7 Ways To Effectively Improve Customer Retention

Waseem Bashir
By Waseem Bashir

2 years ago

5 min read

7 Ways To Effectively Improve Customer Retention

Employing different ways to improve customer retention is a smart business choice that not many companies are taking. Stats showcase that 44% of businesses focus on customer acquisition, and only 18% focus on customer retention. Lead generation and conversion don’t happen overnight. Creating a satisfactory buying journey for prospects takes a lot of effort and campaigns. Finally, on acquiring customers after a long sales cycle, marketers tend to move on to the next prospects, leaving behind the established customers.

They leave out the plethora of sales opportunities that paying customers bring to a brand. Not just social proof or referrals, but active customers are great for selling new products or services. The sales cycles are shorter for paying clients as they are already through with the top of the sales funnel and require the right push to buy other services. It helps create higher ROIs as fewer investments are needed to get repeat business from established customers than new leads.

In this blog, we will discuss everything you need to know about customer retention and the seven ways to improve it. From its significance to the right strategy to leverage customer retention, you will find everything here.


What is Customer Retention?

Customer retention is the last stage of the sales funnel where a company engages paying clients to earn their loyalty, repeat business, and referrals. It involves identifying and addressing the factors contributing to customer attrition and then taking steps to keep those customers around.

There are many ways to improve customer retention, but critical strategies include creating an engaging product or service, providing excellent customer support, and offering discounts or other incentives. Keeping your existing customers happy and loyal ensures continued business growth is within reach.


Why is Customer Retention Important?

Customer retention is critical to any company’s success. A business with high customer retention rates can outperform competitors through its ability to attract and keep customers. It reduces the risk of losing clients to competitors. When customers are unhappy with their current provider or feel their needs get ignored, they’re much more likely to switch providers or look for an alternative solution altogether. Losing even one disgruntled customer can have far-reaching consequences for a business – especially if that customer is influential in spending power or word-of-mouth advertising.

According to Harvard, acquiring a new customer can cost companies around five to 25 times more than retaining an old customer. Also, increasing customer retention by 5% can boost profits up to 25 to 95%. In other words, it’s worth your while to focus on retaining your existing customers!


How to Calculate Customer Retention Rate?

By including customer retention rate as a crucial metric in your marketing performance, you can understand how well your customer services are acting. It is an excellent tool for companies to know where they are lacking and which retention campaigns need optimisation.

The formula for calculating customer retention rate:

Let’s understand the formula through an example:

Say a company starts off a month with 500 customers. By the end of the month, it had acquired 150 customers. But it also lost 100 in the same period. At the end of the month, it has 550 customers. Here,
CE= 550
CN= 150
CS= 500

The customer retention rate becomes= ((550-150)/500)X100

Whether 80% is a reasonable retention rate or not depends on a company’s business and marketing goals.

Another metric that needs attention is the churn rate. It measures the number of customers unsubscribing from a service or leaving the company altogether.

Its formula is:

Churn rate helps determine the rate of lost leads and track of customer services.


What are the 7 Customer Retention Strategies?

1. Stay Connected

Just because the prospect has converted doesn’t mean you can bid them farewell and take them out of your email list. Marketers need to understand that when a prospect becomes a customer, new opportunities open up like:

  • Building a more robust customer profile
  • Upselling and cross-selling
  • Referrals

By always being in touch with established clients, companies must strengthen their bond with the customers and make them feel appreciated. It will encourage customers to stay loyal and help with brand advocacy. Businesses can build a separate email list for paying clients and share tips, latest trends, and updates about the company and industry to retain customers’ interest in the brand.

2. Build a Reward System

A reward system helps send the message to customers that the company cares about them and values their business with the brand. It can involve customers’ discounts, special offers, loyalty badges, or other incentives for staying with the company. It can be helpful to offer customers different rewards for different levels of loyalty.
For example, a company might offer its most loyal customers discounts and preferential treatment on future purchases. If a company has subscription-based services, it can offer some reward every time the customer renews their subscription.

Many businesses offer loyalty rewards programmes to their customers to keep them loyal and increase their spending on their products or services. These programmes can involve points or vouchers that can get used for future purchases, discounts or special treatment. Brands with successful loyalty reward schemes often make it easy for customers to redeem their rewards and monitor how often they get used.

3. Prioritise Customer Feedback

It is important to take customer feedback seriously, as it can help improve the overall experience for both customers and businesses. To ensure that customer feedback gets prioritised, it is essential to consider many factors, such as how often the feedback survey gets conducted. Companies should improve the customer experience based on feedback. For example, by implementing new policies or processes based on customer feedback.

Different ways of taking customer feedback are:

  • Surveys
  • Net Promoter Score
  • Helpline Numbers
  • Social media
  • LIVE Chat on the website

4. Don’t forget special occasions

Wish your customers special occasions, be it “Happy Birthday” or “Merry Christmas” or their anniversary. Companies must not miss these opportunities of having significant interactions with the customers. You can do it in many ways- sending a card, e-card, cake or flowers on occasion, providing a discount or complimentary services on the day itself etc.

5. Create a Customer only Community

A customer-only community is an online space where customers can discuss products and services, ask questions, and get support from other customers. It provides a valuable resource for customers who need help with a specific product or service. Additionally, it can help keep customers loyal to a company by providing them with exclusive content and opportunities.

Creating a particular community for their paying customers makes interacting easier, which might not be possible on social media because their prospects and customers get mixed up. But in a community group, you provide early access to new updates, discuss the brand’s roadmap, etc.

You can build such communities on channels like Tribe, etc.

6. Keep on Educating

A smooth onboarding process followed by quarterly doubt-solving meet-ups and weekly newsletters can help businesses stay at the top of established customers’ minds. The education aspect of marketing never ends. People always have questions to ask; the faster a company answers, the better reception it gets. Create a whole section on your website exclusively for customers and fill it with solutions to customers’ questions after buying your services.

The solutions can be in any format, articles, videos, infographics, etc.

7. Make It Easy to Complaint

Complaint handling is a critical part of customer retention. It’s essential that customers feel comfortable and confident in taking the time to voice their concerns, as this can lead to increased loyalty and more sales. Businesses can make complaint handling easy by creating a complaint process that is simple to follow and provides feedback quickly. Providing customer service representatives with up-to-date training on handling complaints will ensure they can provide the best possible service.

A company should update their social media profiles and websites with links, emails, and phone numbers where customers can easily make complaints.



There are many ways to improve customer retention, but the most important thing is to keep your customers happy. You can do this by providing them excellent service and constantly innovating and improving your product. You should also make it easy for your customers to get in touch with you and make sure that you are constantly updating your products and services. By doing these things, you will be able to keep your customers forever!

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