Throughout my marketing career, I have yet to meet a business owner who wasn’t constantly looking for ways to grow and retain their customer base. Retention, in particular, is often of heightened importance — especially since the probability of selling to an existing customer is 60-70% compared to the 5-20% chance of selling to a new prospect.
I once worked with a small business whose growth had been stalled for several months despite having a highly demanded product and an ambitious and capable team behind it. The problem? The company lacked a comprehensive understanding of its customer base, leaving many of its marketing and sales initiatives without a clearly defined target.
This problem is more common than you might think, and today, many companies still struggle to find impactful ways to acquire and retain new customers.
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In this post, I’ll explain exactly what a customer base is and provide tips and insights on how your company can grow and retain its existing one.
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What Is a Customer Base?
Your customer base is the group of people who repeatedly buy your company's products or use your organization's services. These customers frequently engage with your business and provide the most financial value to your company. Depending on the industry, your customer base can be a specific group, or a target audience based on a buyer persona.
Put simply, these are the customers who frequently buy your products and rely on your company to address their needs and achieve their goals, and being able to identify your unique customer base is the first step to optimizing your relationship through enhanced marketing, sales, and customer service processes.
Importantly, your customer base will often consist of various types of customers, each with their own unique behaviors, personalities, and preferences. Here are some of the most common customer types and best practices for engaging them.
1. Loyal Customers
Loyal customers are those who have been consistently purchasing your products or services over time. These are the people who have come to truly love your brand and are the most likely to openly share their positive experiences with others.
Naturally, it’s critical to remain focused on this group of customers and maintain their satisfaction. In addition to consistently improving the quality of your products and services, consider introducing a loyalty program that rewards these customers for their repeat purchases.
For example, Sephora’s Beauty Insider program provides loyal customers with rewards points for every purchase, as well as other perks such as annual birthday gifts and free shipping.
2. New Customers
New customers are those who have only recently made a purchase with your business.
To convert new customers into recurring or loyal customers, a great strategy is to ensure they’re provided with all the resources needed to have success with your products and services.
If you’re a product-based business, you can include comprehensive, easy-to-understand manuals for how to use your products with each purchase. If you’re a service-based business, the best approach is to create personalized onboarding experiences that help support the implementation of your services based on each new customer’s individual needs.
3. Potential Customers
While not technically customers yet, it’s important to pay close attention to potential buyers who will likely still be investigating whether your products and services are right for their needs.
One way to reel in potential customers is to create freemium offers that allow them to test your product for themselves before committing to a purchase.
4. Bargain/Discount Customers
Bargain/discount customers are neither new nor loyal, but rather tend to explore your products and make purchases only when you’re having a sale or offering a promotion.
Personally, I’ve found that it’s important not to waste too much time or resources on this customer base, as there’s a good chance that they’ll turn around and do business with a competitor if the discount is more attractive.
In addition to the above customer types, within your customer base is a subset of customers referred to as your installed customer base. These customers are at a specific point in the customer journey that differentiates them from the rest of the people in your customer base.
Customer Base vs. Installed Base
The installed base refers to the group of customers within your customer base who are actively using your products. Unlike the customer base, this group excludes people who have not recently made a purchase or are not engaging with your business's offers. Identifying these customers will help your company provide timely service to improve retention.
For example, HubSpot's customer base would be anyone who has purchased or used one of our free or premium tools.
However, HubSpot’s installed base would exclusively consist of those who have integrated our products into their day-to-day workflows. When we zero in on this particular segment of active users, we’re much better equipped to meet their unique needs through personalized marketing, sales, and customer service offerings.
Importantly, while lead acquisition is a necessary component in growing your customer base, your installed base will require strategies that focus more on retention. To ensure the growth and satisfaction of both your installed base and customer base, the key is to strike a careful balance between your lead acquisition and customer retention efforts.
Now that I have highlighted various customer types and explained the difference between your customer base and installed base, you're probably wondering how to build, grow, and retain one. Let’s find out.
How to Build a Customer Base
Throughout the years, I have had the privilege of working with business leaders across industries who understand not only the skill, but also the art of building a customer base from the ground up.
Here are just a few simple yet effective strategies I’ve encountered that can help you start building your own loyal customer base.
1. Build brand awareness on social media.
Social media offers you a low-cost or inexpensive way to spread the word about your business and start building your customer base.
You can quickly form connections with your audience on platforms such as Facebook, LinkedIn, and Instagram, and even run giveaways to attract more people.
2. Partner with other businesses.
If you’re a relatively new business with a barely existing customer base, partnering with other businesses is one sure way to build your customer base.
To make the partnership work, you need to offer something valuable in exchange for the wider customer base you’re trying to tap into.
For instance, if you sell portable cameras, you can run a co-marketing campaign with an outdoor or fitness brand to help their customers capture their outdoor adventures, hikes, or workouts.
3. Run email marketing campaigns.
Email remains one of the most effective ways businesses can start building their customer base. Unlike social media, the people on your email list are already interested in your products and services.
So create email marketing campaigns that help you nurture these leads until they become customers.
Pro tip: You can also track key customer service metrics to help you grow your customer base. Use this free calculator as a place to start.
Now that I’ve highlighted a few essential marketing and sales strategies for building a customer base, let’s dive deeper and explore how to take your new customer base to the next level.
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- Customer Acquisition Cost
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How to Grow Your Customer Base
While marketing and sales teams play a significant role in attracting and engaging your customers, in my view it’s the delightful customer experience created by customer service teams that allows businesses to continuously grow customer bases. This effort keeps buyers hooked, maximizing repeat purchases and creating opportunities for upselling and cross-selling.
On that note, I’d like to share a variety of effective tactics I’ve seen used to help your customer service team grow and retain your customer base into the future.
1. Provide excellent customer service.
Unfortunately, many companies today fail to deliver exceptional customer service despite it being increasingly crucial to growth and retention. In fact, 73% of Americans in 2023 said they would potentially stop doing business with a company after just one negative experience.
Put simply, customers expect perfection, and the slightest misstep can have even the most loyal of your customer base headed for the door.
In my experience, the best place to start when addressing this issue is simply changing your mindset. Rather than viewing the need to interact with unhappy customers as a burden, it should be seen as an opportunity to grow your customer base by improving their experiences. And one easy way to do this is to simply provide faster, more accommodating responses to customer complaints and inquiries.
After all, customer service also greatly influences customer retention, to the point that up to 93% of customers are likely to make repeat purchases with a company that provides excellent support.
2. Encourage customer advocacy.
It can be challenging to attract new customers to your business, especially when they've never heard of your product or service.
In addition, customers are skeptical of advertisements, and most won't be swayed solely by your marketing efforts. Instead, they need to feel confident your company is aligned with and invested in their goals.
One of the best ways to build trust with new leads is to leverage your customer advocates. These customer advocates provide referrals and testimonials that improve your brand's credibility.
BrightLocal research for 2024 shows that 50% of consumers trust online consumer reviews as much as personal recommendations — and that number is increasing. So, even if your customer advocates aren't directly referring new leads, encouraging and publicizing their feedback will help make your company appear more trustworthy.
3. Create freemium offers.
Freemium offers are a great way to grab the attention of potential leads. With a freemium offer, companies give away something of value for free in exchange for customer information. The item given away can be as simple as a PDF download or more interactive, like a free prototype software.
For example, HubSpot offers a freemium version of its Marketing Hub, Sales Hub, Service Hub, Content Hub, and other components of its platform. Users don't have to pay to use these tools, but they do have to supply an email address and create a HubSpot account.
This way, customers can get a taste of how useful HubSpot tools can be for their business. Then, HubSpot can analyze the product usage reports for these users and craft personalized customer service and sales offers based on the tools they use most.
4. Implement a referral program.
Existing customers are an excellent resource to leverage when building your customer base. They can act as an effective marketing method by using word of mouth and providing credibility to your brand. To incentivize existing customers to refer your brand to family and friends, try offering:
- Discounts
- Exclusive access to new products or a free gift
- Upgrade their current plan
Some programs offer both a discount to the existing customer as a thank you and one to the referred customer as a welcome gift. If you decide to go the discount route, make sure that it’s not such a deep discount that referrals start affecting your bottom line.
5. Adopt customer service tools.
As you accumulate more customers, your customer service team must adapt to handle the increase in customer demand. One option your business has is to hire more reps to field service requests.
However, this route is less desirable because it's expensive and time-consuming to complete. Instead, you can use a tool like Service Hub to expand the bandwidth of your customer service team without hiring new employees.
One tool you can integrate into your customer service team is a help desk. A help desk is a platform that hosts a variety of helpful customer service tools, like a knowledge base, a ticketing system, and a shared inbox.
These tools automatically organize and distribute incoming service requests, making it easier for reps to manage their open cases. Instead of having to keep track of what they‘re working on, customer service tools optimize your reps’ workflow and free up time for them to take more cases each day.
6. Collect customer feedback.
If you're running out of ideas for how to attract new customers, look at your customer feedback.
Positive feedback tells you what you're doing well and what you should boast about to new leads. Negative feedback highlights where you need to improve and what needs to change to increase customer retention.
Keeping close tabs on your customer feedback gives you a better idea of what your customer base values most about your company.
Service feedback should be collected after a support ticket is closed or after a customer service interaction. You can also ask customers for feedback after a purchase is made, as you might be curious about the customer service efforts of your on-the-floor sales team.
There are many effective ways to collect customer feedback. For example, provide customers with surveys after a purchase or service interaction.
NPS® surveys are great because they provide your company with qualitative and quantitative data about your customers. If your team is having trouble collecting responses, check out some of these strategies you can use to obtain customer feedback.
7. Create a customer success program.
Successful businesses understand that a customer's value increases as they buy from your company over time. So, if you can convince people to keep coming back to your business, your customer base will continue to grow consistently even if you're only acquiring a handful of customers each month.
One effective customer retention tool is a customer success program. Customer success teams monitor individual accounts for roadblocks within the customer's journey. If they anticipate friction, they can reach out to the customer and help them navigate the issue before it escalates into a significant problem.
This can make all the difference in preventing customer churn, especially when you can remove pain points before customers even know they exist.
8. Consider web accessibility.
If you have a website, it's essential to keep in mind that your brand is visible to anyone who has access to the internet, but not everyone uses the internet in the same way.
Some people need special features enabled on their computers to effectively use and access your site. If your site isn‘t compatible with these programs, this audience can’t reach your content, meaning you're missing out on opportunities to convert potential leads.
In fact, the financial impact of this issue for businesses is significant, with companies losing nearly $7 billion each year due to website inaccessibility.
If you're new to web accessibility, reviewing the guidelines can help you update your site so you can become accessible to all audiences. Not only is this a smart move for your business, but it's a step you can take to make your business more inclusive.
9. Optimize your customer loyalty program.
Your customer loyalty program is another valuable tool for customer retention and acquisition. It can keep your most loyal customers engaged with your brand's promotional offers, and it can be a competitive advantage when customers compare your company to a competitor in your marketplace.
In fact, 69% of consumers say that loyalty programs influence their decision when considering a new brand.
One way to optimize your customer loyalty program is by adopting a tiered membership structure. Tiers encourage customers to continue buying from your business and create a sense of community as they progress through each level of loyalty.
Each tier should have its special rewards, and the rewards should increase in value as customers move toward the highest tier. This is where your team can estimate customer lifetime value and determine how much a person should spend at your business before they're considered to be one of your most loyal customers.
10. Gamify the customer experience.
Gamification is the process of adding playful elements to everyday tasks or procedures to make the process more enjoyable or engaging.
Businesses are now using gamification to attract new users by including gamified elements that enhance their customer experience. The idea is that customers will not only enjoy using the product, but they will want to keep using it because it's similar to a hobby or game.
In the example below, we can see how HubSpot uses gamification for its Academy training courses. These courses have pop-up quizzes and resources that make the training more interactive and engaging. In addition, once you pass a course, you receive a personalized certificate that you can proudly display on your resume and LinkedIn profile.
11. Personalize customer onboarding.
Once someone completes a purchase with your brand, the next few moments are critical to a customer's journey.
If they struggle with using the product or understanding user training, they may abandon your product altogether and seek a more user-friendly alternative.
Your customer onboarding program can solve this problem by personalizing each user’s experience. Rather than applying a one-size-fits-all approach, have your team reach out to your customers and see if you can identify their specific needs and goals.
If you're offering a retail product, prominently display your customer support options on your packaging, so customers know exactly how to reach you if they have a question.
Making your customer service team accessible to your customers is the key to providing reliable, real-time support.
Customer Base Examples
Now that I’ve explained how to build and grow customer bases, I want to briefly cover a few customer base examples by industry, as well as some common strategies for maximizing growth and retention.
1. Retail Customer Base
A retail customer base is comprised of individual buyers of products and/or services. The retail sector spans a wide range of industries, including fashion, food and hospitality, home goods, and even technology, so a retail customer base can refer to anyone from the patrons of a restaurant chain to mobile app subscribers.
There are many ways to grow and retain a retail customer base, depending on the specific industry. However, offering strong loyalty programs and personalized experiences have become particularly popular and effective strategies in the digital age.
2. Industrial Customer Base
An industrial customer base consists of businesses and organizations that purchase products and/or services to support their own production and operational processes. This can include anyone from private manufacturers, distributors, and the businesses involved in their supply to chain, to government institutions and organizations.
In addition to ensuring the efficient delivery of high-quality products, growing and retaining an industrial customer base is largely about building meaningful, long-lasting relationships with buyers. This can be achieved by establishing consistent lines of communication and checking in regularly with customers to gauge their satisfaction and offer additional support.
3. Software-as-a-Service (SaaS) Customer Base
SaaS customer bases may include some individuals, but more commonly consists of businesses and organizations who acquire software solutions from a third-party provider. SaaS is one of the fastest growing sectors, and SaaS customer bases are often incredibly diverse and can include both small businesses and startups, as well as large corporations and government institutions.
Much like in the industrial and retail sectors, growing and retaining a customer base in SaaS involves building strong relationship and taking an individualized approach to customer engagement.
Additionally, because software solutions are frequently complex and customers' needs and aptitudes will vary greatly, providing an intuitive onboarding process and highly personalized technical support is also essential to the growth and retention of SaaS customer bases.
Time to Grow Your Customer Base
I can tell you from personal experience that growing and retaining your customer base won’t always be a walk in the park. In fact, I have encountered many businesses that have done virtually everything right to engage their customer base, and still fail to move the needle based on one missing component or strategic mistake.
However, I can also say with confidence that being able to grow customer bases effectively is a skill that anyone can learn. And while I’ve witnessed plenty of business struggle, I’ve seen countless others find success despite facing a variety of complex challenges, and by leveraging the right channels and methods, you too can build a customer base that will guarantee consistent sales for your business.
Editor's note: This post was originally published in May 2019 and has been updated for comprehensiveness.
Free Customer Service Metrics Calculator
Calculate your business's key metrics and KPIs for customer support, service, and success with this free template.
- Customer Acquisition Cost
- Customer Lifetime Value
- Customer Satisfaction Score
- And More!
Download Free
All fields are required.
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