The 4 Most Important Customer Retention Techniques You Need To Apply

Written by Franco Varriano.

Growth: you can’t get enough. You work on getting more growth for your business every day by focusing on acquiring new customers, marketing to them, and making as many sales.

But there is a problem on focusing only on growth. In chasing new customers, encouraging referrals, and being as clever as you can with your promotions, you might forget one thing: retaining your customers.

For a business to be healthy and have long-term resilience, it has to work on encouraging loyalty with its existing customers. Not only will this create more revenue for your store, it will lead to higher customer satisfaction, better brand reputation, and more referrals.

In this article we’ll discuss a few customer retention strategies, why they’re important, and why they work. This post will be different from our usual format. Instead of breaking down examples, we’ll look at a few key principles behind keeping your customers satisfied and building loyalty, thus reducing your churn rate.

But first, let’s dig into why the health of your business depends on retaining customers.

Why Is Customer Retention Important?

Customer Lifetime Value

Why should you focus on retaining your customers? There are many things you need to be keeping tabs on as a business owner. You’ve got orders to fulfill, suppliers to follow up with, products to design, and a customer acquisition strategy to improve, just to name a few important things. So why spend effort on retaining your customers?

The answer lies in one simple term: customer lifetime value (CLV.) The customer lifetime value, (sometimes called lifetime customer value, or simply life-time value,) is a prediction of the profits you can make from your entire future relationship with a customer. Not only does it help drive marketing decisions, (if you knew over 3 years you would make $6000 from a customer would you hesitate in spending $100 to get that customer?) but it also helps you make decisions that improve the long-term health of your business, instead of focusing on short-term profits.

It can be a bit confusing to calculate your customer lifetime value, but what you want to look at is how long a customer stays with you, how much they buy from you over that duration, the rate of customers who purchase from you again (your customer retention rate,) and the costs to acquire that customer.

To increase your CLV you can improve any of these variables.

This is intuitive: if you can retain your customers for longer, then you can steadily grow your business and have more predictable revenue. It allows you to justify investing more in your marketing spend. If for $100 in advertising you only make $50 back, it might seem like a loss if you look at the short-term return on investment. However, if you know that 50% of customers are likely to spend $6,000 over the course of 5 years with you, then suddenly that $100 spend in advertising becomes a bargain.

It’s an Easy Win

Increasing your customer retention rate, or lowering your rate of churn, is a very easy win for your business.

A study by the Harvard Business School concluded that increasing customer retention by just 5% can increase your profits by 25-95%.

5%. How hard would it be for you to convince 5% more of your customers to do business with you repeatedly?

Not too hard. Definitely easier than convincing a brand new person to purchase from your business.

It’s Something Your Competitors Are Not Focusing On


Your competition is likely not working on retention, which means you can get an edge over them in a very profitable way. Even with money to be made, 70% of Chief Marketing Officers didn’t list retention as a chief priority in their marketing objectives, as reported by BIA/Kelsey.

Investing in a little bit of customer service, or implementing a customer loyalty program, or putting into action the strategies we’re going to show in this article, could help you stand out and beat the competition. It’s an easy win in an industry that’s fast running out of low-hanging fruit.

New Customers Are Expensive

You already know your customer acquisition costs: how much you need to spend to convert new customers. Why waste all of the time and money you’ve invested in capturing that customer? Why not work as hard as possible to retain them and reap the rewards from your efforts?

While there is no data backing up the adage that it takes 7x the resources to sell to a new customer than a current customer, it is a good rule of thumb to hold in mind. It definitely costs you more to market to a new customer than an existing customer and failing to invest in retaining your customers is essentially throwing money away.

4 Customer Retention Strategies

We’re going to highlight 4 principles behind effective customer retention strategies. We’ll describe them, how and why they work, and prompt you to come up with some ideas of your own.

Let’s get started.

1. Find Out Why Customers Stopped Buying from You

The first place to begin is to find out why your customers are leaving you. Why did they stop purchasing from you?

According to the marketing firm CTS, 82% of US consumers said they left a company due to poor customer service.

Yet that isn’t where the story ends, it’s not just poor customer service that might be making your customers leave you. It might be something deeper.

In a study published in BT Technology Journal in 2000, researchers found that 68% of customers stopped doing business with a company as they felt the company didn’t care about them.

It’s not just a poor customer experience that’s making customers leave, but a general feeling that they aren’t valued. This can come across not just in customer service, but in the entire customer experience. How could you avoid this?

A simple way would be to ask your customers.

A simple 3 line email that Groove HQ sent to newly lost customers that had a response rate of 19% and the founder says helped improve retention.

This serves three purposes:

  • By collecting customer feedback, you show that you value them.
  • You demonstrate that you noticed that they left, and that you’re going the extra mile to try and win them back.
  • It gives you valuable insight you can use to improve your business and retain more future customers.



Getting criticism can be hard, but it’s a necessary step to improve your business. Not all criticism you can get will be constructive, but you might get a nugget which makes your store better for your customers.

By using the email above, the founder of Groove HQ shared that open-ended exit surveys allowed them to “make a lot of positive changes and fixes to Groove” which improved a host of business metrics, one of which was customer retention.

Show your customers you care by collecting feedback, and then act on that feedback. You might get some dramatic results.


2. Build A Communication Calendar

Marketing Wizdom found that, on average, 20% of customers are lost due to the lack of a cordial relationship between the customer and the business.

If you want to keep your customers, you need to have a rapport with them, and the only way to do that is by communicating with them.

Just as in life, there is an art to building relationships via correspondence. You don’t want to overstay your welcome in their inbox, nor do you want to become a pushy salesman. There are two ways you can message your customers that will start to nurture a friendly rapport.

Surprise Them

Everyone likes surprises. We like surprise gifts, or unexpected moments of generosity. Whether it’s an unexpected visit from a loved one, or a friend unexpectedly buying you a book, surprises delight us and tighten our relationships.

The delight in surprises seems to be embedded deeply into our psyche. As PsychologyToday puts it, “we are designed to be delighted by novelty.”

Surprising and delighting your customers in ecommerce is also effective. In a survey by LoyaltyOne in 2015, 95% of consumers confirmed that being ‘surprise[d] and delight[ed]’ boosted their loyalty and perception of the brand. More than 50% shared the experience with their family and friends, and 34% stated they gave the brand more business as a result. 

Larger brands are investing in this phenomenon, MasterCard’s “Priceless” advertising campaign has been running for years and is synonymous with the brand itself. However, in 2015 they launched a surprise-and-delight program called “Priceless Surprises”, where MasterCard connected with members on social media to give them extravagant gifts and prizes, such as meeting Justin Timberlake or VIP tickets to the Grammy Awards.

What can you do to surprise and delight your customers? Perhaps an unexpected handwritten note with one of their orders? Or a free gift when they’ve been a customer for one year? Think outside the box. Defy your customer’s expectations and make their day a little bit better with a novel experience.

Educate Them


To maintain a cordial relationship, it’s important to constantly communicate with your customers; businesses that contacted their clients more than 10 times a year were 300% more profitable than those that had less contact.

Educating your customers on something they don’t know, and which they perceive you to be the expert on, is a great way to maintain lines of communication.

Canva does a great job of this with their Canva Design School.

Over at their site you can learn a few design tips and engage in interactive tutorials that will make you a better designer. Not only does this help users, it increases engagement with their tool. As a result of their Design School, Canva now gets over a million visitors a month, with a significant number of those people using their application.

While an online school for your product might seem a bit much, you could gradually create content which educates customers on your industry or product. If you sell denim, educate your customers on how to properly care for jeans. You could use content to make your customers more discerning buyers or teach them how to use your product, thereby making them more amenable to your brand and your offers.

3. Personalize

We’ve talked about the importance of personalization several times here at Rare, and the important of segmenting your audience for many, many reasons. We won’t repeat ourselves here.

You already know the value of personalization and its powers of retention. If you go to a café and the barista already knew what you were going to order and had started preparing it before you got to the till you’re more likely to go again. That café has just retained you as a customer.

Personalization isn’t just using customer’s first name. It’s 2018, in the age of big data you can do a lot more. If they’ve purchased from you before, you have a treasure trove of personalized data on them. Why not send them a newsletter of personalized product recommendations? Or an offer tailored to them on their birthday?

The more personalized your message, the more your customers will feel special, and the more likely you are to retain them.

4. Speedy Customer Service


Remember earlier in the article when we said that 82% of consumers said they left a brand because of poor customer service? 55% of those who left said it was because of issues not being resolved quickly enough.

If you don’t resolve a customer dispute quickly it can escalate. A minor annoyance can inflate to the customer becoming hostile and submitting a chargeback through Shopify or Paypal. By not responding to customer complaints quick enough, you are signaling to your customers that you don’t value them, and they will vote with their feet and leave your brand.

How can you fix this?

Respond to customer complaints or problems in a fast fashion. Have a rock-solid customer support system, invest in a customer ticketing system, hire support staff and put a phone number on all your correspondence. Finally, do what brands are increasingly doing these days and responding to issues that crop up on social media quickly. After all, if a CEO of two different billion dollar companies can find the time to personally respond to customer complaint issues, so can you.

Your Turn

In this article, we focused on principles instead of takeaways, on strategies instead of tactics, because how you retain customers will be uniquely tailored to your business. Chances are that what differentiates your business in the marketplace and becomes a big part of your brand identity, will be closely linked to how you retain customers.

McDonald’s retain customers with their fast service, Apple with their beautiful UX, and Google with their entire search ecosystem. What will you do to encourage customer loyalty?

When coming up with your own customer retention strategy try and:

  1. Actively solicit feedback from customers who are about to leave.
  2. Engage in meaningful communication that creates a cordial customer relationship
  3. Personalize your correspondence
  4. Have quick and amazing customer service.

Focus on these, and you’ll be sure to come up with a few ideas for your own store. Remember, just improving your customer retention rate by 5% can boost your profits by 25% or more.

And if you’re one of the thousands of merchants who are already using Rare’s Smart Email Marketing software and want to see how our Customer Success Team can work with your brand to grow your revenue – feel free to book a call at your convenience here.

Want More Email Marketing Insights - Specifically Designed to Help You Grow Your Online Store?

Sign-up for the Newsletter to get exclusive insights, tactics, and proven strategies from Top Ecommerce Experts that we don't publish here:

Get proven ecommerce tactics & strategies from real ecommerce entrepreneurs!

Get proven ecommerce tactics & strategies from real ecommerce entrepreneurs!