Customer retention is the ability of a business to retain its customers. Over time, it is measured by customer retention rate — the percentage of customers a company keeps to the end relative to the number of customers it had at the start of a specific business period.

In the video below, you'll get inspired by 5 customer retention strategies.

Customer retention is impacted by the number of new customers acquired and the existing customers who churn by not returning to purchase, canceling subscriptions, or closing contracts. That said, by calculating the customer retention rate, companies get to know how loyal their customers are as well as the effectiveness of their customer service. In turn, if there is a need, they can come up with ways of improving their customer experience.

Email marketing remains the best way of retaining customers. In fact, 80 percent of businesses say that it is their greatest driver of consumer retention.

Why it is important to retain your customers

Customer retention is essential to a brand for several reasons. Let’s highlight some of them.

Saves on marketing costs

Acquiring a new customer costs 5x more than it does to retain one. As such, customer retention saves a company money and reduces the marketing expenditure by keeping the existing customers who have already interacted with the company’s products and services. Also, the fact that existing consumers are already familiar with a brand’s services or products, marketers spend way less time when providing customer support.

Fosters repeat sales

Existing customers are more likely to buy new products or services from a company. That said, a customer will buy from a brand in the future only if they trust it to offer a better shopping experience when compared to its competitors.

Benefits from word-of-mouth advertising

Loyal and happy customers give a business the benefit of word-of-mouth promotion at no cost. Existing customers are more likely to tell their family members and friends about an enterprise, its products, and services. And given that customers, especially, those who are still prospecting, respect the opinion of people who are close to them, they will be convinced to make purchases from a specific business.

Have a look at these statistics: 46 percent of customers in America get brand information from family members, while 45 percent get info on potential purchases from friends. Moreover, 92 percent of customers trust the opinion of friends and family more than other marketing strategies.

That said, the bottom line is that an existing customer is more likely to make referrals. And the new customers a business gains in this way cost way less to acquire and have a significantly higher lifetime value compared to customers acquired in other ways.

Allows to get useful feedback

Existing customers give valuable feedback which if implemented, can enable a business to run more efficiently. According to Apptentive, 97 percent of customers said that they are likely to become loyal to a brand that implements their feedback, while 55 percent said that they would not continue being customers of a business that ignores their feedback.

From interacting with a business over time, existing customers are in a better place to tell it about the areas that need to be improved. Repeat customers are easily approachable, and their suggestions on improvement can be sought at any time. Implementing customer feedback can see a business benefit from new opportunities that lead to increased sales and retention rates.

Earns profit from premium-priced products

Existing customers are less conscious of the prices of products compared to new customers. Loyal customers already value a company and are, thus, ready to pay a premium fee to access the services or products offered by the business.

Customer retention benefits

  • Drives better revenue. Retaining existing customers means more profits as buyers already have faith in a brand and are, therefore, more likely to spend more. Using customer loyalty programs to increase retention boosts returns significantly.
  • Saves money. Implementing customer retention strategies costs less than attracting new buyers. It costs 5x more to land a new customer than to nurture an existing one. As such, focusing on retention can help in cutting down marketing costs since existing customers are already familiar with the business.
  • Allows getting valuable data. Existing customers are more likely to participate in surveys and, thus, provide a business with useful data. By acting on this data, a company can offer a more personalized experience to its customers and create effective targeted marketing campaigns.
  • Builds strong relationships with customers. Implementing customer retention strategies, for example, loyalty programs, makes customers feel appreciated. In turn, they develop emotional connections with a brand and will be patient in case of mishaps. Marketers can increase customer appreciation by offering rewards or points during special occasions, for instance, customer birthdays.
  • Boosts sales. By leveraging the data gathered through surveys, marketers can make better suggestions to consumers, which, in turn, increases the probability of purchases. With time, more sales will be achieved.
  • Measures your marketing strategies efficiency. From analyzing customer retention metrics and reports, businesses can determine the effectiveness of their marketing strategies. Some of the vital retention metrics marketers need to pay attention to include repeat sales, loyalty program engagement, and purchase frequency.
  • Provides effective communication. Repeat customers are easier to communicate to, especially during emergencies such as recalls. Businesses can quickly match purchase dates and proceed to send messages to affected customers rather than sending a general email which most likely, will be ignored. Moreover, it is easier to relay sales, special events, and new product information to existing customers.
  • It’s self-sufficient. Once a business sets up a customer retention strategy, little input is required from marketers as the programs are often self-sustaining. The only action the company has to take is to monitor various customer retention metrics. All the while, the retention strategies will be running on the initial settings.
  • Helps gain new customers. Loyal, existing customers are the best advocates of a brand. They will share their good experiences with a company thus reassuring customers with doubts while also introducing the brand to new people.
  • Gives an opportunity for growth. Customer retention presents a chance for expansion. For example, if a brand needs a stock of consumer photos when launching a new product, existing customers can come in handy. After all, they are best suited to promote a company’s product because they are already familiar with what the business offers.

How to calculate customer retention rate

Customer retention rate (CRR) is given as a percentage. To calculate it the following information is needed:

  • The number of customers at the end of a specific business period (E)
  • The number of customers acquired by the business over that duration (N)
  • The number of customers at the beginning of that period (S)

When calculating the customer retention rate, the number of new customers acquired is not counted, only the number of existing customers at the end of a specific period. The figure for the remaining customers is arrived at by subtracting N from the value of E. To determine the percentage, divide the result by the number of customers at the beginning and then multiply by 100. Below is the procedure:

CRR = ((E-N)/S) *100

Benchmarking and monitoring the CRR enables businesses to improve various aspects to ensure that they retain most of their customers. What is the ideal CRR value? Companies should strive to attain a CRR of 90 percent or at least, 85 percent. Nonetheless, this will vary from one business to another; hence, it is important to monitor a company's CRR individually. The point is to keep improving upon the metric monthly.

Customer retention tactics and strategies

Here are some excellent strategies for increasing customer retention each business should implement:

Share case studies during the sales process

Companies should provide information on previous case studies to reveal their style of collaborating and communicating with customers. They can go on to disclose the results achieved. With this information, new customers will set their expectations and be more welcoming of the experience they get while interacting with the company.

Set expectations early

Companies should communicate the progress towards goals, deadlines, project inclusions, processes, and so forth to keep their customers informed of what is happening. Doing this will ensure that the customers are kept happy and, thus, ready for continued interaction with the business.

Develop a roadmap for the future

Marketers should create and revise company-customer relationship roadmaps regularly to enable buyers to plan effectively. Doing this will keep the customers informed of the current and future stages of the relationship.

Create memories around shared successes

Companies can boost customer retention by creating memorable events around successes. Implementing this approach will also keep customers from dwelling on negative experiences, for example, missed deadlines, wrong deliveries, etc.

Create customer loyalty programs

They motivate clients to choose your brand. Offer them to collect the bonuses after each purchase and when they reach a particular amount of money, customers can use them to get a generous discount.

Ask for feedback and act on it accordingly

Ask your clients to estimate both the service and the products after every purchase. Let them not only provide you with the points but allow to leave a comment. This way, you can use it to improve the service.

How to increase customer retention with email marketing

Brands can boost customer retention with email marketing. It is especially easy when one uses a professional email marketing platform. It provides with a bunch of advanced features and instruments that contribute a lot to customer retention.

Give customers more control

Allow users to determine their email preferences while subscribing or right after it. Let them set the types and frequency of the emails you will send them. This way, you won’t bombard your audience with bulk emails they’re not interested in. This approach is the beginning of your mailing list segmentation.

Look how Bonobos put that into practice.

Email preferences

Write valuable messages and exciting stories

Providing something valuable to subscribers is excellent for lead nurturing. Blog posts, interviews, and case studies can give customers more reasons to trust you.

Lead nurturing

Utilize re-engagement email campaigns

Businesses and their customers often grow apart after a while. Work, family, or a change in interests can result in this. To keep customers drawn in businesses should send re-engagement emails. Updates and offerings, as well as benefits, are some of the things a company can include in these emails.

Re-engagement email

Segment and personalize

Generic marketing emails will not cut the mustard as far as customer retention goes. Customers prefer customized messages. How can this be achieved? With the help of an email marketing service. It offers instruments for mailing list segmentation based on gender, location, products purchased, and so forth.

SendPulse has smart segmentation features available for any type of business.

At the end of the email, Mackage offers to choose clothes for men, women, kids, or go to Bags section. This way the brand collects the information for further personalization.

Email with segmentation options

Give discounts

They encourage customers to keep coming back to a brand. By offering a discount for the next purchase, you make a small investment for fostering customer loyalty and boosting customer retention.

Boden tempts subscribers with a time-limited discount.


Run holiday marketing

Holidays give additional opportunities to increase customer retention. Congratulate your subscribers on their birthday and holidays, provide with special offers. This way, customers will feel that you care.

Check out how Petco increases customer retention on the National Pet Day. They offer 15% of the orders of $75 and free shipping.

Holiday marketing

To conclude, email marketing is sure to help a business in improving its relationships with customers and retaining them. Companies can easily send personalized messages, valuable content, and discounts to customers using an email marketing platform.


  1. This article develops an in-depth look at customer retention. Here you'll get to know why it is important to build, how to calculate it; get acquainted with strategies and techniques that help increase retention.
  2. The article provides the ultimate guide to customer retention.
  3. Draw inspiration from 14 examples of customer retention strategies that work.
  4. Here you'll find 5 strategies that help retain more customers.
Also searched with "Customer retention"
Rate this article about "Customer retention"

User Rating: 4 / 5 (9)

Try SendPulse today for free

If you are interested in "What is Customer Retention: Definition, Video" you might be interested in our bulk email service.