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All You Need To Know About Customer Retention – The Ultimate Guide

Mathew Maniyamkott

27 January 2020

10 min read

Your customers are your most valuable asset, especially if you are a small company. Growing your customer base will always be one of the most important objectives in every stand-up meeting. Businesses spend thousands of dollars on lead generation so that they can welcome new customers into their fold. But if you have a leaky bucket where you lose your existing customers to your competitors, then it is a bigger loss to you that needs careful evaluation.

Retaining clients is simple. Keep them happy. But there is more to it than you could possibly imagine. Why? Because there are plenty of options for your customers and a small slip from your side can make them leave you. This is why you need to have a customer retention plan in place.

The importance of customer retention cannot be explained in one or two sentences. But it’s certain that having a loyal base of customers who are happy to rally around you is the best thing that you can possibly have for your brand. Hence, the SurveySparrow team has put together a beginner’s guide on customer retention for you.

A happy loyal base of customers is the best thing that you can possibly have for your brand.

What is customer retention?

The ability to keep your customers doing business with you for the long term is called customer retention. If you are looking to stay in business for a long time, then you need to focus on retaining customers.

Why should you retain your customers?

You have various benefits by following well-defined customer retention strategies. Here are some of the reasons why retaining your customers is possibly the best thing to do for your organization.

Saves money

Losing existing customers in the hope that you will get new ones can be a bad decision because you have to spend 4-5x times if you were to get a new one versus keeping the latter happy. If your existing customers are happy with you, it might even be easy for you to upsell and cross-sell your products, which means more profit.


If you have customers who are happy with what you do and what you offer, they would be more than happy to buy new products from you. They would even be willing to pay a premium. Loyal customers are the ones that will spread the word about you and bring in more customers for you.

Retained customers will provide feedback

Customers that you manage to retain are more likely to provide you with valuable feedback. In fact, if you happen to take action based on the feedback that you get, they are more likely to be loyal to you. These customers who have stayed with you for a long time will also be familiar with the areas that need improvement.

Ask them a simple question-” How can I serve you better?” You would get bombarded with answers that will help your business big time.

If you are looking to stay in business for a long time, then you need to focus on retaining customers. 

Old customers pay a premium

Do you know that your old customers are ready to pay a premium for your offering if you have kept them satisfied? Your long-time customers value your business and are often happy to pay a premium because they know that they wouldn’t regret the decision because of their previous experience with you.

Easy word-of-mouth

There is no denying the fact that word-of-mouth is the best type of marketing that you can get. Your most loyal and happy customers are the ones who will do it for free. These are customers who have stayed with you for a long time and every time you launch a new product, they are more than happy to open their purse strings. These customers are vocal about the excellent service you provide and want their friends and family to experience the same.

Reduces your marketing budget

When you have your old customers paying more for their present service as well as new products that you launch, you are better of winning their trust for the future rather than going full-throttle on acquiring new customers. You can adjust your marketing budget based on this. Concentrate more on teaching your customers how they can get the most benefit from working with you.

Customer Retention Formula

If you are a product manager or a business owner, you need to know your customer retention rate. Knowing the number will help you measure your retention correctly, track your progress, and you will have something to benchmark your future goals.

Customer Retention Rate = Number of customers at the end of a period / Total number of customers. 

You should define the period clearly. It could be 3 months, 6 months or a year.

Once you are aware of your churn rate, then you should take a look at the customers who churned. Find out if all of them churned because of the same reason, if not, then why did they stop doing business with you. See if you can get them to participate in a survey. Understand why they left and if it is because of mistakes that happened from your side, then ensure that it doesn’t happen again.

What are the best Customer Retention Strategies?

Once you are aware of your customer retention rate, now is the time for you to find ways to improve your customer retention rate. It is an important metric for your business as it measures your success in driving new customers as well as how satisfied you keep your existing customers. Retaining your customers can bring in a huge ROI for your business.

Here are some customer retention strategies that all businesses should employ:

#1 Set clear expectations

Setting expectations and communicating them clearly with your customers is a big deal. It is a make or break thing. If you don’t communicate it clearly, they would be of the assumption that they were to expect something else completely different which you wouldn’t have thought about offering at all. You need to tell your customers that they can expect results in so many weeks, the work that you would do to get them, expectations from the client, and so on.

Let your clients understand your point of view, milestones and the dates for each of them, appraise them of your progress towards the goal, what does the project entail, what they can expect from you, and so on. All of this will keep your customers happy.

The smallest of things that you do for your customer is an indication of how much you value them.

#2 Engage with customers

Don’t stop engaging with your customers once they are on board. In fact, it is a great time for you to deepen your relationship with the customer. Make your customers try out each of the features available on your app. Whenever they reach a new milestone on your product, make it a point to celebrate it. Write email copies for each little step that they take and send it to your customers.

Make it a point to tell them where they could get more value from you. You can also create a community of your users on a platform like Facebook, LinkedIn or your own app. It will not only help with your brand building, but it will be a fantastic force for your customers to engage with you.

#3 Treat your special customers differently

While it is common wisdom that you should treat all your customers equally, there is a catch to it. Not all of your customers would use your product to the best. If you have customers who have been getting consistent value from you over a long period, it is imperative that you need to give them more attention. The extra attention is not only to ensure that they don’t move to a competitor, but you can also use them as an example as a validation of sorts for other customers.

They will have a lot to talk about your business. Talking to them regularly will help you unearth new ways your product could be used, even something that you would not have noticed. Get their feedback regularly with the online survey tools like SurveySparrow.

#4 Delight your customers

Who doesn’t love surprises? Certainly, your customers would love to be the recipient of surprises. It doesn’t have to cost a bomb nor should it be something that everyone usually expects. Even something as simple as a handwritten note can be special to your customer. The smallest of things that you do for your customer is an indication of how much you value them. If you want your customers to stay with you, then you should do things that most companies don’t.

Surprises keep your customers motivated. Each surprise that you do tells how much you appreciate their business. Your customers will associate you with being happy when they get a surprise from you. Customers will be more than happy to fill the feedback form or pass a comment about your product on a social networking site, something that they might not have done earlier. 61% of customers say that the best way to engage them is through surprise offers or gifts.

#5 Set up a loyalty reward program

Don’t you think that your most loyal customers should be rewarded? In fact, a report by BRP consulting says that 68% of customers say that they would shop at a brand which has a loyalty program. Heard of the Pareto Principle? It states that (in business terms), 20% of your customers will give you 80% of the revenue and vice versa. Who is that 20% for you? You need to find them and draft a loyalty program that will incentivize them to spread the word about you and stay longer. Create a program where it is easy for your existing customers to sign up as a loyalty partner. State the information clearly so that they aren’t confused about the rewards. Get customer feedback so that you can incorporate any changes if required.

You can collect customer feedback to find their opinion about your brand.

#6 Create a roadmap for the future

It is easy for a customer-company relationship to become boring, uninspiring and demotivating. It is pivotal that you draw a roadmap for the future. This will not only improve your bottom line, but your customers will also be assured of the fact that you care about their interests. Your team should be given the freedom to be as creative as possible so that the plan you create resonates with your customer. Create a plan that keeps both the parties excited about the future of the relationship.

#7 Collect regular feedback

This will be one of the most important things that you need to do on a regular basis, not only to improve your retention rate but also to be abreast of what your customers think about your product. Feedback is also a great way for you to understand why your customers left you for your competitor. It will help you understand what’s wrong with the onboarding process. Ask your customers about the different areas where you can improve. You can unearth gems with the help of feedback from customers. Each time you make a change based on the feedback given by your customers, you will become a brand that customers love and admire.

With feedback, you can identify the various issues that your customers have. It would have been impossible to know them without sending emails asking for feedback.

#8 Personalization

It isn’t a trend that will go off soon. Customers want things that are personalized to their likes and dislikes. If you can personalize a process or product that is difficult for your competitors to reproduce, then you are gold. Your customers will be more than happy to do business with you. Add a recommendation engine on top of your offering which you have already personalized, your customers would be coming back for me. It is a win-win for everybody involved. Research says that customers who experience personalization are known to be satisfied customers and stick around with the business for a longer time.

#9 Gamification

Adding a gaming environment to your customers during the purchase or usage process is known to increase customer satisfaction because you are making the process more fun. When you create a gamification program, the rewards are not redeemable in real life, but the entire process is a reward in itself for the customer.

#10 Collect behavioural data

Analyze the shopping patterns of your customers to predict how it would pan out in the future. It helps you understand them so that you can send them offers that they will be able to resonate with. Understand the browsing patterns of your customers, it will give you a clear idea of who your customer is and what they usually like. By understanding these things, you need to create a strategy that will make your customer keep coming to you often.

#11 Use automation

There is a lot of noise about automation these days and how it helps with your marketing. With automation, you can send reminders to your customers, ask them to take action, send more information about your products, and much more. All you need to do is find the right tool to market your product.

Marketing automation is extremely useful because there are a lot of things that a business should do on repeat making it impossible to keep up because the minutes add up and it is time-consuming. With automation, you can clearly be ahead of your customers. Re-engage with your customers through marketing automation. Remember, communication is everything.

Over delivery is not an expectation, but it can delight the customer like no other because they aren’t expecting it at all.

#12 Under-promise and over-deliver

Your customers don’t expect the moon from you. All they care is getting what they paid for. They would not be expecting you to over-deliver, but they would be thrilled if you do so. Also, do not let them down by not sticking to their expectations, that can have serious repercussions to your relationship. Over delivery is not an expectation, but it can delight the customer like no other because they aren’t expecting it at all.

#13 Keep a record

In other words, use a CRM tool to record all the conversations you have with the customers. Notes from emails, phone calls, preferences, special requests, etc. When you have so much data about your customers, it becomes easy for you to give the best to your customers. Your team will be able to connect the dots without a worry in the world, even if it is a new employee who is taking care of the customer. If possible, get on a discovery call with the customer during the onboarding process to understand everything about them. You can use this information to give excellent customer service to your customers.


Ready to create a customer retention program for your customers? We are hoping that’s the decision that you took after going through this article in its entirety. Use the 13 customer retention strategies above to get a headstart on improving your retention rate. Having a good customer retention rate is an indicator of how well you are treating your existing customers. Ensure that you understand the importance of customer retention rate and work towards keeping the number reasonable.

Spend time on retaining your existing customers. The ROI for the same is higher than what you achieve by getting new customers. Stop sending thousands of dollars on generating incoming leads if you have a leaky bucket in the form of existing customers who are leaving you every day. If you see an exodus of customers leaving your business, it might be too late. Don’t let that happen. Start a customer retention program now.

Mathew Maniyamkott

Guest Blogger at SurveySparrow

Regular contributor to various magazines. Passionate about entrepreneurship, startups, marketing, and productivity.

Everything about delighting customers.
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