick: Send a discount code for a customer’s second purchase. 

This is a great way to nudge a first-time customer over the line into a repeat customer.

winter warmer sale hotel melbourne


Over to you 

Your existing customer base is your brand’s most valuable asset. Customers know your brand, they know your products or services, and – if you did your customer onboarding right – they appreciate how your products and services make their lives easier. 

As you’ve seen, focusing your efforts on improving the experience for existing customers and rewarding them for their loyalty is a sure-fire way to improve customer retention and drive a strong ROI over the long term.

Big picture wise, it’s also crucial for growing your business. Try one or all of the strategies in this article and see how your customer retention soars. 

Is customer retention part of your Digital Marketing Game Plan? If not, now’s the time to bring your strategies together. Find out how to use digital marketing to improve customer retention in our FREE ebook. 

New call-to-action

Let's increase your sales.

Claim your $2,000 Audit for FREE by telling us a little about yourself below. No obligations, no catches. Just real, revenue results.