Customer Retention Strategies for Beginners

August 31, 2021
Emmanuel Umukoro

Although it is important for every business to acquire new customers, retaining existing customers is more important because the cost of acquiring new customers is five times higher than the cost of keeping existing ones.

With a 5% chance of success, you'll need to spend money on marketing to persuade new customers to try your products. Unlike current consumers who already purchased from you, so there's a better chance they'll do so again. Existing clients are up to 70% more inclined to buy from you again.

In addition, existing customers can also refer people to your business, resulting in more sales. That's why customer retention is crucial to your business's success. Before we list the strategies needed to improve your customer retention rate, let’s discuss what customer retention is and what a good retention rate should look like.

What is Customer Retention

Customer retention refers to a company's capacity to retain customers over time, implying that they will continue to purchase your goods and services. The number of existing customers that leave and the number of new customers you acquire determines your retention rates.

Keep track of your retained clients so you may attempt to maintain a high customer retention rate (as measured by the customer retention rate).

What’s a Good Customer Retention Rate

To determine the customer retention rate, first choose a time period, such as monthly, quarterly, or yearly. Then compare how many customers you have at the conclusion of that time period and compare it with how many you had at the start, subtracting out any newly acquired customers during that time.

For example, if you had 200 customers at the beginning of the month, gained 30 new clients, and lost 14, you would conclude the month with 216 consumers and a 93% retention rate.

Find a yardstick to compare your customer retention rate with to see if it's adequate. You can utilize historical data to compare the present rate to previous rates, this will highlight patterns, or you can use industry-specific customer retention rates as metrics.

A Mixpanel survey indicated that for banking organizations, an eight-week retention rate of more than 25% was good enough for instance.

Customer Retention Strategies

In order to keep customer retention rates as high as possible, many businesses employ a variety of strategies -  I also advise merchants to use various customer retention solutions because the more approaches you utilize, the higher your chances of retaining customers. Of the strategies adopted by these businesses, here are the ones I found most effective ways to increase customer retention.

1. Let Customers Know How You’re Helping Them

Sometimes, most people will not know when you're doing a good job for customers. A retail grocery store for instance offering discounts on certain sales can summarize how much they're helping customers save at the bottom of the receipt. This discounted summary emphasizes your store's efforts to assist consumers in saving money. So when you're doing a good job for your customers, it's important that you communicate it

What you can do to meet customer expectations while you're just starting out is considerably limited. While you're at it, keep doing outreach to highlight these efforts as your business expands and you enhance how you address customer needs, whether it's extending store operation hours or new items and services. In all that you do, keep informing Customers of your growth efforts and how you're helping them

When customers see you making regular enhancements that benefit them, they become more devoted to your brand.

Useful Tips

  • Clarify Benefits - When communicating with customers, make careful to clarify the new benefits you're providing. Never take it for granted, and use the chance to explain why you're doing what you're doing.
  • Use the right communication channel - Create communication channels that work best for your business category. A face-to-face encounter with clients is ideal for a business-to-business (B2B) company, but if you sell consumer goods, email and other online platforms can work better for sending out announcements for most business categories.
  • Don’t market them - Avoid sounding like you're merely advertising your company. Your focus should be on how the organization is providing a better experience for customers.

2. Enhance customer experiences regularly

At every stage of your business, there will always be new ways to improve certain parts of your business.  Identify these areas by concentrating on ways to make your consumers' lives easier. 

Improving customer experience is one of the most crucial ways to retain consumers, and your products improvement, customer service and support, and operational procedures are all part of this.

When the industry standard was a week, Amazon, for instance, began offering two-day shipping. That may appear to be enough of a victory in and of itself, but Amazon didn't stop there.

Amazon incurred additional costs as a result of the shift, not only did it improved its customer retention rate, it also helped Amazon enhance its inventory turnover ratio, which increased revenues.

Your customer targets may appear complex at first. However, if you take tiny, incremental steps toward your goals, you'll be able to provide clients with exceptional experiences, increasing customer loyalty, and retention.

Useful Tips

  • Gap Analysis - A gap analysis is a versatile approach that may be used in any aspect of your business, from product enhancements to personnel resource requirements. You'll need a plan of action to get outcomes after you've identified areas for improvement, and gap analysis can provide this. Examine where you are now vs where you want to be, then devise a strategy to bridge the gap.
  • Map your customer’s journey - If a customer needs to complete numerous stages to make an online purchase, consider which procedures you can simplify or eliminate. In essence, create a customer journey map to help you understand how they interact with your business and look for places where customer convenience can be enhanced or where the customer experience is already unpleasant. The advantage of customer journey mapping is that you get a solid feel of what's causing friction by seeing customer interactions from their perspective.

3. Start a Customer Loyalty Program

A loyalty program is an excellent way to keep customers. It compensates your customers for doing business with you and encourages them to choose your company over competitors in the future.

When airlines give flier miles, for instance, consumers who use that airline for the majority of their trips receive a variety of benefits and discounts. And this in turn increases customer referrals.

The best part is, a loyalty program can be as simple as a punch card, in which customers make a designated number of purchases to get a free item.  Setting up a system where customers signup online and earn points through recorded purchases could be another way.

If you run an online store, an e-commerce platform like Shopify can help you set up a reward program using its third-party app connections.

Customize the terms of a loyalty program to fit your company's model and budget. To establish a program that provides value for your customers while retaining profitability for your organization, you'll need to figure out your customer lifetime value.

Useful Tips

  • Consider Partnerships - Few businesses have sufficient resources to provide numerous benefits on their own. Partnering with complementary companies to improve the range of services available at both companies is one solution. A toy store, for instance, could team up with a neighborhood ice cream shop to offer a special deal that draws visitors to both locations.
  • Keep Delivering Value - Ensure that the loyalty program provides value to customers. That can take a variety of forms, from members-only contests, exclusive discounts, or access to promotional items, and organizing events are examples of how a loyalty program adds value.

4. Get Customer Feedback

The impact of feedback cannot be overemphasized, especially in this digital age, where customers have many ways to provide feedback to businesses, many of which are open to the public. One example is social media, but there are also business directory sites like Yelp and popular multifunctional apps like Google Maps.

Developing a feedback system where customers can comment regularly on your product will aid product development and serve as testimonials to attract new customers

Since a customer can share a negative experience online feedback platform for all to see, a lack of response from you may cause potential customers to avoid doing business with you.

A prompt answer, on the other hand, builds trust and confidence in your business.

Proactively reach out to customers for their input, in addition to gathering and responding to customer feedback. That's something you should do regularly, but especially when making modifications to your products or services.

Useful Tips

  • Use Survey - Collect consumer feedback using surveys, which allow you to get feedback from a wide range of customers. Look for themes and areas where several clients have mentioned difficulties with your business in the survey data so you can fix them. Also, take note of where they are happiest so that those areas might be preserved.
  • Start a Focus Group - Establishing focus groups or a customer advisory board, where you may talk directly to clients in an open forum, is a way to create a feedback system. This qualitative feedback complements the customer data gathered by your customer management software, providing you with a complete picture of retention enhancement opportunities.

5. Instill Customer Relationship Culture in your Organization

Create a customer relationship management (CRM) culture throughout your company to boost customer retention. That means your organization as a whole should support principles emphasizing pleasant customer experiences and puts customer retention practices in place to help achieve that aim.

It should begin with the highest staff; they should serve as the principal advocate for instilling a CRM attitude throughout the organization. To give this strategy significance, the organization must set clear, quantifiable goals, like reducing customer inquiry turnaround time by 60% minimum.

Customer expectations are higher now than ever, so a CRM mindset is a must in today's competitive industry. As the first step in strengthening your company's CRM capabilities, develop a CRM plan. Determine what types of customer experiences you can provide that are compatible with your business model.

If you run an e-commerce business, for example, customer expectations can be a desire for free shipping. Find a means to provide it while remaining profitable, such as imposing a minimum order might help you.

Useful Tips

  • Use CRM Software - Set up and use CRM software as part of adopting CRM culture. There are various advantages to using CRM software. It gathers and organizes all customer information, including a history of consumer contacts with your company, so you can provide a consistent customer experience. It is your primary tool for conducting customer analytics. It also automates several time-consuming but crucial operations, such as scheduling and sending emails to your consumer base.
  • Use Customer Analytics - Use customer analytics to acquire insight into areas where customer experience can improve. Customer data analysis, such as determining which customers are the most profitable, aids in the identification of product enhancement opportunities, income potential, and marketing tactics.

6. Adopt Customer Relationship Marketing

Creating communication with consumers is an important part of increasing customer retention. This can be accomplished through the use of integrated marketing channels in an approach designed to increase retention rates called customer relationship marketing.

To improve customer loyalty and brand affinity entails forging strong customer relationships. It avoids the transactional aspect of traditional and many e-commerce marketing operations, which places a higher priority on increasing company income than improving the consumer experience.

Consider how your marketing plan may use customer outreach in a welcoming, non-intrusive, and spam-free manner. This can be accomplished by implementing inbound marketing strategies, which attract customers rather than trying to contact them through advertising.

Maintain relationships with your customers by reaching out to them frequently to remind them of your organization and its products. This must be done thoughtfully and in line with your brand's positioning.

Customers may unsubscribe if a retailer runs an aggressive e-commerce email marketing campaign.

Useful Tips

  • Reward Customers - Customers should be rewarded by receiving a discount on their next purchase or a free promotional opportunity, such as early access to your latest product. These incentives build customer loyalty and affection for your brand. You can also utilize this strategy to re-engage customers who haven't bought in a while.
  • Create Newsletter - Delivering a newsletter to clients regularly, reminding them of your organization, is a terrific approach to preserve customer ties. Customers should get value from the email instead of seeing it as a sales pitch, therefore it should include educational possibilities.

7. Let Customer Know What to Expect

Ensuring customers understand what they can expect from you, such as your return policy, refund policy, and others, are crucial to enhancing customer retention.

Customers forgive if you let them know what to expect and what you can accommodate, but they are not so forgiving if you fail to meet those expectations or pre-inform of the things you can accept.

If you offer free shipping on e-commerce purchases above $100, for example, make that apparent on your website before a customer adds a product to their cart.

Otherwise, consumers may select low-cost products only to be disappointed when shipping fees exceed the value of their chosen products, forcing them to abandon their purchase.

Useful Tips

  • Set Useful Expectations only - Ask your customers what information they need if you're unsure what those categories of information they need. Inform them only of the information about what you have to offer in areas that are important to them, such as how you handle returned items, refunds, or delivery time.
  • Communicate Expectations Early - Make it clear early enough to customers what you can deliver and when you can do it. That keeps them from making conclusions on their own and becoming frustrated later. If your response time to consumer inquiries is 48 hours, for example, make it clear on your website where customers can submit questions.


Amazon is a perfect case study that’s using the aforementioned strategies to retain customers. Through its Amazon Prime subscription service, Amazon has created a tremendous customer retention mechanism. Customers who enroll in this program receive several benefits, including faster shipment and free music and movie access.

Since you must register an account and log in to receive your benefits, Amazon can track your activity and behavior, allowing them to customize your shopping experience by using customer analytics for recommending products based on your previous purchases.

According to Consumer Intelligence Research Partners, these characteristics help Amazon retain customers at a rate of more than 90%.

Building up and implementing customer retention requires time.  Large organizations like Starbucks took years to evolve their retention programs to where they are today. You will need to track your progress, establish a set of metrics that align with the strategies you're using and your business model, such as e-commerce KPIs for a social commerce website.

These indicators can aid your retention rate and serve as your overarching customer retention metric. Truthfully, implementing these strategies will cost money, especially since you''' need to integrate apps into your online store that can cross-examine your customer activities and supply you metrics at a glance so you can focus on business growth.

My advice to startups and mid-level businesses looking to save instead of adopting multiple software is to adopt a single Subscription Management Solution like Chargezen that can supply you with deep-dive customer analytics and a snapshot of your business performance at a glance.

Chargezen is the most advanced vertically integrated cloud-based platform for managing Subscriptions and from CRMs, automation, accounting tools, invoicing, and tax management; Chargezen integrates with most of the apps you use and constantly adds support for more.

If you need help adopting this vertically integrated Shopify Subscription management solution, reach out to the Chargezen support team or write me at

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