Customer Retention Strategies – 10 Foundation Examples

For most businesses, keeping existing clients using effective customer retention strategies is vital in keeping it alive.

There are many reasons for wanting to retain existing customer. The underlying principle behind it however is simple; Acquiring new customers is difficult and resource intensive. Bringing existing customers back is not just easier, it’s less taxing and here is the kicker… existing customers spend more, more often. Bargain right?

The Harvard Business School noted in 2000 that increasing customer retention by a mere 5% improves an average company’s revenues by 25% to 95%. Huh? You probably this this makes no sense as how can 5% lead to 25 or even 95%? Well return customer don’t just spend money, in most cases they spend more. The fact they often spend more means that retaining a small portion of them can lead to a much larger flow on effect.

customer retention value over time
From the Economics of E-Loyalty. Acquisition costs lead to reduction in profit early in the lifecycle which increases as time moves on.

Even understanding this, companies invest a huge amount of effort and money to acquire new customers. The successful ones focus on things such as brand awareness, innovative product and service offerings, and stay one-step ahead of the competition in terms of consumer support.

Many organisations do poorly with customer retention because they disregard how important it is even though it is so much easier to re-sell existing customers, than it is to acquire new ones.

I believe this heavy skew towards acquisition is due to traditional marketing and marketing curriculum focusing heavily on customer acquisition.

The best practices for customer retention strategies come from noticing the obvious, using common sense, and thinking about those things in new ways. NGData asked 42 experts for their advice on the best customer retention strategies, which we highlight in this article.

1. Stay in Contact Without Being Annoying

Communication with customers is a good thing. Right? The correct answer is, “It depends on how it is done.” Excessive e-mail communication, such as sending a daily email to the entire email subscription list is likely to drive more customers away than it is to retain them.

Only a few businesses have daily breaking news stories. Examples of this are those in financial services and investments where the markets change hourly. Most businesses do not have a justified need to communicate with customers that often. Damage to customer relations comes from over communication, especially by sending out too many sales and promotional messages.

Imagine your internet provider emailed you daily? At first, you’d probably just ignore them. Then, it would become silently irritating and you’d be onto the ‘mark as read’ pretty quickly. Then the trash button. Then if the frustration level becomes high enough, you’d unsubscribe from email list and before you know it, your association with that company is not as rosy as it once was.

For most businesses, communication once per month is more than sufficient, unless there is a compelling reason to communicate more often. A good compelling reason comes from the customer’s point of view, not from the organisation’s point of view. Examples of compelling reasons might be offering a free test of an upcoming software release as a beta version or giving free tickets to the best customers for an advance movie premier of a popular blockbuster film.

2. Keep Communication Short and Compelling

The first thing a customer sees about an email is where it comes from and the subject line. The subject line is the first impression. There are microseconds available to convince the person to open the email. With the massive free storage available, many do not even bother to click on an email long enough to throw it away.

Subject lines, which improve email open rates, include those that are:

  • Funny – This investment scheme made monkeys fly out of my butt
  • Shocking – Everyone is a terrorist and most do not know it
  • One word – Panic
  • Use numbers – 10 things that cost you money
  • Express scarcity – Preferred clients get 75% off for the next 24-hours
  • Personal and local – Take your date to the best restaurant in Boston for free
  • Create curiosity – What your pet thinks about you
  • Are mysterious – What thousands know, that you don’t
  • Are blank – Hubspot reports from a study done in 2014, that emails with no subject line were 8% more likely to be opened, because they are so rare.

More subject lines items can be found here and here.

Once a customer or client opens an email, do not overwhelm them with massive amounts of information. Use catchy headlines that have a “read more” link for them to click on to get more information. These links also help track email response rates and allow A/B testing of different configurations to see what works the best.

8% higher opening rate than emails with a subject! Courtesy of Hubspot:

3. Make Good Customers Feel Special – Convert Irate Customers to Best Customers

Everyone appreciates feeling special. Getting birthday congratulations and good wishes for the holidays are classic ways to let customers know that they matter to a company. One clever way to build up this feeling is to create a celebrated annual anniversary from the date of the first customer purchase and give a gift or recognition on that date each year thereafter. American Express made good use of this tactic by printing on their credit cards “Member since ______” (the year the customer first joined Amex).

Love your irate customers! Irate customers are emotionally involved with the company’s products or services so much that they take the time to complain to the company about them. Most dissatisfied customers do not bother to complain. They simply stop purchasing and switch to competitors without saying why.

Customer service representatives, when dealing with an irate customer need to be trained and have the authority to communicate that, 1) They understand how important the customer’s feeling are; 2) They are able to do something about the problem, and; 3) Ask the customer what they think should be done.

Then they should do whatever they can to make the customer satisfied. The extra effort of helping an irate customer will usually turn them back into one of the best customers a company has.

4. Offer Irresistible Discounts

This technique is useful for any product or service that has a monthly billing cycle, subject to renewal. When a customer fails to renew a subscription, an automatic discount offering program triggers that continues to maintain contact. Reductions in subscription price combine with a longer subscription period.

Compare customer acquisition costs to determine the discounted offering. For example, if a new customer acquisition cost is $75 per customer and the annual subscription is $100; an existing customer can be offered a discount of 75% and pay only $25 per year. This provides the same revenue as getting a new customer.

Even better is offering an existing customer a two-year subscription for $50, saving them $150, which is an almost irresistible offer. Make offers using a stepped basis with more than one attempt and more than one reduction in price.

By treating customers who are leaving as if they are new customers, retention of existing customers improves.

5. Reward/Loyalty Programs

Programs that offer rewards to customers for brand loyalty are extremely effective, when the programs are easy to understand, and the rewards are easy to achieve.

subway loyalty card
Remember the subway loyalty cards? They no longer have them down under!

My local coffee shop gives me one of those loyalty cards which I originally thought was a bit old school in terms of marketing but whatever, $4.50 for a coffee in Sydney means if you can get a free one.. you take it. Guess what? I love to see that card filled up with signatures until I get my free coffee! In fact, I’ve found myself buying a coffee just to get that free one!

Social Annex compiled data on customers from a variety of survey results. The studies noted such things as, 87% of customers want reward/loyalty programs. The most critical time to gain a customer’s loyalty, as reported by 48% of customers, is when they make the first purchase. About 46% of customers increase purchases, because of the loyalty rewards offered.. As my coffee shop obviously knows.

Loyalty program membership in the U.S. increased 27% from 2012 to 2014. In America, there are now about 2.6 billion members in total for all the loyalty programs offered. Many shoppers are members of more than ten loyalty programs. 83% of these members say that are more likely to continue purchasing a brand with a loyalty program that offers rewards they like.

It is clear from these study results that reward/loyalty programs are quite effective when managed well.

Customer complaints about reward/loyalty programs include, 1) 65% of customers experience frustration with a brand when accessing purchases using different methods (online versus brick and mortar stores); 2) 87% of customers want brands to improve these experiences, and; 3) 85% of customers who signed up for a reward/loyalty program did not receive any communication from the company.

6. Useful Content

Content is still king. Giving customers useful content that is not a sales pitch helps establish the organization as an authority in a particular space. This is a terrific way to increase brand loyalty. The content relates to what the company does and the interests of its customer base.

Publication of eBooks and “How to” guides, sponsored by a company, is one way to increase customer loyalty.

Some things are counter-intuitive. Quizzes are interesting to customers, because quizzes tell them something about themselves. Surveys that only ask questions about the company, its products, or services are less interesting.

For example, a candy company that promotes taking a quiz to determine what kind of candy bar a person would be, based on their personality, will get more interest than sending out requests to take a survey about candy.

7. Support Employees so They Can Be Kind to Customers

Organizations that are respectful of employees and give them the necessary support to be able to perform well in their jobs, help create a workforce that understands customer satisfaction is a priority for the business to thrive.

Every contact between a customer and anyone from an organization is an opportunity for kindness. Customers are people who deserve treatment with respect and politeness. An organization needs to rid itself of sullen, rude, and low energy people in every place where they have contact with the public. One bad employee can literally drive a huge number of customers away.

Organizations should proactively reach out to customers to make sure their experience with the company is going well, their needs are being satisfied, and let them know the company appreciates their business.

8. Personalize Messages

To build customer loyalty it is important for customers to feel an organization cares for them after a sale is made. The critical period to establish customer loyalty is in the first three months of the initial customer contact or purchase. A personalized welcome message sent to the customer who becomes a member of the rewards/loyalty club is essential. Surprise discounts and gifts for new customers work very well.

When employees communicate with customers, have them use their names. Using the customer’s name and having employees identify themselves by their name, makes the experience for customers more personal and pleasant.

Having public forums that encourage customer comments, which block inappropriate content like spam, are a wonderful way to stay in touch with loyal customers and get feedback from them.

9. Customer Service Availability 24/7

Live chat on websites is a good way to offer help to customers. On the Internet nothing ever stops, so if possible it is best to offer customer service on a 24/7 basis. If that is not possible, use an automated email response system to inform the customer that a service ticket has been created and someone will contact them during the next open business hours.

Promptly answer all inquiries and immediately deal with any complaints.

10. Special Events and Social Media Influencers

Special events, where company employees have direct contact with loyal customers are very impactful. These events do not have to be extravagant. They can be as simple as a picnic or a barbeque. Even the VIP customers who do not attend the event will appreciate the fact that they were invited.

Steve Jobs, while he was alive, was a master at creating a public event to present Apple’s newest products. He presented the products to a room packed with loyal supporters. Customer loyalty to the Apple brand was phenomenal, aided very much by these public product launch events.

When a company establishes a brand, customer loyalty can create a lifestyle. A good example of this is the support for Harley Davidson motorcycles. Social media becomes a focal point for those with brand loyalty to congregate around the related influencers who have a following.

For its 110th anniversary, Harley Davidson used a three-day live music concert and motorcycle gathering in combination with select social media influencers to show off its new motorcycles.

In 2016, the company’s current global campaign is “Live Your Legend.” The theme is a father encouraging his young son to follow his example and become a loyal Harley Davidson customer. This is an example of how to extend customer loyalty to the next generation.


Companies that do well take customer retention very seriously and continue to work hard to maintain customer loyalty. Innovation in the use of social media, having customer reward/loyalty programs, and providing excellent customer service, all play an important role in this effort.