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19 customer retention strategies that work

Alia Paavola
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Customer retention strategies are used by companies to turn customers into repeat buyers and prevent churn.

For businesses, having customer retention strategies in place is key to profitability. Increasing customer retention by 5 percent boosts profitability by up to 95 percent, according to Harvard Business Review.

Graphic explaining that a 5% boost in retention can lead to up to a 95% greater profit
A graphic that shows a 5% boost in retention
can increase profitability by as much as 95%.

Another study found a 2 percent increase in retention is the same as decreasing costs by 10 percent. Plus, customer acquisition can cost five times more than retention.

Graphic explaining that a 2% increase in retention equals a 0% decrease in cost
A graphic that shows a 2% increase in
retention equals a 10% cost decrease.

There are many ways to improve customer retention to prevent customer churn. Below we break down 19 strategies that work.

19 customer retention strategies that work

1. Set proper expectations and deliver on them

In all transactions with a business, customers have expectations. A business must set and meet these expectations as you only get one chance to make a good first impression. Setting expectations early and delivering on them allows a business to start off on the right foot and keep more customers. The time to wow customers when they make their first purchase.

Whether online, in-person or over the phone, the first experience sets the tone for the entire customer relationship. A bad experience will make the customer likely to jump ship, while an outstanding experience may make them stick around.

There are many ways to set expectations but one key way is to be clear about your offering or product. This includes sharing details like what it entails, what it will cost, and what the deadline or timeline will be.

Additionally, customers need to understand what support and service options are available. For example, businesses should clarify what hours their customer support line is open and who they should contact if they run into a snag. Plus, they should let customers know if the business offers special services like onboarding or a fit specialist.

Once expectations are set and communicated, you must deliver on them. Some easy ways are meeting shipping deadlines, keeping a project on budget, and responding to customer issues in a timely manner.

2. Find moments to go the extra mile to exceed customer expectations

In certain circumstances, it is important to go the extra mile to exceed customer expectations.

A few simple ways to go the extra mile are:

  • Delivering your product or service much quicker than expected
  • Giving customers more for their buck
  • Providing a free gift in the mail.

For example, a dental office could stay open 15 or 20 minutes later to squeeze in a patient last minute. While an online store could repost a customer’s photo using a product on its Instagram story. And a restaurant could give customers a free dessert or take-home bottle of sauce on the house.

One business that goes the extra mile to exceed expectations is Ritz-Carlton. The luxury hotel brand empowers its employees to spend up to $2,000 to solve a customer issue or improve a customer's experience. Its employees also can spend this amount without permission from a manager. The reason is that the average Ritz-Carlton customer will spend $250,000 with Ritz over their lifetime. This means the $2,000 to resolve a single incident or make a customer happy is worth it in the long run for the business.

One ‘extra mile’ experience from the Ritz-Carlton came after a child left his stuffed animal, Joshie, at one hotel. When the child was upset he lost the stuffed animal, his mom told him that Joshie was taking an extended vacation at the Ritz. The mother then called the Ritz to ask if Joshie was there. When they said yes, the mother asked if they would mind taking a picture of Joshie at the hotel to authenticate the story she told her son. A few days later, the mother got the package in the mail with the stuffed animal and several photos of Joshie’s prolonged vacation.

Photos of Joshie, the giraffe, on vacation
Photos of Joshie on his prolonged Ritz-Cartlon vacation.

3. Ensure your customers are onboarded and using the product post-purchase

Another way to retain your customer base is to make sure they are onboarded and using the product or service post-purchase. 

This will look a bit different depending on your business and industry. The key is that customers need to experience the product and service and know how to use it to be retained.

For SAAS companies, it is important to help customers set up your service or software and get users of it onboarded with a demo. You can also offer other educational offerings or help them with their first action. Many customers learn by doing. As a result, one best practice is to show your customer how to perform a task and then watch them complete the same task while providing guidance.

But, if you sell a product like exercise equipment your approach may be different. For example, you'd want to make sure customers receive the product and know how to use it. And for those in the service industry, it’s important to check in with customers to see if they are happy with their first service experience.

To ensure customers are using your product or service, you should proactively check in with them to make sure. This can include calling them, emailing them, texting them, or using marketing materials like a newsletter.

If you have a subset of customers who haven’t used or adopted your product post-purchase, you can reach out to them to encourage them to use the product.

Here’s an example of a text message you could send to a subset of users that haven’t yet used your SaaS product:

A text message from an SAAS company.
An example of a text that a SaaS company could send its customer.

4. Build meaningful relationships with customers

Building meaningful customer relationships is vital to the long-term success of your business. This is especially true in a world where new competition always emerges and it's easy for customers to make a switch.

There are many ways to build meaningful relationships with customers. Some key ways include regularly checking in with existing ones and thanking them for their business. These items will ensure that they feel appreciated, supported, and valued by your business.

Another key way to help build strong relationships with customers is by getting to know them on a personal level. This means getting outside the standard business talk to ask about other things that are important to them. One great way to do this is to ask questions about non-work-related items. This includes questions about family, recreational activities they enjoy, and what motivates them.

These can help foster a deeper relationship and build trust.

Another way to help manage relationships with customers for the long haul is to install a CRM platform. The platforms help store and manage customer data. By using these platforms, you are often better positioned to provide personalized service and support.

5. Build a community around your product or service

Another way to increase customer retention and customer engagement is to build a community around your brand or product. These communities help customers build emotional connections to brands.

To create a community, brands could set up chat rooms, physical meet-ups, or a way to engage on social media.

Athletic brands like Nike, Lululemon, and Athleta are brands that have built a solid customer community. For example, Nike has its Nike+ Run Club. This club allows customers to connect with friends and other runners through challenges. Lululemon and Athleta also host outdoor yoga sessions to bring their customers together. The people who take part in these communities are more likely to stay a customer and be loyal to your brand since they feel connected.

Another example of creating a customer community is from UI Health Care. The health system created a competition on social media to raise awareness about men’s health issues. Community members were encouraged to grow out their facial hair during November. They were then asked to share the final result on social media with the hashtag #BeardUpIowa. This created a fun thing for the community to take part in and generated goodwill toward UI Health Care’s men’s health program.

A photo of University of Iowa's Beard Up campaign
A photo of UI Health Care's Beard Up campaign.

6. Create serendipity or FOMO

To keep customers coming back, create serendipity or the fear of missing out on products, services, experiences, or events.

There are many ways to do this. But one way is making your offering so magical, seamless, or valuable that customers will keep coming back. 

One great example is Uber and Lyft. The ride-hailing companies made calling a cab easy and convenient for customers. With a few clicks, customers can call their ride like a personal driver. As a result of the value and disruption, both companies have become household names.

Another example of a company that keeps happy customers is Sephora. If you visit a Sephora store, a beauty expert will give you a free 15-minute single-feature makeover. For example, a customer could get a smokey-eye done without making any purchase. This free makeover helps customers better understand Sephora’s products. Plus, it encourages customers to stay for a longer period.

There are many ways companies can prove value to help their brand stand out and retain customers. Some more examples include:

  • Creating educational content that helps customers solve pressing problems
  • Giving customers a sample of a product to take home,
  • Providing a specialist to help customers find the perfect product.

7. Really understand your product and service to add value with marketing

It is important for businesses to really understand the ins and outs of their product or service. This includes the best use, time, place, channel, audience, and need for your product and service. After understanding the product, you can add value with your marketing efforts.

There are many ways to create value through marketing. One way is to keep your products and services top-of-mind for customers. This can be done with regular newsletters, posts on social media, or high-quality content.

One company that does this well is Crumbl Cookies. The cookie company rotates its menu to give customers four or five new cookie flavors each week. To help promote the new products, Crumbl posts about the new flavors on social media. Specifically, it shares the content with its 2.5 million followers on Instagram, 5.5 million followers on TikTok, and 525,000 followers on Twitter. This helps drive repeat customers to their stores because they don’t want to miss out on particular flavors that catch their eyes.

Here’s an example of a post that Crumbl shared announcing its new weekly flavors on Instagram: 

Crumbl Cookie's Instagram post.
Crumbl Cookie's Instagram post announcing new cookie flavors.

Not every company can create five new cookie flavors to entice repeat customers each week. But, Crumbl shows how a good retention marketing strategy can help encourage existing customers to buy again.

Here are a few other examples of adding value and encouraging repeat buyers with marketing:

  • A clothing retailer could send customers a magazine that shows off its new fall arrivals
  • A SAAS company could send a newsletter filled with tips to boost customer survey response rates

Another good marketing strategy is to understand the customer journey. This allows you to bring valuable content no matter where a customer is on that journey.

8. Proactively reach out to customers during the most relevant moments

Encourage repeat business by proactively reaching out to customers during relevant moments. This includes before a contract is about to expire, a few days before a free trial is up, or before a seasonal change.

Proactively reaching out is helpful. This is because customers often forget about routine appointments or when they need to schedule services. Here are a few examples of how or when you could reach out in different industries.

  • Home services. You could reach out to customers to remind them that it is time to schedule a seasonal service. This includes reminders like gutter cleaning, pool opening, or window washing.
  • Healthcare. Reach out to remind patients about an upcoming appointment or to schedule an annual physical.
  • Insurance. Reach out before a customer's insurance policy lapses or send a payment reminder.
  • SAAS. Proactively alert customers about an upcoming contract renewal or a looming upgrade.

9. Be human in your interactions with customers

Communicate with customers like they are human to invoke a deeper connection. This is especially helpful as more interactions move online.

Customers want to feel like they matter and adding a human touch to interactions can help. A PwC study found that 64 percent of U.S. customers feel that companies have lost touch with the human element of customer experience. And, customer experience is a key factor used to make purchase decisions.

There are many ways to keep the human touch in your interactions with customers, but here are a few:

  • Have two-way conversations
  • Show genuine empathy about customer concerns and issues
  • Own your mistakes
  • Share good and bad updates, like shipping confirmations or delays
  • Check-in with customers
  • Showcase the humans behind your brand
  • Personalize your interactions as much as possible

Here’s an example of Slack adding a human touch in a reply to a Twitter user. The company shows empathy and personalizes the interaction.

Twitter thread from Slack that showcases empathy
Slack responding to a customer on Twitter with empathy.

10. Provide omnichannel communication 

Businesses with strong omnichannel customer communication strategies retain 89% of their customers.

As a result, consider implementing an omnichannel experience for customers. This means letting customers use their preferred communication channel to engage with your brand. This will make it easier for them to buy a product and reach support.

Omnichannel communication involves using multiple channels like voice, email, SMS, and social media. Providing these channels helps deliver a cohesive and positive customer experience.

A best practice is to understand the channels your customers use and how each one fits into the buying journey. For example, you may find that some leads prefer a phone call, while others want quotes via email, and others prefer texting for support. You may also find that email marketing works better for some customers, while SMS marketing works better for others.

Here’s an example of a text that your business could send to quickly answer a customer question.

A rapid back-and-forth text conversation between Mizuno and a customer
An example of a back-and-forth text exchange.

11. Respond to customers promptly no matter the channel or reason

While a slow response rate can impact how customers feel about your brand, not responding to customers can be harmful. In fact, a Gartner study found that failure to respond to customers on social media can boost the churn rate by up to 15 percent.

Make sure you have a strategy in place to respond to customers across the communication channels you offer.

Athleisure brand Lululemon has a great customer response strategy on Twitter. The brand responds to customer questions and mentions promptly. Here are a few examples:

Lululemon responding to a customer on Twitter
Lululemon replying to a customer's tweet mentioning them.
Lululemon responding to a customer on Twitter
Lululemon answering a customer's question.

Keep in mind that response time has an impact on customer satisfaction. Sixty-six percent of customers say that the most important thing to provide optimal customer service is to value their time. This is why responding promptly to any customer inquiry is key to keeping customers happy and coming back.

If you need a way to manage more communication channels on one platform there are solutions out there. We'd suggest considering a business texting solution like Textline. The platform allows businesses to manage texting and social media replies from one dashboard. Textline integrates with Instagram and Facebook Messenger. This means that when customers direct message your business, mention you in a story, or reply to a story, you can respond in Textline.

Textline inbox showing Instagram message replies.
Textline inbox showing a customer story mention from Instagram.

12. Personalize, personalize, personalize

To better retain customers, make sure you incorporate personalization.

Accenture found that 91 percent of consumers are more likely to do business with brands that offer personalization. McKinsey & Company found that 76 percent of customers hate when personalization isn't occurring.

There are many ways to increase personalization, here are a few examples:

  • Personalized discounts. A home decor store could offer 20 percent off an interior design consultation for any customer who spent upwards of $1,000 in the last three months. Additionally, they could assign a design consultant based on the style of items the customer purchased.
  • Personalized shopping experiences. StitchFix offers personalized shopping experiences by treating each customer as an individual. It offers customers personalized style recommendations based on their preferences, size, and feedback.
  • Custom reports. Another example of personalization is from Spotify Wrapped. The music streaming app provides users with a custom year-in-review playlist. This playlist summarizes each customer’s listening patterns from the past 365 days. This personalized report has been a hit for the company, with more than 90 million users engaging with it in 2020.

13. Incentivize customer loyalty

There’s a business case for creating loyal customers. Loyal customers are five times more likely to repurchase and five times as likely to forgive a company for a mistake. Additionally, they are four times more likely to refer other customers and seven times more likely to try a new product than new customers. That's according to research from the Temkin Group.

As a result, one great method to help retain customers and encourage them to buy again is by creating a customer loyalty program. These programs are often overseen by the customer success team.

There are many types of loyalty programs. One is a point-based system where customers get points for each dollar spent. There are also cash-back programs that give customers a percentage of money spent back. Another is a tiered program that offers different deals to members based on the amount spent or purchase frequency. Some companies develop special offers for their best customers or most valuable customers.

An example of a standout customer loyalty program is The North Face’s XPLR Pass. Under the program, customers earn points in various ways. This includes by making purchases, referring other customers, and checking in to various national parks. Customers can redeem the points for money off their gear purchases.

Customers who sign up for the loyalty program also can field-test new gear and get early access to items. Plus, they obtain exclusive member-only items. It makes sense why the rewards program ranked among Newsweek’s top loyalty programs of 2022.

14. Measure and analyze customer behavior

Another important way to improve customer retention is by measuring and analyzing customer data. This includes data like purchase history and average order value. And includes customer retention KPIs like repeat customer rate, retention rate, and churn rate.

It is important to track these metrics so you can establish a baseline and then set goals to improve them. Creating and analyzing these metrics will help you identify and address the reasons why customers may be churning. Plus, it helps you understand the key levers that drive retention.

Since this blog post focuses on repeat purchases, here’s a quick breakdown of how to measure customer retention rate.

How to measure customer retention
How to measure customer retention.

To calculate CRR, subtract the number of new customers acquired from the number of customers remaining at the end of the period. Then divide that number by the total number of customers at the start of the period and multiply by 100. 

In short, retention rate = ((Customers at end of a period - New customers during the same period) / Total customers at the start of the period) x 100.

Say you wanted to measure your retention rate for July. Let’s say you had 1,000 total customers at the start of July, ended the period with 900 customers, and added 50 new customers during the month.

An example of calculating customer retention rate
An example of calculating customer retention rate.

The calculation would be ((900-50) / 1,000) x 100 = 85 percent. The retention rate for July is 85 percent. 

Once you have a baseline of what your retention rate is, you can set goals to improve it, roll out initiatives that may work, and continue to analyze.

15. Solicit customer feedback and implement it

Another way to get insights from customers is by getting feedback and implementing it. This can go a long way in keeping customers as it shows that you are listening and value their opinions.

One way to get customer feedback is by asking them to participate in a customer advisory meeting. You can ask participating customers to share pain points, why they enjoy your product or service, and ask for suggestions. Creating a panel of customers to get this feedback will help you fine-tune your products and services. Plus, it can also help you build relationships with your customers.

Another way to get feedback from customers is by using customer satisfaction surveys like NPS surveys or CSAT surveys.

Here’s an example of how you could ask customers for feedback via text:

An example of a text asking customers for feedback.
An example of how to ask a customer for feedback.

A third way to get feedback is by asking for customer reviews. These are key to business relationships because they help establish social proof. You can ask customers to leave them on your website, a review page, or via text.

16. Provide a concierge if appropriate

For higher-cost products and services, consider providing customers access to a concierge. For some companies, this is an account representative or customer success manager.

A concierge is a person that assists with personal business. This includes making travel arrangements, scheduling appointments, or running errands. Offering customers a concierge makes the experience seamless and encourages repeat business.

Account or customer success managers are also used to strengthen client relationships. Account or customer success managers help ensure customers are getting the most out of their product or service.

Customers are often assigned an account manager or CSM to help them with any inquiry, such as resolving an issue or answering a question. Having a single point of contact to help customers with these issues helps build good personal relationships.

17. Use subscriptions to bolster the experience

Consider implementing a subscription service or membership option to improve the customer experience. Customers will be more likely to opt-in to a subscription service if they get special treatment over one-time purchasers.

A great example of this is Amazon. The e-commerce giant created Amazon Prime in 2005, initially offering members two-day free shipping. The membership now includes offers to other exclusive deals like access to shows, discounts, and other perks. The program has more than 200 million subscribers across the globe, showing its success.

Another example of a subscription-based service is GoodRx Gold. It is a monthly membership program. It offers discounts on prescriptions and healthcare services.

Image of GoodRx Gold
An image of GoodRx Gold's membership.

18. Thank your customers

To show customers you care and provide excellent customer service, thank them. Customers who receive customized thank-you notes are more likely to become repeat purchasers. That's because they will feel valued and view your business in a positive manner.

A business can send a thank-you note via email, over social media, through text, or a handwritten card delivered by mail. But, the important thing to keep in mind is that these notes should be personalized, short, and timely. In other words, don’t send a thank you message out of the blue. 

To read 24 genuine thank you messages you can send customers, read our blog here.

19. Find ways to simplify

Customers want convenience and simplicity. In fact, Siegel+Gale found that 64 percent of customers are willing to pay more for simplicity. Plus, 61 percent of customers are more likely to recommend a brand because it provides a simpler experience.

As a result, make sure your products, services, and messaging exude convenience and simplicity.

One great example of this is Google. The search engine’s homepage is simple by design and has an experience that is easy to understand. This keeps users coming back to use it over and over.

The bottom line

Retaining customers is important for every business. Consider implementing our proven strategies. This will keep customers happy, encourage repeat business, and build relationships over time. Plus, they will help you boost your average customer lifetime value and meet your business goals.

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