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7 Best Customer Retention Strategies to Boost Profitability

Learn top customer retention tips, techniques, and strategies. Get the latest methods of how to improve customer retention, increase purchases, & grow revenue.

Jeremy Chatelaine

Kate Parish

7 minute read

What is an executive summary
Trusted by top companies:

Short answer

How to improve customer retention?

  1. Onboard newcomers
  2. Provide proactive customer service and support
  3. Offer value-added services and solutions
  4. Listen to and respond to customer feedback
  5. Establish a loyalty program
  6. Introduce omnichannel customer support
  7. Ensure personalized communication
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Exceptional customer retention brings exceptional profits - are you missing out?

Imagine investing time to convince someone to buy, only to cease communication afterward. Customer retention is crucial; without reminding clients of your brand's value, they may not continue doing business with you.

Retaining customers is more cost-effective than finding new ones and having to re-invest the time and effort involved in fostering loyalty and trust.

Effective retention strategies go beyond basic assistance, promoting communication and understanding.

Let’s look deeper into customer retention's importance and steps to enhance it for your long-term success.

What is Customer Retention?

Customer Retention (CR) is a mix of strategies for turning customers into repeat buyers and preventing them from switching to a competitor. CR is mainly achieved through Customer Success (CS) by proactively helping clients achieve their goals using your product or service, and also by rewarding loyal customers through loyalty programs.

Why is Customer Retention important?

Customer Retention is important because it increases customer lifetime value (CLV), improves client acquisition ROI, reduces acquisition costs, and increases word-of-mouth recommendations.

How to calculate Customer Retention Rate?

Customer Retention Rate (CRR) is the percentage of customers that stay with your business in a given period of time, either by renewing subscriptions or buying repeat purchases.

To calculate customer retention rate you’ll need to follow these steps:

  1. Determine a specific time period, such as a month, quarter, or year to measure retention.
  2. Count the total number of customers at the start of the time period (Start).
  3. Count the total number of new customers acquired during the time period (New).
  4. Count the total number of customers at the end of the time period (End).
  5. Subtract the number of new customers (New) from the total customers at the end (End): End - New = Retained.
  6. Divide the number of retained customers (Retained) by the total customers at the start Retined / Start.
  7. Multiply the result by 100 to get the customer retention rate as a percentage.

Formula: CRR = [(End - New) / Start] * 100

personalized sales email template example

What CRR figure should you aim for?

You should aim to match or exceed the benchmark for your specific industry or niche. According to statistics, all industries have about 75.5% average Client Retention Rate. The lowest customer retention percentage is in the Hospitality, Travel, and Restaurant sectors (55%), followed by Retail (63%).

What business impact does Customer Retention have?

1. It’s less expensive than customer acquisition - According to information from Forbes, in SaaS specifically, retaining existing customers costs 4 to 5 times less than finding new ones.

2. It promotes loyalty and favorable recommendations - A devoted audience will share their positive experiences with others, attracting more purchasers to your businesses.

3. It boosts revenue - SemRush states loyal clients spend 67% more after being with the company for 31 to 36 months than during the first six months.

4. It increases customer lifetime value (CLV) - This metric illustrates how much you expect a customer to spend on your products throughout the whole time of being your client. As you build stronger relationships with people, they become more perceptible to your cross-selling and up-selling propositions. As a result, this metric skyrockets.

5. It creates space for inventiveness - Once you’ve built a solid base of customers, you’re free to experiment with your product development and marketing tactics. Just be cautious about making too many changes. Major transformations may scare the audience away.

7 best Customer Retention strategies to implement

Now that you understand the importance of customer retention, it’s time to outline some steps to practice in the company.

1. Onboard Newcomers

While you may not predict whether the customer will be satisfied with your products or services, you can influence their first impression.

It’s your duty to ensure the customer understands the product value and gets the most out of it before the introductory period ends. That’s where you need an onboarding procedure.

What the onboarding process generally looks like:

I) Sending a welcome email - Even if you already sent an email during a free trial period, sending another one after purchasing a product is essential.

Here is the email Grammarly uses to greet its premium users:

the email Grammarly uses to greet its premium users

II) Introducing new users to an application or software product during their initial use - This stage may include educational materials, guides, checklists, product tours, and app tutorials.

III) Feature promotions - Extend initial onboarding by introducing users to other features, either new or undiscovered ones. However, make sure not to overwhelm them with too many advertisements.

IV) First-week check-in - An onboarding process may include keeping in touch with clients and getting their product feedback. You can send surveys or schedule a call.

V) In-depth product use promotion - After some time, you can collect data on user preferences and suggest other features based on their interests.

Sometimes onboarding may require additional tools. Suppose you want to show an engaging, interactive, and professional presentation. You may employ tools like Storydoc to appeal to your target audience.15

2. Provide Proactive Customer Service and Support

HubSpot found that 93% of customers will make another purchase if they’ve experience exceptional customer service from a company.

This experience involves knowledge, empathy, active listening, and meaningful dialogues. Customers expect the business to foresee their needs and address problems before they arise no matter how small the provider. That's why it's essential for startups to have robust customer support for startups, ensuring customer queries and concerns are addressed promptly.

That’s where you may need to introduce artificial intelligence (AI).

AI-powered systems can analyze behavior, extract topics, spot patterns, and predict possible issues. They send notifications to you or a client to take preventive measures.

There's plenty of customer success software to explore to see what fits your busienss best. For example, you can employ chatbots tools on the website that will work uninterruptedly. They will collect customer requests and return possible solutions or notify a customer service team to intervene.

The way MailChimp uses its chatbot is a good example for proactive customer service:

good example for proactive customer service

3. Offer Value-Added Services and Solutions

Value-added services and solutions are a company’s offers in addition to its basic goods or services. These are often free extra commodities, such as:

  • no-cost trials
  • samples of goods
  • perks for membership
  • free delivery
  • messages of gratitude
  • free drinks or comfortable waiting rooms, depending on the niche

Such a strategy can set you apart from the competition. Value-added services also encourage people to return to your brand, improving retention.

4. Listen to and Respond to Customer Feedback

Another critical aspect of retaining customers is listening to them. Solicit feedback to understand their needs and issues. It will help you take action to improve your products, leading to higher customer satisfaction, retention rate, and loyalty.

For example, you can send surveys to measure a Net Promoter Score. It usually involves rating whether a client will recommend the brand from 1 to 10. By looking at customer experience stats, businesses can get a clearer idea of how customers feel and spot areas to improve.

To create a comprehensive product feedback loop, encourage more detailed answers and include forms to describe feelings and desires. This approach not only helps in gathering actionable insights but also in continuously refining your product based on real customer experiences.

5. Establish a Loyalty Program

If you already have devoted customers, don’t take them for granted. Instead, focus on fostering loyalty by incentivizing them to stay with you.

Incentivise client loyalty by doing the following:

  • setting up a loyalty program where people will earn rewards for completing specific tasks
  • sending promotional codes
  • providing special and personalized offers
  • sending them Canvas prints as appreciation
  • inviting them to VIP events
  • opening early access to new product launches
  • grandfathering in pricing when rates rise

Here is how Zoës Kitchen, a restaurant chain, shares information about its reward program.

reward program examp

6. Introduce an Omnichannel Customer Support Strategy

Omnichannel revolves around uniting offline and online sales and customer support through customer support software.

Modern consumers switch between various channels when interacting with your company. They may ask a question in a live chat pop-up, send an email, and then call a customer support team through your contact center software.

Your task is to ensure the client receives the needed attention without repeating themselves every time. Analytics are vital here. Looking at call center metrics and other insights is a must.

It’s about providing buyers with a seamless and personalized shopping experience across all these touchpoints.

To reach this, a business needs to closely connect its online and offline branches as well as the channels of interaction. And with a business phone service that’s up to date and well integrated, you can be ready and able to engage with customers any way they prefer.

What do you need to deploy omnichannel?

For omnichannel you’ll need:

  • Customer profiles
  • History of purchases
  • Customer support cases and conversations

These need to be accessible to all staff members who communicate with prospects via any touchpoint.

As a result, shoppers get their requests resolved even if they talk to different associates.

Omnichannel requires serious investments and cutting-edge technologies. So it takes time to replace the multichannel strategy.

NOTE: What is the difference between Multichannel and Omnichannel?


The multichannel approach implies having many offline and online touchpoints so that customers can opt for the most convenient ones. Unlike omnichannel, multichannel does not connect these touchpoints; they remain separate.


For instance, if a person buys online and then decides to buy online and then decides to cancel it through a customer service representative over the phone, they’re likely to fail to do so.

7. Ensure personalized communication and engagement

The ability to recognize clients across touchpoints leads us to the next way to boost retention. It includes storing client information and using it to provide relevant and personalized solutions.

Personalization ensures customers don’t feel like a number in your system. It makes them feel appreciated and seen.

According to McKinsey, 78% of consumers are more likely to refer friends and family to companies after having a personalized experience.

How to personalize your communication with clients?

I) First, you need to segment the audience.

As you accumulate data, you can spot similar patterns among certain users. They may have similar interests and responses to your campaigns. Others, for example, will require another treatment from your sales team. Use it to your advantage.

2) Second, draft content to satisfy the needs of various people.

Suppose you set up a sequence of personalized emails. Consider using variables that would be substituted with the name of the recipient.

For instance, your subject line could be: “[Name], we have a promo code for you!”

That’s where you may need dedicated tools like Zendesk's customer service apps to pull customer information, view the conversation history, and streamline conversations.

3) You may also want to optimize using ChatGPT.

This tool can give you ideas on personalizing communication, writing a business proposal, or building your sales persona.

I supplied ChatGPT with an example sales pitch and asked it to give me tips on enhancing it. The tool even gave me an optimized variant!

Optimzide sales deck using ChatGPT:

Ensure personalized communication with ChatGPT

How to start doing Customer Retention having few resources

If you’re starting out, you may postpone customer retention until you build an extensive customer base.

But once you’ve persuaded someone to buy, you can discover the potential of customer retention. Here is how you can nurture people to become loyal customers:

  1. Introduce users to the product with a smooth onboarding process
  2. Resolve issues timely, even before they arise
  3. Introduce simple video guides for valuable features and capabilities.
  4. Collect and deal with reviews
  5. Communicate with customers regularly

But in the end, it all boils down to developing strong, long-lasting relationships.

Kate Parish

Kate Parish is the chief marketing officer at Onilab, a full-service eCommerce agency with a focus on Magento. Kate has been working on diverse marketing strategies and activities for more than 8 years. In her pursuit to bring up top-notch marketing solutions, Kate is constantly exploring the topics of SEO, branding, SMM, PPC, and Magento PWA development

Table of contents
What is Customer Retention? Why is Customer Retention important? How to calculate Customer Retention Rate? What CRR figure should you aim for? What business impact does Customer Retention have? Top Customer Retention strategies to implement How to do Customer Retention with few resources
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