Customer Retention That Works: 5 Ideas and Examples

Written by:

| Published:

June 21, 2023

| Updated:

July 29, 2024

Attracting new customers is one thing, but keeping the ones you already have? That’s when a business really starts to set itself up for long-term success.

In this post, we’re going to break down why customer retention matters so much, as well as 5 key strategies and examples that you can use to keep your customers coming back.

Why is Customer Retention Important?

Customer retention is all about looking at the people who return to your business over and over again. They’re the loyal ones, re-reordering or renewing the same product every few months or years. These repeat customers come back to your business first, as your brand has established itself as the top choice for your product or service. Investing in customers like these can pay off big, and this is why:

It’s More Cost Effective to Take Care of the Customers You Already Have

A 2014 Harvard Business Review article explained that attracting a new customer can be 5 to 25 times more expensive than retaining one. The exact figures depend on the industry you’re in, but even common sense will tell you that it’s much easier to convince someone to purchase something from a place they already know and trust than it is to bring in a shopper who is only in the initial buyer’s journey learning about you.

Advertising can also be far more targeted when you’re trying to attract someone you’ve already engaged with. If you’re a beauty brand and someone’s just purchased a lipstick from you, sending them a code to get a free lip product with their next purchase isn’t just a random bit of marketing: it’s targeted to their interests. Advertising is far cheaper and more effective when you know who you are targeting with your communication.

Returning Customers Spend More

A 2014 survey showed that returning customers tend to spend 67% more than new customers. This makes sense. If you think about those businesses with whom you’ve had a positive business relationship, you’ve already established trust. Once you trust that something is valuable, it’s easier to justify spending more money on it.

People make emotional decisions to purchase, but they justify that purchase with logic. They choose to purchase your products or services because of how it makes them feel, but they will use data and logic to justify it. The positive history they have with your brand is a big part of both the emotional decision as well as the logical justification for continuing to do business with you.

Boost Brand Recognition

Building a strong brand voice is always important to ensure that your audience recognizes and connects with you. And though we all invest in online advertising, word of mouth and influencer marketing holds growing value. It’s why loyal customers can become your biggest promoters and do more for your brand than a big ad spend. These passionate brand advocates leave great reviews, share their experiences on social media and tell their friends about your products and services.

Not only does this boost sales, but it also boosts overall brand recognition and trust. Suddenly you’re not just that business someone saw advertised on Instagram. You’re the place that people can’t stop telling their friends about. It may seem counter-intuitive, but sometimes the best way to attract new customers is to invest in the people who are already your biggest fans.

How to Measure Customer Retention

There are several metrics to use when measuring customer retention, but the simplest approach is looking at the percentage of existing customers who return to your business over time. If the majority of your first-time customers come back and use your service or product multiple times, that pushes your customer retention rate up. If you only seem to have first-time customers, that will send the rate down.

Here are a few other metrics that are used to judge customer retention:

Customer Churn Rate: The opposite of customer retention rate, customer churn rate measures how many customers are lost over a period of time.
Revenue Churn: A measure of how much money you lose when customers choose to not renew service contracts.
Repeat Purchase Rate: This aims to answer the question of how many customers come back to purchase from you again after their first purchase.
Customer Lifetime Value (CLV): As the name suggests, this metric is all about how much profit a customer has brought to a business throughout the lifetime of the customer relationship.
Net Promoter Score (NPS): This score shows how likely it is that your customers will recommend your business to other people and is usually based on a rating that a customer has given on their experience.

To use most of these metrics, you need to have a strong sense of what your website KPIs are so that you can see how well your website ROIs are being hit.

5 Customer Retention Strategies

Now that you know why customer retention matters and how to measure it, here are 5 strategies proven to keep customers coming back long after their first purchase:

Make it Personal

We’ve already spoken about the value of customer data, but it means nothing if you don’t use it to personalize how your business engages with returning shoppers. One of the first areas this applies to is advertising. For example, you can use tools such as our no code popups, slide-ins, and banners in Kadence Conversions. These Kadence WP popups can be used to provide offers to returning customers that reflect their interests.

Your customer support communication also needs to reflect this level of personalization so that loyal shoppers feel that they are respected members of your brand community. The more attuned your customer retention strategy is to your customers, the more you’ll be able to keep their attention.

Answer Questions

Helping your customers be more successful with the products and services you offer is key to customer happiness over the lifetime of their subscription or ownership of the product. As such, support is critical for this important customer retention metric. After all, who would stick with a company that didn’t offer exemplary support in using the product or service?

Making sure that shoppers have easy access to your support team is crucial when it comes to customer retention. From both the shopping experience as well as the ownership experience, support solidifies customer success.

Blogging using WordPress is an excellent way to answer both pre-sale and post-sale support questions. By providing clear and easy to read documentation with both video and visual support elements, your audience can get clear on why they need your product or service and put it to great use in their lives.

If what’s holding you back is needing to know how to start a blog, click here for a full guide on how we can help you.

Reward Loyalty

This customer retention strategy is simple: we encourage loyalty by rewarding it. How a business goes about this can occur in multiple ways, but setting up loyalty and referral programs is where it all starts.

Loyalty programs where customers get discounts on future purchases once they hit a certain spending amount are also great at incentivizing people to come back. Any way that you can reward your customers for returning will help maintain a relationship with them that goes the distance.

Use Feedback

Some of the most valuable insights a business can receive on how they can improve their customer retention strategy is from their own customer base. Make sure to set up a feedback loop that allows people who have bought from you to share those insights so that you can make their experiences even better and, hopefully, attract them back for more. This can be done through surveys emailed to customers after purchases or feedback forms on your website. The Kadence form block allow you to create feedback forms with ease so that you can get valuable insights directly from customers. Storing those feedback submissions in the database is simple when you have Kadence Blocks Pro, so you can easily export the submissions into a spreadsheet for further analysis.

In your forms and surveys, ask questions about the product, whether it was easy to order and what their overall impression was of your website. You may find that there are some areas to improve on that are otherwise keeping people from returning. Maybe it’s time to rethink your product pages or do an overhaul of your website design. Whatever it is that’s keeping customer’s from sticking around, feedback is one of the best ways to get to the bottom of it.

Highlight Social Proof

New customers are far more likely to shop with you if they can see that others have chosen to do so. Proof, especially from happy customers, is difficult for people to ignore. To highlight how people have responded to your business, you can create testimonial pages on your site or share positive reviews on your social media. The Testimonial Block from Kadence Blocks makes this a breeze.

Any way that you can show that the value of what you do extends past a product page or a single order helps imply that your business is worth returning to. That’s why social proof remains one of the best areas to look to when you’re building a customer retention strategy.

5 Customer Retention Examples

Most of the major brands and companies that you see dominating their industries reached that position in part, at least because of their ability to maintain customer loyalty. Keep reading for some examples of customer retention strategies in action, some of which might even have you in as a customer already, and get the inspiration you need to revamp your business’s customer retention plan:

1. Glossier

Right from when they began, the billion-dollar beauty brand Glossier gave out $10 in store credit every time a customer’s referral made a purchase. This customer retention strategy encouraged people to get their friends onto the brand and created a sense of loyalty amongst their customer base that has been vital to the entire brand’s success.

2. Codecademy

One of the best social proof strategies that we’ve seen in recent years is from Codecademy and their “Learner Stories.” Their video testimonials, in which alumni share how their learnings opened personal and professional doors, are a reminder of just how convincing approaches like this can be. As we’ve said, your best promoter is usually the person who has already benefitted from what you do.

3. Ikea

There may be a running joke about the frustrating nature of Ikea instruction manuals, but their blog has been instrumental in helping customers set up and maintain purchases from them. They’ve used their blog as a key support tool for customers, showing that sometimes the best way to retain customers is to make it as easy as possible for them to use your products and, when in doubt, get help about them. They also share décor inspiration and general tips to keep their community excited.

4. Nordstrom

Nordstrom has set up multiple feedback channels with their customers that go beyond simple product reviews. The company emails surveys asking shoppers to rate the likelihood of them recommending the store to others, as well as prompting users with surveys as they browse the site. All this data is then constantly put to use to maximize the store’s ability to attract and retain customers.

5. Spotify

Spotify Wrapped is perhaps the most popular example we’ve seen of a customer retention strategy that’s based all around personalization. The annual event uses data about what listeners have enjoyed the most to attract them right back to the app to listen even more. Just simply reminding people about what they’ve enjoyed using or buying on your site can be enough to attract them back.

Create a Customer Retention Strategy That Works for You

Every business has its own gaps when it comes to customer retention and its own context. That’s why we’ve made sure that our Kadence WP offerings are flexible enough for you to build the strategy that works best for you and your business.

We’ve created blocks that allow you to set up feedback forms and customizable pop-ups, as well as guides on issues like setting up product pages that actually convert into sales. If you’ve found that you need to do a complete overhaul of your online store, we can help with that too.