It sounds like a trick question, but the answer isn‘t "acquiring two customers." It’s actually retaining an existing customer.
Why? Well, it costs 5-25x less.
Let's review some of the most useful customer retention strategies that the biggest brands currently use to inspire loyalty.
Table of Contents
- What is customer retention?
- How to Retain Customers
- Excellent Customer Retention Strategies
- Customer Retention Programs
- Which customer retention strategy is right for your business?
What is customer retention?
Customer retention is how businesses quantify their customer loyalty over time, gauge overall success, and indicate their place in the market.
After making the sale, it’s time to focus on keeping those customers around (HubSpot’s Post-Sale Playbook can help you out here). In my experience, there are numerous ways to measure customer retention, which can dictate how your customer success or other post-sale teams are approaching how to retain your customers.
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To boost customer retention, companies will implement various strategies to reduce the number of customers lost — or customer churn — in a period and better their overall experiences to ensure that they remain loyal to the business. I’ve found using software to track your analytics can be a huge help here.
How do you calculate your customer retention rate?
To calculate the customer retention rate, you have to divide the total number of customers minus new customers by the number of customers acquired at the beginning of the period.
The formula should look like this:
Customer Retention Rate = (Total # of Customers at the end of the Period – New Customers Acquired) / Customers at the Start of the Period
Do keep in mind that while not listed in the graphic, the customer retention formula is incomplete without knowing customer churn.
To help you yield more accurate calculations, we've created a Customer Churn Analysis Template.
Use this template to store and analyze qualitative and quantitative feedback to better understand and reduce your churn rate — and increase retention.
How to Retain Customers
- Create a strong onboarding experience.
- Provide personalized customer experiences.
- Build trust with your customers.
- Implement a customer feedback loop.
- Maintain a customer communication calendar.
- Send a company newsletter.
- Start a customer education program.
- Offer unique services.
- Start a customer retention program.
1. Create a strong onboarding experience.
In my experience, first impressions are everything — especially when it comes to your customer retention plan. When your customer makes their first purchase, your business has the opportunity to make the initial experience strong — so you want to make sure your onboarding structure and process are running like a well-oiled machine.
Customers will likely recall any customer service hiccups in their initial onboarding, such as mishandling information, not having a designated point of contact to hold their hand through the beginning, or misalignment with the sales team.
Moreover, a poor onboarding does not just add to your customer churn, but also could damage your brand going forward. While your business can rectify those points of conflict, it can still leave a bitter taste.
Pro tip: A good onboarding process should have workflows with internal tasks and reminders, well-timed email triggers, follow-up messaging, self-service knowledge base access, and celebratory messaging to excite and impress new clients. This will complement how your team uses their knowledge of your products and services to delight your customers.
2. Provide a personalized customer experience.
No two customers have the same exact needs and may be looking for tailored solutions from your business.
I recommend avoiding providing templated solutions for customers needing products and services that cater to differing industries, scales, time limitations, or other preferences.
In fact, according to Econsultancy, 80% of companies reported seeing a lift in customer loyalty and relationships since implementing personalization.
Pro tip: Keep your offering relevant and personalized to each individual customer based on their business goal and team metrics, so the solutions provided are the most useful for alleviating their challenges. This will make them feel more inclined to continue working with you.
3. Build trust with your customers.
Two things are true when it comes to building trust between your company and your customers:
- Don't assume they trust you because they buy from you.
- Trust takes time to build.
When deciding to make a purchase, 81% of customers say that trust is an important factor in their decision. But in my experience, building trust isn't a one-size-fits-all tactic that any business can implement overnight.
After all, the definition of trust is the “firm belief in the reliability, truth, ability, or strength of someone or something.” Reliability is a key factor in building trust, so your company should consistently deliver value to customers.
Pro tip: Consistently follow through on your brand promise, and do what you say you'll do over time. This will impact whether or not your customers perceive your brand as reliable and, ultimately, trustworthy.
4. Implement a customer feedback loop.
It‘s hard to improve your business if you don’t know how your customers feel about it. To start retaining customers, you need a process for obtaining customer feedback.
This is where a customer feedback loop comes in. It provides a system for collecting, analyzing, and distributing customer reviews and surveys.
Here are a few ways I’ve found to collect customer feedback:
- Run a survey like Net Promoter Score®.
- Ask customers to participate in user testing and focus groups.
- If you use a phone system, give customers the chance to provide feedback after each and every call or interaction with your team.
After gathering this feedback, I suggest analyzing your survey results by identifying trends in customer behavior and other areas you can rectify to enhance the user experience. Then, share this information with teams that will benefit from it most and apply the feedback.
Pro tip: As an example, product reviews should be distributed to engineers and development teams so they can address flaws in your product's design. By using this system to collect and share customer reviews, your business can efficiently address criticism and improve the customer experience.
5. Maintain a customer communication calendar.
Even if your customers aren't reaching out with feedback, your team should be proactive in communicating with them.
This was ingrained in me as I started in Customer Success — I found that adopting a communication calendar to manage customer engagements can create interactions to understand sentiment, gauge current challenges, provide opportunities for upsell and cross-sell, and ultimately power your customer retention strategy.
A communication calendar can keep track of customer queries. It tells you the last time that a customer has reached out and alerts you when they haven't interacted with your brand.
Pro tip: Here‘s an example — if a customer’s subscription is set to renew or expire, you can email them to schedule a call about renewing with your business.
6. Send a company newsletter.
In my experience, a company newsletter is a simple and cost-effective way of retaining customers because it can enhance your company's reputation and notability.
Even though it seems simple, newsletters remind customers of your brand every time they open their inbox and continuously provide valuable information to your clients.
Pro tip: You can use email automation to send updates or offers to all of your customers at once. And, you can send the email using an RSS feed on a designated frequency while still remaining compliant, so you don't have to hit “send” manually.
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7. Start a customer education program.
A customer education program demonstrates a long-term investment in your customer base.
Under this initiative, your business creates various customer self-service tools like a knowledge base and a community forum. Then, customers use these features to locate solutions to service problems before reaching out to your support and service teams.
This program can extend beyond your products and services, establishing another marketing channel for your business.
Pro tip: For example, HubSpot Academy courses cover numerous marketing, sales, and customer service topics. That way, HubSpot customers know how to use the HubSpot tools in their everyday workflow, and can help them decipher how to apply this to their business.
8. Offer unique services.
Offering a value-added service that's superior to your competitors in the eyes of your customers is no easy feat, but the reward is worth it in the long run. Your services can complement the products that your business offers and similarly tie to your customers’ business model and challenges.
If you've developed a niche that solves critical customer use-cases, your unique and value added services can put you on the right track to retain customers.
Pro tip: For example, HubSpot Academy courses cover numerous marketing, sales, and customer service topics. That way, HubSpot customers know how to use the HubSpot tools in their everyday workflow and can help them decipher how to apply this to their business.
9. Start a customer retention program.
A customer retention program is an amalgamation of several types of tactics. There's a program for just about every business case.
Later on, I'll define customer retention programs, explain the most common types, and show you examples of how to implement them within your organization.
But first, here's a list of strategies you can start executing this week to build into your customer retention plan.
Excellent Customer Retention Strategies
- Adopt customer service tools.
- Apologize when you make mistakes.
- Inspire with a mission.
- Empower customers with convenience.
- Leverage personalization.
- Speak to your customers.
- Create a divide between you and your competitors.
- Use subscriptions to bolster the experience.
- Use experiences to elicit positive feelings.
- Capitalize on social proof.
- Educate your customers.
- Surprise and delight.
- Offer support on the right platforms.
- Thank your customers.
- Provide incentives before a customer can terminate their membership.
- Build trust with your customers.
- Form a community around your product or service.
- Become part of the customer's lifestyle.
- Establish loyalty with a one-of-a-kind product.
- Offer a product or service that solves a problem, but not every problem.
- Keep things interesting.
- Use gamification and referral programs.
1. Adopt customer service tools.
If you're a small to mid-sized business (SMB), your support team may only consist of a few people. However, as you grow your customer base, technology solutions can supplement your small team and customer service needs. I like this solution because the right technology can empower your team with the support they need to be the best service reps possible.
Customer Retention Strategy Example: Santa Cruz Bicycles
Santa Cruz Bicycles did exactly this when it realized its current approach to customer support wasn't sustainable.
While the company was committed to providing excellent customer service, that standard became harder and harder to meet as more customers purchased their bikes. Rider Support Lead Kyle Harder notes this challenge in the graphic below:
Instead of hiring more reps, Santa Cruz Bicycles turned to customer service tools.
- It started with a CRM, using the software to record customer interactions and create support tickets.
- Reps used the HubSpot task tool to mark open support cases and ensure each ticket was responded to in a timely manner.
- As the company grew, it adopted Service Hub to centralize customer service operations. This meant that all support inquiries were funneled into a shared inbox where reps could collaborate on complex service tickets.
This made it easier for the team to streamline urgent or sensitive issues, improving their likelihood of preventing churn.
2. Apologize when you make mistakes.
Try as you might to avoid them, but mistakes happen in business.
Whether that mistake is a data breach, an outage, a billing error, or something else, a mistake can put you at risk of losing your valued customers. In my experience, it’s how you handle it that really matters for your future interactions with customers.
Customer Retention Strategy Example: HubSpot
HubSpot Research found that, in cases of company error, 96% of survey respondents would continue buying from a company they regularly purchased from if they apologized and rectified the situation.
That means you need to develop a plan for the inevitability of a mistake — and a plan for how to solve it promptly, apologize honestly and directly, and move forward to retain your loyal customers.
For example, HubSpot had an experience with this during a recent INBOUND when an outage we suffered impacted numerous enterprise customers. We worked quickly to fix the mistake.
Our COO and VP of Customer Success then apologized, explained what had happened, and detailed how we would prevent it from happening again publicly on our blog. They also sent customers individual emails.
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3. Inspire with a mission.
Sometimes, a brand inspires loyalty not through tactics and systems but through what it stands for — its mission statement or vision. Customers are loyal to a business because they feel they are a part of something bigger than themselves — and bigger than the company.
Customer Retention Strategy Example: TOMS
If you’ve ever watched Simon Sinek's TED talk "Start with Why,“ you probably already know a thing or two about the importance of having a mission or ”reason why."
TOMS has built its entire business model around making the world a better place.
The way it does this is in its “One for One” policy. For every pair of shoes that are purchased, it gives a pair to people in need, thus far donating over 60 million pairs of new shoes.
As consumers, we're focused on the altruistic and environmental effects that our buying habits have beyond consumption. Doing good is becoming more and more important to us.
This doesn't mean you should build your marketing around an altruistic message just to do it. The lesson, in my opinion, is in finding something that people care about and positioning your brand around it.
4. Empower customers with convenience.
No matter the industry your business is in, you want to make your product or service convenient to partake in. In my experience, convenience is often a top priority for customers.
Customer Retention Strategy Example: Starbucks
The coffee goliath Starbucks has always been innovative with its marketing, especially in the customer acquisition department.
In the early days, Starbucks founders Zev Siegl, Jerry Baldwin, and Gordon Bowker focused on the sounds and the smells inside their shops to provide a delightful customer experience.
But to grow, they had to get innovative. One of their most innovative customer retention moves is the Mobile Order & Pay feature within the app. Thanks to the feature, customers can order their coffee before they even arrive at the shop.
I think this strategy is effective because it caters to the needs and desires of the customers. So the simplest takeaway here is this: Make your products and services as accessible as possible. Identify the desires and behaviors of your customers and create tools and systems that empower them.
Whether that be an app or other traditional methods, it's up to you.
5. Leverage personalization.
When it comes to personalization, targeting the right people is the priority. Customers not only want to be treated like people through the personalization of recommendations and service but also want to see the humanity behind your brand.
Customer Retention Strategy Example: Tesco
This supermarket giant has a strong presence in the U.K., with nearly 4,000 stores nationwide.
For huge brands like these, coming across as authentic and human can be a challenge. Online grocery shopping and self-service scanners are convenient, but people still like dealing with other people.
Customer service is still necessary, and the folks at Tesco have chosen to use X as a way of executing this with a human touch. They show they care by adding personality to their interactions with customers.
Check out this example interaction:
This tactic works because Tesco keeps its social accounts active, encouraging engagement by guaranteeing a response. To get started with an approach like this, I recommend you identify your audience personas and communicate with them on their preferred channels. It doesn‘t matter if it’s email or Snapchat, as long as it's where their attention is.
From here, you should encourage customers to speak directly with you through that channel. Make it part of your messaging, and remind them during and after the buying experience.
In addition, always add personality to every message. Nobody likes a canned response, so make sure whatever you‘re communicating sounds like it’s coming from a human.
6. Speak to your customers.
It's vital to any business to both listen and connect with your customers not just for maintaining customer satisfaction but also for following through on your customer retention plan and identifying expansion opportunities. I think this strategy is constructive because you can learn from firsthand accounts of what is going right or wrong in your strategy.
Customer Retention Strategy Example: R&G Technologies
We've taken a look at several B2C examples, but what about the B2B world? R&G Technologies is an Australian IT support firm that has developed strong, long-term relationships with its clients.
It solidifies these relationships with rapid response times and strict service-level agreements (SLAs). They get back to their clients quickly, and their employees have been bought in on this by tying these KPIs to how much they earn.
However, the biggest lesson is in its customer satisfaction surveys. R&G Technologies clients have an opportunity to express what‘s going well and what isn’t. This allows the company to identify unhappy customers before they churn.
R&G’s strategy is especially effective because they focus heavily on asking the right questions in order to gain insights they can execute on. This information is used to make better business decisions and retain customers.
Most importantly, these discussions identify the challenges of R&G's audience. This can help inform both the overall marketing and retention strategy.
Don‘t underestimate the power of one-on-one conversations with your clients (especially if you’re running an online business).
7. Create a divide between you and your competitors.
You have a reputation to cultivate, and setting yourself apart from your competitors can help establish authority and a passion to help your customers realize success.
Customer Retention Strategy Example: Apple
Want your customers to see you as the obvious choice over your competitors? Make note of Apple's strategy, demonstrated by their “Mac vs. PC” ad campaign.
The campaign starred John Hodgman as the inept PC and Justin Long as the cool, collected Mac. The two would quip humorously over what made the Mac a better choice than a PC in a really entertaining manner.
The “Mac vs. PC” campaign was very tongue-in-cheek — and it generated a lot of dispute. Not only that, but it divided the market and set Apple apart from its competitors by identifying the kind of consumers who should buy Apple products.
I think sticking true to who you are as a brand shows integrity and makes it easier to attract customers who just might become your strongest brand advocates.
Can you find a cause to fight for (or against)? If your brand is more friendly than this, you can still put some fire behind your story and create a rally effect.
Don't be afraid to be a little bold in your marketing to get the best results from this approach.
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8. Use subscriptions to bolster the experience.
Customers will be more inclined to repeat purchases from your business if they get special treatment over one-time buyers.
Customer Retention Strategy Example: Amazon
It's unusual for a commodity-based organization to implement a subscription service into its business model.
Which is exactly what Amazon created in the form of Prime. The subscription was originally created to bring customers faster delivery. It generated a lot of controversy but quickly became popular with regular shoppers on the platform.
How can you use subscriptions to achieve growth goals and increase customer retention?
You don't need to charge a fee for your subscription model in order to gain customer loyalty. In my experience, providing benefits in the form of exclusive content and events is another way to leverage this approach without spending a ton.
If you‘re going to take a page directly from Amazon’s playbook, then make sure you‘re offering something people want. This goes back to customer development and understanding your audience’s desires and challenges.
9. Use experiences to elicit positive feelings.
Experiential marketing has long been used as a way for brands to create positive sentiments with customers, and tapping into their sentiments is worthwhile.
Customer Retention Strategy Example: Coca-Cola
In Zurich, during the FIFA World Cup, Coca-Cola placed a VR experience in front of a train station. With the experience, you could stand in front of a screen and see a popular soccer player next to you. You could then practice a soccer move with the athlete or compete in your own mini-soccer tournament.
Even though Coca-Cola produces beverages, they figured out a way to tap into the positive hype around an event by providing delightful customer experiences that reached beyond the point of sale.
Look for ways to create positive feelings in the form of new experiences outside of your main products, services, and value propositions.
10. Capitalize on social proof.
Sometimes, the greatest form of advertising isn't your own. In fact, customers are more likely to trust opinions from family, friends, and other consumers more than branded content and ads to influence their purchases.
Customer Retention Strategy Example: Codeacademy
Using the power of testimonials and customer stories, Codeacademy uses social proof to show prospective customers the value of its products — with stories straight from the horse's mouth about how it helped them:
More than 97% of customers report that online reviews influence their buying decisions.
And seeing that lots of other brands and individuals like you use a product actually makes you want to do it, too — FOMO is a powerful marketing and retention tactic.
I suggest you use customer testimonials and information to attract new customers, and to convince existing ones to stick around or upgrade their products.
Highlight loyal customers — and their stories — on your website or your social media networks and share their successes to help you grow your own.
11. Educate your customers.
A customer retention plan does not just involve expanding your customer’s investment in your product.
Whenever your customer makes a purchase from you, offer them something that cannot be quantified — like a free educational program or resources throughout their customer journey on your product or service — so they are continually informed on how they can get value out of your business.
Customer Retention Strategy Example: HubSpot Academy
Education is one of the most valuable things you can offer your customers (or even just your site visitors).
HubSpot Academy offers free marketing, sales, and customer service training videos and certifications that anyone can use to learn and grow their skills — and some are only available to HubSpot customers and partners.
I think these unique, exclusive offerings help make the HubSpot community more engaged and interested in staying in the loop with our educational programs.
12. Surprise and delight.
Exceeding your customer‘s expectations with something like an added gift or benefit will give them joy they won’t forget. Take Chewy’s approach to understand how you can delight your customers.
Customer Retention Strategy Example: Chewy
People are passionate about how much they love their pets.
Pet supply ecommerce company Chewy knows its customers love their pets. It also knows they can buy pet food and supplies from a variety of companies — including Amazon — for similar prices.
So, it uses the principle of surprise reciprocity to delight its customers with spur-of-the-moment gifts and cards for their pets.
For example, Chewy has commissioned paintings of customers’ pets. Other ideas could be hand-written thank you letters or free samples of new products. Such gestures make customers feel valued and appreciated.
13. Offer support on the right platforms.
Part of knowing and understanding your customers is knowing where they spend their days using your product and how they most want to get customer support when needed.
Customer Retention Strategy Example: Slack
For the most part, Slack functions perfectly as a workplace communication tool.
But like all technologies, it experiences the occasional outage that impacts its users — many of whom immediately start asking their coworkers around them and the Twittersphere if their Slack is down too.
Luckily, Slack is there to help when things go wrong. They know their users are active on X and frequently update on the platform in case of outages or other customer issues.
I’ve found that spending time in your customers‘ shoes to get to know how they look for help will prevent them from feeling like they’re in the dark — and will make you reliable in their eyes, even when things go wrong.
14. Thank your customers.
It sometimes can all start with a thank you. Taking the time to voice your appreciation for your customers — outside of an email campaign or a customer purchase — goes a long way toward building a brand that's lovable, memorable, and impactful.
Customer Retention Strategy Example: Zappos
Clothing and shoe ecommerce site Zappos is well-known for its excellent customer service — including its efforts to show customers how much they care by saying thank you and sending gifts.
In fact, Zappos even has an office-wide tally of how many gifts and surprises have been sent to customers during the previous month to make sure the whole team is doing their part to show customers how much they're appreciated.
In my opinion, saying thank you is a simple customer retention technique, but it’s an effective one that distinguishes faceless websites from beloved brands.
15. Provide incentives before a customer can terminate their membership.
We‘ve all been there before. Your free trial, one-year subscription, or introductory pricing is set to expire in a few days. You’ve set an alarm to cancel it before you're charged again.
Companies like Adobe recognize this all-too-common churning technique and put steps in place to mitigate it before it happens, strengthening their customer retention plan.
Customer Retention Strategy Example: Adobe
Adobe offers Creative Cloud Apps on a monthly subscription that locks customers into the service for one year at a time.
If they choose to cancel early, they have the option to receive up to two months without payments in order to keep their Creative Cloud service.
The company is purposefully attempting to retain customers with two months of a free subscription, and they're offering it at a time where customers are attempting to decide their long-term relationship with the company.
By stepping in at this stage, Adobe is giving customers a reason to stay a little longer so the brand can prove its value to them.
Your business can take this technique one step further by giving extra care to these customers. Follow up with them on a phone call or with a personalized email to understand how you can make their experience better.
16. Build trust with your customers.
There are many different ways to approach building trust with your customers. One key method is to show that your customers are valuable and to solve for their unique needs.
Customer Retention Strategy Example: Classy Curlies
Classy Curlies builds trust extremely well by doing something most business owners might scratch their heads at — they show their customers how to accomplish the company's mission on their own.
On the website, customers will find DIY kits and tutorials on how to care for their hair and skin with everyday products they can find at home or in the grocery store. And by the way, Classy Curlies also sells specialized DIY kits.
By putting the customer first and offering these solutions free of cost, Classy Curlies has been able to build trust with customers and retain them.
Whether they opt for the latest DIY kit or they‘re a faithful reader of the DIY blog, I believe new customers can find something at Classy Curlies that’ll keep them coming back for more.
17. Form a community around your product or service.
Establishing a following for your product or service can encourage prospective customers to join in on the benefit of an active community.
Customer Retention Strategy Example: Flo
For people who want to manage their reproductive health, Flo offers a world-class platform that predicts, analyzes, and tracks individual health data.
What sets Flo apart from its competitors and helps it retain customers is the community within the app.
Flo provides prompts for the users to discuss, pairs each user with a virtual health assistant, and even holds space for anonymous chat rooms where users can discuss their health concerns privately.
In my opinion, the community within this app bridges the isolation gap that some people might feel while they wait for medical results, when they seek a medical professional, or when they want recommendations for the best products to use.
18. Become part of the customer's lifestyle.
You have the ability to turn your company into something that inspires your audience and makes them want to be associated with your brand. You can make your product offering a part of their day-to-day or lifestyle.
Customer Retention Strategy Example: Cash App
Repaying a friend for a round of appetizers. Collecting funds for a surprise gift to a coworker. Tipping your barber when you're short on cash.
There are virtually endless uses for a finance app like Cash App that makes money sharing simple and quick.
Their business model is simple — they make money off of a small fee that users pay when depositing money into their bank accounts.
But how exactly do they retain these customers so that they'll send and receive money through Cash App next time?
The secret to their customer retention strategy isn't really a secret at all. The magic lies in the lifestyle that is attached to the app. It takes at least two people to use Cash App — someone to send money and another to receive it.
If you have at least one friend, acquaintance, or coworker who uses the app, you'll probably find yourself using it at some point to pay them back for grabbing your morning coffee.
I think this strategy is effective because the service meets a common need and integrates itself seamlessly into users’ lives.
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19. Establish loyalty with a one-of-a-kind product.
The products and services your business provides have unique qualities. Offering that one-of-a-kind product can enable your customer retention strategy, and separate you from your competitors — by providing something that can't be replicated anywhere else.
Customer Retention Strategy Example: Bath & Body Works
Any products from Bath & Body Works smell amazing. They usually have sales, and they last much longer than traditional candles or soaps do.
But I'm willing to bet that the scents, price, and longevity are secondary to the reason the company has kept you as a brand-loyal customer for so long.
Their retention strategy? The wallflower fragrance plug.
Only Bath and Body Works wallflower fragrances will work in the corresponding plug-in, and that's not by accident. AirWick, Glade, and other fragrance plug-ins are designed this way, too.
If you decide to purchase one brand over the other, you're committing to the scents that come with it.
This strategy plays into the mentality of “sunk cost.” If you’ve already bought the Bath and Body Works plug-in, you’re more likely to keep buying their scents than switching to a competitor, which would involve more upfront expenses.
20. Offer a product or service that solves a problem, but not every problem.
Though I know it’s tempting to do, don't build a product that looks to solve everything. Rather, aim to create a product offering that can solve a specific set of problems extremely well. More than clarifying your customer retention strategy, this helps your product team solve challenges faced by businesses.
Customer Retention Strategy Example: Canva
When Canva first stepped into the graphic design market, they were competing with some of the most established brands in the industry.
They were the little fish in a big pond. Now, they've become a household name (at least in every tech and marketing household).
This company has successfully acquired new customers and retained existing ones over the last few years by solving one problem: access to easy-to-use professional design tools for non-designers.
Long gone are the days of watching an Adobe Illustrator tutorial to whip up a great-looking social media post. Canva offers ready-to-use templates, icons, elements, images, and fonts that just about anyone can master.
I suggest you find your niche and become the top brand in that niche to find success.
21. Keep things interesting.
If you can intentionally review and reorder the products you position for sales, customers will notice, potentially come back, and could appreciate the novelty of surprise.
Customer Retention Strategy Example: Five Below
A common shopping place for teenagers to spend their allowances, Five Below is teaching those of us in the business world some valuable lessons about customer retention.
The brick-and-mortar store sells inexpensive products, which is common among businesses with high customer retention rates. However, Five Below makes shopping for their inexpensive products an experience for every customer.
Every few weeks, Five Below switches up a large portion of their inventory. On average, estimates show that a customer visits a Five Below store every 99 days, so they're bound to see something new and exciting every time they shop.
By keeping your offerings fresh, customers are incentivized to come back on a regular basis to see what’s new.
22. Use gamification and referral programs.
Offering your existing and loyal customers incentives to refer their network to your business is a win-win situation for both your company and their experience. It also acts as a central tenant for your customer referral program.
Customer Retention Strategy Example: MeUndies
Touted as the most comfortable pair of underwear in the world, MeUndies drives great retention through two elements. The first, which we've already covered, is in its “reason why.”
The folks at MeUndies were tired of the struggle that comes with finding a great, comfortable pair of underwear.
To back this up, they've fostered a strong culture and are very transparent with the production process. They have an entire page dedicated to their factory (it's beautiful, by the way).
Although this makes for great retention, our focus is on their clever referral program. Customers are encouraged from the moment they purchase to refer a friend, and the rewards are worth it:
There‘s a gamification element that shows how far through the buying experience your friend is, too, including a "nudge" button. If a friend adds a product to the cart but hasn’t completed checkout, you can send an email reminder about it.
In other words, MeUndies has found a way to use their current customers to reduce cart abandonment, while providing social proof in the process. I think this is so clever!
There are many different ways to conduct an effective customer retention program than just this single example. I'll walk through them with you below.
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Customer Retention Programs
A customer retention program is a specific initiative designed to encourage customer loyalty. Customer retention programs can be company-led, such as instituting a customer onboarding process, or customer-led, such as downloading and using a mobile app to make purchases.
Customer Retention Program Ideas
There are several types of customer retention programs you can start for your business. If you're not sure which is right for your company, I’ve curated this list of client retention programs you can implement to delight your existing customers.
1. Onboarding Program
Onboarding is a customer success function that teaches new customers how to use your product or service and enables them to get the right initial settings for them to start off strong in terms of adoption.
Rather than learning by themselves, customers are taught by a company representative who personalizes the initial setup and training according to their business goals and use cases.
This program can help customers save time and help them understand how the product can achieve their overarching business goal.
I think onboarding programs are an effective customer retention tool because they prevent churn with new customers. Embedding customers within your product ensures adoption so they can complete their goals on time.
Example: At HubSpot, we offer a one- to three-month onboarding process where company representatives work with customers once or twice a week. This helps keep our customers happy and provides insight into common roadblocks.
2. Customer Loyalty Program
While it's important to focus on customers who are at risk of churn, don’t forget your loyal customers either. One way to build this is a customer loyalty program.
A customer loyalty program can reward customers for their continued commitment to you and your company. The more they shop and interact with your business, the more they're rewarded.
I’ve found this keeps customers happy because they're getting more from the experience than just your product or service.
Example: Many companies offer a point-based program that gives customers points every time they make a purchase. After they earn a certain amount of points, customers receive a free product or discount.
3. Customer Advisory Board
As I mentioned above, your most loyal customers are also your most valuable ones — not just because of the money they spend but also for the information they provide.
They tell you why they love your brand so much and make suggestions as to where you can improve it.
Creating a panel of these customers can help you fine-tune products and services at your business. Additionally, you can increase customer advocacy by encouraging participants to publicly share their reviews.
Example: I’ve found that Customer Advisory Boards that have routine cadence to discuss feedback, opportunities for improvement, common challenges, and testimonials will help maintain rapport when attracting and engaging potential leads in the future.
4. Corporate Social Responsibility Program
Your company is more than just a product or service. Customers look at everything your business buys, sells, and advertises to its target audience.
If they sense any inconsistency between your brand‘s messaging and its actions, they’ll be quick to recognize the ingenuity. Instead, I believe it's important to get involved with your customers beyond products and services.
Example: Think about your customers’ values and create a Corporate Social Responsibility (CSR) program that pursues a moral goal. While your initiative doesn't have to be as ambitious, this is a great way to demonstrate your commitment to their needs.
5. Beta Testing Group
Similar to the feedback loop, beta testing (a form of user testing) groups serve a dual purpose.
They provide your business with specific, actionable observations from the customer's POV, and they keep customers invested in the new feature your company is beta testing.
Example: Beta testers are usually an exclusive group since every customer isn't asked to give their feedback on a new feature due to bandwidth limitations. The exclusivity alone is usually enough to entice customers to commit.
Ideally, different customer retention programs work hand-in-hand to create a customer experience that cultivates loyalty, positive sentiment, and makes customers more willing to continue purchasing.
Which customer retention strategy is right for your business?
Now that you're equipped with a list full of viable strategies for your customer retention plan, which ones will you incorporate within your business?
Every strategy won‘t work for every business, but as long as you’re keeping the customer‘s needs in mind, they’ll be happy to purchase from you every chance they get.
Editor's note: This post was originally published in September 2019 and has been updated for comprehensiveness.
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