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Published On: August 21st, 2023|10.8 min read|

In the fast-evolving landscape of today’s business world, where numerous brands compete for customer attention, winning over consumers transcends exceptional products and simple purchasing transactions. The leverage lies in establishing lasting connections with buyers, nurturing enduring trust, inspiring their return and fostering a sense of belonging. How to achieve such a holistic relationship and make customers committed brand advocates? Much of this success hinges on the outstanding retention initiative.

While serving as a significant component of the CX strategy, Customer Retention involves an organisation’s capability to encourage repeat purchases and active engagement with products, services, and communication, all while preventing buyers from shifting to competitors when choices are available.
Customer Retention is indicated by the Customer Retention Rate (CRR) measurement, which calculates the percentage of consumers who remain with the company over time with the overall base. CRR in various market segments typically hovers between 70% and 80%. However, it can vary considering the industry specificity, business models, customer behaviours, and other factors. In summary, a higher CRR effectively highlights the success of a business’s retention endeavours.

Conversely, it’s worth noting that another crucial factor, such as churn or attrition, stands in contrast to retention, representing the departure of customers from an organisation. In this context, companies often strive to balance these two dynamics effectively, aiming to achieve high retention and low churn rates simultaneously, as this equilibrium signifies a robust and flourishing database, contributing to long-term revenue and profitability growth.

The increasing importance of repeat business

Keeping buyers returning is essential for a business to do well and last. Consequently, the imperative to prioritise enhanced Customer Retention has become more critical than ever, given the array of benefits it can yield. This significance is highlighted by selected statistics, such as, for instance:

Acquiring a new customer can cost much more – up to 25 times – than keeping an existing one.
Source: Harvard Business Review
Boosting customer retention by just 5% can generate over a 25% increase in profits.
Source: Bain & Company
The likelihood of securing sales from existing customers can be up to 14 times greater than making sales to a new one.
Source: Marketing Metrics

There is more evidence that loyalty is an asset for any organisation engaged with consumers, making it highly worthwhile to cultivate. Among various benefits, significant advantages for the company include:

  • Ensuring a steady revenue stream and reducing expenses related to marketing and acquiring new customers.
  • Encouraging buyers to make additional purchases, explore new opportunities, and opt for premium options rather than switching to another provider.
  • Enhancing the Customer Experience by fostering positive interactions across various touchpoints and influencing the perception of the brand and the company.
  • Strengthening loyalty, cultivating a profound sense of attachment to the brand, and creating devoted advocates among consumers.
  • Facilitating the collection of valuable feedback for improving products, services, and specific aspects of the CX strategy.
  • Securing the business more resilient during economic downturns or market fluctuations, mainly when relying on a loyal customer base.

Modern customer insights: heightened expectations and reduced loyalty

To gain a comprehensive understanding of the present-day concept of Customer Retention and to lay the groundwork for future strategy building, it is crucial to delve into the key characteristics of modern consumers and their evolving behaviour. The factors contributing to this include heightened expectations, reduced brand loyalty, and increased price sensitivity, all shaped by economic, political, and technological elements, such as inflationary pressures, pandemic-related constraints, technological progress and intense competition.

According to Forrester’s “Predictions 2023: Consumers Will Spend More and Demand Better,” buyer attitudes are shifting in the following ways:

They are becoming choosier, seeking fewer yet richer experiences that merge pandemic-induced digital fluidity with the nostalgia of earlier times.
They continuously curate their experiences, favouring brands that offer high value while abandoning those that fall short.
They reconcile fiscal caution with spending impulses by choosing which brands and experiences to support.

The insights highlight a trend of consumers becoming increasingly demanding and less attached to brands. This presents a more considerable challenge for businesses in the retaining effort compared to previous decades when Customer Retention was relatively more straightforward. Limited options and stronger brand loyalty, stemming from fewer competitors and less online access to information, made it reliant on personal relationships, quality products, excellent customer service, and word-of-mouth referrals to foster loyalty.

Nowadays, companies must go the extra mile to nurture robust and dependable buyer relationships in the modern landscape. This involves deploying diverse and increasingly sophisticated strategies, harnessing innovative tools, and employing creative tactics to deliver exceptional experiences that resonate with customers at every touchpoint. Key elements such as early-stage attention, advanced personalisation, consistency, seamless support, and real-time engagement take the forefront in this endeavour.

Best Customer Retention strategies for sustaining business growth

Building a Customer Retention strategy for sustaining business growth is necessary as the process must be structured, intentional, and customer-centric. Therefore, such undertaking involves a set of tactics, initiatives, and practices, aiming to create a strong bond between the brand and buyers and maximise customer lifetime value.
All in all, crafting a cohesive strategy for Customer Retention entails several key steps, including:

1. Customer onboarding

Customer onboarding is a crucial first step in establishing a positive experience with the organisation, serving as the foundation for further lasting engagement and loyalty. Its goal is to help buyers swiftly understand the company’s intentions and feel confident in utilising its offerings. Thus, onboarding should be friendly, seamless, easy to understand, and trustworthy while upholding the brand promise. This encompassing approach includes personalised setup guidance, a comprehensive knowledge base, valuable inspirational resources, timely follow-up messages, and readily accessible support – all without overwhelming customers with excessive information. Furthermore, extending the onboarding experience beyond the initial introduction can ensure buyers continue to receive care and remain well-informed over an extended period.

2. Hyper-personalisation

Hyper-personalisation significantly enhances Customer Retention by tailoring experiences and interactions to each buyer’s unique preferences and needs. This approach focuses on a customer-centric philosophy that puts factual consumers’ requirements first. It utilises sentiment analysis of comprehensive data encompassing all possible touchpoints to unveil valuable insights into buyer behaviours, likes, and preferences. By implementing hyper-personalisation, companies can move beyond generic messaging and engage in well-tailored communication, deeply customised interactions, and proactive support that consistently exceed expectations and promote more fulfilling and enjoyable experiences. Consequently, the initiative increases satisfaction metrics such as CSAT and CES, heightened loyalty, and sustained long-term market success.

3. Consistent experience

Ensuring a coherent and seamless experience across all touchpoints, whether online, offline, or through various channels, is pivotal in an effective Customer Retention strategy. Firstly, it reinforces a coherent message across communication channels, aligning with brand values and commitments, thus creating a seamless interaction everywhere. This facilitates omnichannel integration by centralising customer data for a comprehensive buyer view, better management and optimised engagement. Lastly, consistent support is essential, encompassing accurate information, prompt issue resolution, uniform communication, and upheld commitments.

4. Transparent communication

Transparency helps to boost the Customer Retention strategy, significantly influencing trust and understanding. It involves open and honest communication with consumers, addressing issues openly, providing buyers with detailed information and ensuring complete information about products, services, data privacy, and processes.

5. Bringing together technology and the human touch

Combining advanced technology with authentic human interactions, the Customer Retention strategy can effectively meet diverse customer needs, cultivate loyalty, and establish meaningful relationships. This entails leveraging innovative tech solutions for seamless experiences, rapid responses, and personalisation. Meanwhile, empathetic human agents are pivotal in providing intricate support and building emotional connections when required.

6. Outstanding support

Outstanding customer support is a potent asset within the Customer Retention initiative, significantly bolstering loyalty. Several vital elements should be efficiently integrated, to achieve this:

  • Adequate Staffing: Ensuring a proper complement of support staff is essential to address inquiries and concerns promptly.
  • Skilled and Engaged Agents: Engaging knowledgeable agents with a high level of skills, relevant expertise, patience, and emotional intelligence who genuinely prioritise resolving issues and ensuring customer satisfaction.
  • Effective Problem-Solving: Swiftly and accurately resolving problems in a friendly, confidential, and confident manner around the clock.
  • Proactive Approach: Anticipating customer needs and proactively addressing potential issues before they arise, showcasing a forward-thinking attitude.

7. Constant improvement

Progress and performance can be accurately assessed by monitoring relevant KPIs related to Customer Retention. Continuous improvement encompasses actively collecting feedback, prioritising changes based on insights, implementing them, and watching the outcomes to align with the goals.

Customer Retention strategy: traditional vs virtual

Customer Retention, whether in traditional brick-and-mortar businesses or online settings, shares the fundamental goal of keeping customers engaged, satisfied, and loyal to the brand. However, there are some differences in approach and strategies between customer retention in traditional and online contexts:

Traditional Customer Retention
Online Customer Retention
In traditional businesses, the physical presence plays a vital role in customer interactions, fostering a personal connection through face-to-face engagement, in-store experiences, and direct staff interactions. Localised targeting prioritises building community relationships, while in-person customer service offers direct issue resolution. Tangible loyalty programs utilise physical cards or coupons, and the physical store atmosphere enhances the overall experience, encouraging return visits.
Online companies primarily interact with users through digital channels, enabling frequent engagement, global reach, and 24/7 accessibility. Activities are directed toward virtual space, emphasising user-friendly navigation, ease of use, suggestions and recommendations, and AI-driven communication tools like chatbots. However, direct contact remains crucial, with the ability to effectively connect with company agents to address specific queries.

Although both channels and methods differ, they share the same goal: to retain buyers effectively. They are often combined when businesses have brick-and-mortar stores and e-commerce platforms, aiming to provide a seamless and comprehensive customer experience across physical and digital touchpoints.

Amazon use case

Amazon, the world’s largest online retailer, effectively retains customers by integrating a subscription service into its business model in the form of Prime. The company offers exclusive benefits through exclusive content and events by providing what consumers desire based on understanding their needs, preferences and challenges. Despite the controversy, the initiative gained popularity among regular users.

Source: HubSpot

Starbucks use case

The coffee giant Starbucks boasts a rich history of innovative customer acquisition. Starbucks focused on crafting a delightful in-store experience during its inception, emphasising the ambience of sounds and scents. In pursuit of growth, they implemented inventive strategies like their app’s Mobile Order & Pay feature, enabling customers to pre-order, driven by a commitment to accessibility and alignment with customer preferences.

Source: HubSpot

How to retain the youngest generation?

Retaining the youngest generation, often referred to as Generation Z or Millennials, requires a tailored approach that aligns with their unique preferences and behaviours. Otherwise, businesses may struggle to capture their loyalty and risk losing out on a significant market segment.

The McKinsey research “Understanding the ever-evolving, always-surprising consumer” reveals insights into why consumers switch to new brands. “Notably, it is the younger generation that more often indicates that it is because of purpose as a driving factor. This includes the company’s values, treatment of employees, and more”.

Here are some strategies to effectively retain this dynamic and digitally savvy demographic:

  1. Utilising digital platforms and social media to connect with users where they frequently interact.
  2. Creating compelling content that resonates with the interests of the youngest.
  3. Offering user-friendly online experiences while ensuring that websites and apps are easy to navigate and provide quick access to information and support.
  4. Ensuring platform mobile responsiveness as many young consumers prefer to interact and purchase using their mobile devices.
  5. Providing quick and accessible customer support through live chat, social media, and chatbots while responding promptly to inquiries and addressing issues in real-time.
  6. Showing a commitment to social and environmental causes, as younger generations are more likely to support brands that align with their values and contribute positively to society.
  7. Promoting transparency even more because younger consumers value authenticity and are more likely to trust open and honest brands.
  8. Implementing gamification elements and loyalty programs that offer rewards, discounts, or points for engagement and purchases.


Undeniably, an impactful Customer Retention strategy fosters trust and commitment and transforms buyers into devoted brand advocates, simplifying upselling compared to acquiring new consumers. Ensuring the satisfaction of existing customers and cultivating repeat purchases is pivotal for the growth of nearly every business across various industries. On the other hand, neglecting the retention undertaking can have significant consequences, leading to higher churn rates, reduced revenue, diminished brand loyalty, negative word-of-mouth and lower customer lifetime value.

What is worth remembering?

  • Enhanced investment in Customer Retention strategies can help establish trust and drive repeat purchases.
  • Loyal customers spend more and remain engaged with the company, contributing to stable revenue streams.
  • A higher Customer Retention Rate (CRR) is the KPI that indicates a thriving business with strong buyer loyalty.
  • Customer Retention can be nurtured with onboarding, personalisation, consistency, transparency, tech and human balance, and exceptional services.
  • Adapting approaches to the youngest generations’ distinct preferences, interests, and viewpoints is essential for their retention.
  • Neglecting proper retention efforts increases the likelihood of buyers switching to competitors.
cx for softwareCustomer Journey Mapping Guide: Creating Impactful Experiences
cx for softwareCustomer experience analytics 101: How to have a 360 view of a brand’s CX?
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