Resource Page: Customer Retention

Customer Retention

What is customer retention?

Customer retention simply means keeping customers over a period of time. The longer they stay with the company, the better customer retention is. Low customer retention means more customers abandon your company. This is known as customer churn or attrition. In order to retain customers and reduce churn, you must create a customer retention process. 

What is a customer retention process?

A customer retention process is the method companies use to improve customer retention. The structure of a customer retention process consists of strategies that cover everything on the customer journey from onboarding to customer support. Your customer retention process should be divided into overall strategic goals, each containing a series of smaller tactical objectives. Use the SMART goal guide to inform your objectives and goals. 

When do customers become loyal?

Customers become loyal at different stages of the customer journey. To know when your customers become loyal you need to identify and measure certain behaviours using some form of CRM, substantial datasets, and specific metrics.  Consider retention rates, customer engagement at critical touch points in the customer journey, and certain commercially desirable behaviours such as referrals or brand advocacy. These will help you pinpoint the exact moment each customer becomes loyal. 

Customer expectations

Today consumers expect more from brands. Successful retention depends on consistently meeting your customers’ expectations. Personalised interactions, excellent customer service, and valuable experiences are just some of the typical features you can employ to meet and exceed consumer expectations.

Building trust & customer relationships

Over time customers come to expect their favourite brands to keep delivering great experiences. As a result, companies that consistently meet customer expectations, build trust, develop positive customer relationships, drive retention and satisfaction.  

The impact of customer satisfaction on retention

Customer satisfaction is essential for customer retention. The end result of overall satisfaction is felt more profoundly by customers when they directly benefit from excellent experiences. From quick deliveries, swift complaint resolutions, seamless usability, convenience and flexibility. Satisfied customers are happier and more receptive and willing to give feedback.

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Benefits of Customer Retention

Customer retention benefits businesses in several ways. It’s more cost effective than customer acquisition, builds loyalty and positive word-of-mouth marketing, and helps brands stand out from competitors. 

Costs less than acquisition

The cost-benefit of retention has shown time and again its financial viability against acquisition. Encouraging customer retention certainly requires investment but nothing like the money, time and resources expended on acquisition-focused models. Especially when considering ROI on acquisition and retention efforts. Acquisition converts leads to customers once, retention can give you a customer for life. 

Builds loyalty & referrals

Customer loyalty is the result of an effective retention strategy. The customer learns to trust the brand over time when they are consistently satisfied and delighted by great customer experiences (CX). Retained customers shift towards advocacy when trust is established. They feel more secure that the brand will validate their referrals, giving newcomers the same level of service and exceptional CX that made them loyal in the first place. 

Increases profit

Retained customers spend 31% more on average and are 50% more likely to buy other products than one-time customers. The value of retained customers compounds even more with those acquired through referrals, as advertisement spending isn’t required to attract them. Thus, limiting expenses and resulting in higher profit margins. 

Reduces customer churn

The techniques and methods used to retain customers naturally reduce churn. Retention strategies drive engagement, adhere to customer preferences, and rely on substantial data about customer behaviour to resonate with target audiences. We’ll take a deeper look into the strategies brands employ to drive retention and reduce customer churn later. 

Coincides with engagement

Customer retention strategies also lead to higher engagement. As companies implement methods of retaining customers, they build an overall more satisfying experience. Naturally, customers want to engage more with brands that delight them. 

This is particularly beneficial for B2B or any other companies with low purchase frequencies, as it’s in their interest to stay top of mind with customers between purchases. A combination of retention and engagement strategies  lead the way towards compelling purchase cycles that go far beyond transactions.

Helps brands stand out

Brands that make the effort to retain customers stand out more in industries that still overly rely on poor acquisition models. Consumers are actively searching for brands that value and appreciate them. Companies that supply this demand stand to gain more recognition in their respective markets. 

Learn more about the benefits of customer retention.

Customer Retention Strategies

Good practice is central for the development of effective customer retention strategies. Retention strategies should all contribute to a personalised, rewarding, seamless and convenient experience. Those that keeps customers engaged with the brand, consistently builds on their trust and continues to delight them, such as: 

  • Smooth onboarding 
  • Personalised experiences 
  • Feedback channels 
  • Omni-channel marketing 
  • Customer service 
  • Adoption of technology

Smooth onboarding

A smooth onboarding process is a great way of showing new customers what they can expect from a company. Positive first impressions are crucial for successful customer retention. When the onboarding stage is seamless and hassle-free, it instantly meets customer expectations, begins to build trust, and increases overall customer satisfaction with the brand.

Use data to personalise customer experience

An overwhelming majority of consumers willingly share their data for personalised experiences. Companies that offer personalised experiences see almost half of their customer base become repeat buyers. 

Customer relationship management systems (CRMs) are typically used for data collection. Of course, businesses should ask customers for their permission first, and clearly explain how their data will be used. 

Open feedback channels

Where personalisation makes customers feel seen, open feedback channels makes them feel heard. Feedback also gives companies valuable insights into how their customers feel towards the brand. Gathered information informs improvements, adjustments and when companies should double down on features that work.

A flexible approach of collecting feedback is best. There’s multiple methods of collecting customer feedback; from product feedback to customer satisfaction surveys. 

Use omni-channel experiences

Omnichannel experiences improve customer retention due to convenience, quick problem solving, and seamless customer services. Using a diverse collection of platforms to contact customers keeps them within reach even outside of the purchase cycle. Helping companies to stay front of mind and preventing loyal customers from missing out on special rewards and promotions.

Omnichannel support is just as much about the brand always being within reach of customers too. To successfully retain customers for the long term, they should never feel abandoned or stuck with problems.

Offer great customer services & support

Customer service must be seamless, attentive, and quickly resolve complaints and queries. However, in this age of digitalisation and automation, consumers expect brands to provide self-service options. People want to avoid waiting in  call queues and the inconvenience of being passed between departments. 

Self-service could be FAQs, community forums, and knowledge bases. Customers can interact with virtual assistants e.g., chatbots, to help them navigate your website to quickly find the answer to their query. Therefore, content must be clear and easy to understand and structured well for VAs to navigate with ease. 

Use tech

Implementing effective customer retention strategies required technological solutions. Software such as loyalty platforms, AI and ML, CRMS and databases. Without them, it’ll be harder to put a retention strategy together and track its performance. In fact, it’ll set you back from competitors taking advantage of smart solutions.

The right technical solutions are essentially tools that equip you to implement, track, adjust and continue to innovate your customer retention strategy. You should decide which tools you’ll use in the customer retention process.

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How to Measure Customer Retention

You need to know which key performance indicators (KPIs) to track and monitor in relation to your customer retention strategic goals and tactical objectives.

All metrics that track the progress and success of long term goals become KPIs. Here are some examples:

  • Customer Lifetime Value (CLV)
  • Customer Retention Rate (CRR)
  • Customer Churn Rate (CCR)
  • Revenue Churn
  • Existing Customer Growth Rate (ECGR)
  • Repeat Purchase Ration (RPR)
  • Product Return Rate (PRR)
  • Net Promoter Score (NPS)
  • Time Between Purchases

Customer lifetime value (CLV)

Customer lifetime value (CLV) measures the value of a customer over a specific period of time. CLV shows businesses how much they can earn from the average customer. 

Customer retention rate (CRR)

A customer retention rate measures the percentage of retained customers in the audience. It helps companies pinpoint what works and need improving in their retention strategy.

Customer churn rate (CCR)

Churn or attrition rate measures the rate at which customers stop doing business with a company over a period of time. This helps businesses pinpoint exactly where customers are dropping off in the buyer’s journey.

Revenue Churn

Measures the percentage of revenue lost as a result of churned customers. This metric gives companies insight into the financial impact of customer churn.

Existing Customer Growth Rate (ECGR)

ECGR measures the impact of retention strategies in your existing customer base. It tracks the growth of certain behaviours: repeat purchases, improved engagement and advocacy. This is a great metric that could be a KPI for a referral programme, to understand how quickly newly referred customers begin to demonstrate loyalty.

Repeat purchase ratio (RPR)

Repeat purchase rate helps companies measure the percentage of their customer base that typically purchases their products or services repeatedly. This gives insight into the quality of your products and also an idea of how well the overall shopping experience resonates with your customer base. 

Product Return Rate (PRR)

PRR informs lets you get a feel of how your customers feel towards your product or service. Every business will see returns from time to time. However, a PRR above 10% needs immediate attention before irreversible damage to the brand.

Having feedback channels is critical for understanding why someone has returned your product. Even if the PRR is below 10%. As it could be something as simple as not understanding how to use the product properly. Producing educational content in this instance for example, would ensure you keep these customers onboard.

Net promoter score

NPS helps you to understand how likely customers are to refer others to your brand. The survey has a scale of 0-10 with a simple question: “on a scale of 0-10, how likely are you to refer others to X”. Respondents are categorised into three groups depending on the number they choose: Detractors, Passives and Promoters.

Although this metric is focussed on referrals it still reveals insights into how current customers feel about your brand. Detractors should be followed up as it suggests they are close to churning. Similarly, passives might enjoy the product but find the experience lacklustre. Therefore, you’d need to implement retention strategies to insulate them against competitors. Remember to follow up with promoters too! It’s important to know why something resonates!

Time between purchases

This metrics is another great way for measuring possible declining customer interest. It looks into customer behaviours e.g., purchase patterns and overall engagement with the brand. It’s particularly useful for brands that offer seasonal products or B2B companies with longer sales cycles. As it may inform companies’ engagement-focussed retention strategies.

That said, it’s also a vital metric for companies that rely on high purchase frequency models. Especially if times between purchases grow longer. You’ll need to investigate the reasons why and adjust your retention strategies accordingly.

How to formulate

To learn how to formulate each of the metrics above please click “learn more” below.

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Customer Retention Marketing

Customer retention marketing should be a part of your retention process. Customer retention marketing plans allow companies to distribute retention strategies throughout the marketing funnel to maximum effect. For example, dedicated communities to inform leads at the awareness stage or reviewing customer feedback during the consideration stage. Marketing isn’t always focussed on acquiring new customers. More companies than ever realise true success is retaining loyal customers. It’s more cost effective, flexible and as we’ve already seen, even automates acquisition through word-of-mouth.

Customer advocacy programmes

Brands can leverage customer advocacy in a number of effective ways. There’s referral programmes, which incentivise brand champions to refer their friends, families, colleagues and even strangers online to your brand. In return, the brand rewards brand champions for advocacy, and welcomes new customers with a welcome gift. 

Companies can also branch out in other areas of customer advocacy such as launching campaigns with user-generated content. Brands often interweave video testimonials, online reviews, social media features and influencers into their marking. Customer education and onboarding

Customer education and onboarding

Education has already played a major part in the customer retention strategies of countless companies. This comes as no surprise since there’s more software products entering markets across sectors. Plus, customers of essential services such as financial services and insurance, want educational content to protect themselves during economic headwinds. 

Companies that fall short of producing education content will lose customers. As consumers today perceive that as a way for companies to hide agendas in the small print.

As products become more complex they need guides, comprehensive onboarding experiences, and general support at every stage of the customer journey.

Rewards and loyalty programmes

When it comes to retention,  it all starts with a great loyalty programme. People want to feel valued by the brands they use. There’s so much choice out there for customers these days, they can easily find alternatives to the brands that fail to court their loyalty. 

With a loyalty programme in place however, companies can consistently engage their customers with effective retention strategies. Tailoring them specifically to changing expectations, unique preferences and behaviours. Supported by data and a robust technical infrastructure, the loyalty programme can be used to advertise personalised and highly relevant rewards to the customer. Anywhere. Anytime.

Use emotional triggers

Loyalty programmes also allow you to use emotional triggers to maximum impact. You learn purchase habits and preferences with enough data pulled from a loyalty programme. Knowing this information lets you strike with the right reward offer at the perfect time. 

For example, offering a targeted discount on their favourite product on the anniversary they became a customer. Perhaps they redeem rewards from a particular restaurant in your partner network? In that case, you could negotiate a free course for brand advocates on their birthdays.

Upselling and cross-selling

Upselling and cross-selling should be part of your retention marketing. Especially if you’ve done the hard work of implementing strategies and tracking the right metrics. You should have clear indicators as to which customers are most likely to convert.

Identify the needs of your retained and loyal customers through feedback and surveys. Market to this segment in a personalised way. Avoid offering them just any old cross-sell or upsell. You want to offer them something based on their past behaviours; past purchases, their favourite type of products etc. 

Observe where they are in the customer journey, choose your time for maximum impact, and then make the benefit-led offer. 

Implement tiered customer service

Another great way to retain customers is to offer them service tiers. These tiers offer customers different standards of service depending on their spending, engagement, and loyalty. 

Brands that use this strategy must avoid alienating customers in lower tiers. Equally, there must be great benefits that incentivise customers to engage or spend more with the brand. It’s all about striking balance.

Brand partnerships

Consumers enjoy co-created value as they see it as being truly unique. Particularly when two brands that supply separate needs for a customer come together to offer a bundle of rewards. It makes rewards, benefits, and discounts highly relevant to the customer. 

Partners can leverage one another’s expertise, resources, personnel, and even audiences for maximum impact and exposure. Brands can reach previously unreachable audiences, build brand equity, and boost engagement through highly relevant rewards. All of which results in higher customer retention. 

Customer feedback and surveys

It takes understanding a customer to retain them. Brands that want to improve their customer retention identify the pain points, needs and preferences of their customers. A great way to do that is to give your customers a voice.

Letting customers air their complaints gives you incredible insights into possible flaws in your product or service. It might seem counterintuitive to give customers a forum to voice their complaints. But how else can you gather valuable insights for making your product or service even better? 

Customers will find somewhere online to share negative reviews. It’s better to give them a place to do so so you can engage with the customer. That way, you show others you’re on the ball, you listen to your customers, and take their feedback on board. 

Personalised recommendations

Your retention marketing will be more effective when you offer a product or aspect of your service that you know the customer will love. Personalised recommendations are the result of in-depth data analysis. 

You can learn your customers’ preferences from certain behaviours. Repeat purchases and what they’ve browsed on your website show you the products they enjoy and might be interested in. Therefore, you can base your recommendations from this data. 

There’s a higher chance that a customer will be more interested in a recommendation that feels personalised to their needs and preferences. When customers feel understood, like the brand they love truly knows them, it’s a powerful motivator to stay with said brand.

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Customer Retention by Industry

Some sectors simply “do” customer retention better. Sectors with higher customer retention rates (CRR) understand their customers needs and preferences. Whereas industries with low CRR are yet to catch up with shifting consumer expectations and the commercial benefits of customer retention that far outweigh acquisition-focussed models.

We looked at the average CRR of ten sectors, including: 1) Financial Services 2) Insurance Companies 3) Telecommunications 4) eCommerce Stores 5) Retail 6) SaaS 7) Hospitality, Travel & Restaurants 8) FinTech Companies 9) Membership Organisations 10) Utility Companies.


The financial sector sees some of the worst customer churn across all industries. The main reason is a lack of consumer trust. The sentiment of many consumers towards banks, lenders, and building societies is negative due to the current poor economic conditions. Many feel financial services providers are exploitative.

Yet, there are financial institutions restoring trust by switching to customer retention models that rewards loyalty, and looks after consumers through economic difficulties.


Although there’s more demand than ever for insurance products, customer satisfaction is at an all time low. The insurance industry has punished loyalty for decades.

In fact, the sector has operated in a way where customer churn was almost encouraged. As they understand that policyholders had only so many insurance providers available in the market. Sooner or later, the customer will cycle through them all and return.

Yet stricter regulations on price walking, shifting consumer expectations, more competitors on the market, and innovative alternatives, are forcing insurers to re-examine their approach towards customer loyalty.


Many argue telecommunication companies are too big to fail. That statement is partially true. As by the state of the CRR in the industry, telecommunications are yet to see more success in customer retention. Like the insurance industry, telecoms are notorious for dissatisfied customers. The main reason for this is poor customer service.

Surveys show the main reasons customers churn are: waiting too long on the phone; having to call more than once to speak to the right person; and interacting with untrained or unprofessional staff.

However, some telecommunication companies have implemented self-service to centralise customer service to the customers themselves. Giving them all the tools and resources to resolve queries, issues and complaints at their own pace.


Many eCommerce businesses simply struggle to put an effective customer retention strategy in place. Whilst poor CRR could be due to poor product quality, more often than not it’s down to lack of customer retention marketing.

However, some eCommerce businesses have taken small but transformative steps toward better customer retention, crafting a compelling point of difference in a sea of competitors.


The majority of retail shoppers are known as switchers. They’ll happily shop with competitors to get their hands on a particular product or item. It’s for this reason that some marketers believe retail companies should focus on market-growth strategies instead of nurturing loyalty. Therefore, optimising brand exposure at the consideration stage of the customer journey.

Yet, customer expectations and the way they shop has changed. Customers want better shopping experiences and tend to shop online. A customer retention strategy can grab the attention of customers online with exceptional marketing and cause a buzz with exciting rewards schemes.

Loyalty programmes can eventually offer retail customers personalised, targeted discounts. Rather than taking a chance of stocking the latest hot trend, your product choices are informed by the needs and preferences of your customer base. Plus, successful customer retention often results in referrals. Meaning retention efforts and market-growth models need not be exclusive to one another.


SaaS companies see some of the most impressive CRR across all industries. Of course, much of this success could be due to the subscription-based models typically seen in the industry.

There’s lots of SaaS solutions out there vying to be the number one go-to brand for specific problems. In order to retain customers, you need to clearly communicate what makes your SaaS unique and better than the rest.

Hospitality, Travel & Restaurants

This sector is currently struggling with customer retention as most consumers are tightening their purse string. Less spending power means customers must prioritise essential goods vs luxuries. However, tough times will pass, and there’s still higher income demographics that travel and hospitality companies can appeal to.

There’s a few examples of businesses in this sector using co-created value to great effect. Helping consumers with tighter budgets save for much needed holidays with packages that include discounts on hotels and eating out.

Similarly, high ticket customers enjoy unique, highly relevant valuable rewards. Prestigious airlines often partner with luxury hotels and fine dine restaurants to give customers an unmatched quality in both service and experience. Successful customer retention often finds its origins in a brand’s ability to consistently delight customers.


Fintech companies have revolutionised the way we manage our finances. As innovative alternatives on the market, you would expect their CRR to outperform the traditional financial services sector. However, The 30-day Churn is a very real dilemma for some FinTech companies. This is when customers abandon the company after a 30-day free trial.

A portion of this churned demographic could be opportunists. Equally, it could be an indication of low engagement tactics employed within the overall retention strategy. FinTech companies are trying to cut churn by implementing gamified elements to their services.

Membership Organisations

Membership organisations connect members in a particular industry, interest, mission or profession. They have a high CRR compared to other industries in this list. This is due to the values, interests and ethics of customers being at the centre of why the membership organisation operates.

Aligning your brand this way will initially acquire customers, as they’ll want to be associated with organisations that appeal to them. To retain them as a member of the organisation is a whole different ball game.

The strategies vary depending on the type of organisation but typical strategies include: co-created, highly relevant rewards and access to exclusive resources and networking opportunities for career development.


Utility companies also enjoy a high CRR. This is due to their 12 month minimum contract models. Many customers are currently sticking with their providers even after their contract expires. Mainly due to the cost-of-living crisis as energy costs offset by governmental contributions are extended to existing customers only.

There’s so much more utility companies can achieve with better retention strategies. As evidenced by smaller providers who are leading the way in innovative loyalty nurturing strategies. Setting up generous retention programmes that reward energy points to brand advocates and newcomers. Plus, providing tools, tips and techniques for saving on energy costs.



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