I worked in a retail store where repeat customers often hunted down their favorite sales associates to solve their problems. These customers didn’t always buy, but they formed relationships with their favorite sales associates and purchased at a later time. 

They became more than just loyal customers… they evolved into brand ambassadors. 

Ready to find out what keeps customers coming back to your company? Then keep reading. 

What Is Customer Retention and Why Is it Important?


Depending on the study, and the industry, the cost of acquiring a new customer is anywhere from 5 to 25 times higher than an existing customer.

Customer retention enables your company to hold on to customers with the goal of empowering them to become brand ambassadors. 

Most marketers believe customer retention is simply keeping customers from leaving your company… but it should go beyond that. Retention should also be about empowering customers to become brand ambassadors. Customer retention is a win-win, for both your company and the customer. Your company keeps customers and they continue investing in your company.  

For the past eight years I’ve had the same stylist. Why? Because he’s fantastic, understands my style, knows what I like, and has insight into my life during our 30-minute sessions. 

Do you think it would be easy for me to switch stylist? No way. I would have to waste my money with multiple sub-par haircuts to find a replacement. That’s why I remain loyal.


Did you know that just a small change in customer loyalty can have a major impact on your bottom line?

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The Benefits of Customer Retention

For a variety of reasons, just about every business loses customers. Take, for instance, the car dealership who, once they sell, never attempts to contact the customer again. 

For other companies, maybe a customer purchased because of a specific sale – a one-and-done kind of deal. They haven’t been back and they probably won’t be if you don’t continue to offer discounts, products, or services. 

A Harvard Business School study showed that a mere 5% increase in customer retention rates can increase profits by 95%. 

And a Gartner Group study estimates that 80% of your future revenue may come from 20% of your current customers. 

Think of the money your company can save with retention. You can spend less on marketing by targeting customers instead of prospects. 

Customer retention can lead to increased revenue. For example, loyal customers spend 67% more on products and services than new customers.

How to Calculate Your Customer Retention Rate?

As a lifelong marketer, math and me never got along. We shook hands and parted our separate ways. So don’t worry, I’ll walk you through how to calculate a customer retention rate even I can understand.

The formula for customer retention rate is below. Please note that “period” is a period of time you choose (weeks, months, years, etc.):


All right, what does this mean? Let’s walk through an example. 

Say last month your company:

  • Began the month with 100,000 customers
  • Added 10,000 customers
  • Lost 5,000 customers

To find out how many customers were around at the end of the month take the number of customers you started the month with, which  is 100,000 – 5,000 (number of customers lost) = 95,000 + 10,000 (number of customers added) = 105,000. So in this scenario there are 105,000 customers at the end of the month. 

Let’s plug the numbers into the formula. Please know this will not be in mathematical order. So any of you math geniuses out there don’t lose your cool because I’m bending the rules.


105,000 – 10,000 / 100,000 x 100 = 95.

The retention rate for 30 days was 95%.

So how can your company not only keep a customer but make certain they’re happy and contributing to your success?

Keep reading to find out.

6 Strategies to Increase Customer Retention


Behavioral data

You can provide tailored recommendations to customers by analyzing their browsing and purchase patterns. I can’t tell you how much it infuriates me to get an email or social ad about something I’ve already purchased. You can craft an experience that not only keeps customers coming back, but also fosters loyalty.

Re-engage Past Customers

If your marketing platform can sort through behavioral data, you can reach customers on their preferred channel. 

Customers who haven’t purchased from you in the past 6 months or longer, depending on your industry, are excellent candidates to connect with on their preferred channel.

Loyalty Program

One of the best ways to get repeat customers is to offer a loyalty program. Starbucks now has more than 16.8 million loyalty members and attributes a majority of their additional $2.65 billion in revenue to their rewards program. Sure, you may not be Starbucks, but there are plenty of loyalty program examples you can use.


Once your loyalty plan is in place, you can do something special for your most loyal customers. Advance Auto Parts provides a dedicated parking spot in front of the store for VIP members. Reebok hands out an all access pass for exclusive product releases, partner events, and even concert series to their top customers. Go ahead and decide what will work best for your company and reward your top customers.

Be Unique

Customers will buy into your mission. TOMS Shoes is a great example. Buy a pair of TOMS and a child in need receives a pair of shoes. They’ve donated more than 93 million pairs of shoes to date. 

New Products and Services

Customers who haven’t purchased from you in some time may start buying once you offer a new product or service.

It’s why the big tech companies like Apple, Google, Microsoft, and car companies like Tesla and Ford, have elaborate unveilings where they invite everyone to bask in the glory of new products and services for fat profits.

Final Thoughts

Customer retention is your company’s low-hanging fruit. If you spend a little time on retaining customers, your company will likely net major gains.   

To make certain you have a sustainable business, and without spending loads of money on acquiring new customers, retain what you have. 

Because, as Joni Mitchell once sang, “… you don’t know what you got ‘til it’s gone”.  

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Want to increase your customer lifetime value by 306%? Find out more in the Customer Loyalty Whitepaper.

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