10 Proven Customer Retention Strategies for Better Business Growth

10 Proven Customer Retention Strategies:

  1. Provide excellent customer service
  2. Say thank you
  3. Request feedback
  4. Apologize for mistakes
  5. Leverage personalization
  6. Offer a subscription
  7. Create a loyalty program
  8. Educate customers
  9. Toot your own horn
  10. Build a community

Customer retention is fundamental to continuous business growth, but there are lots of obstacles to overcome when building a business without constantly replacing customers that make only one purchase.
It’s easy to become focused on attracting new customers instead of keeping existing ones happy and continuing to use your products and services. But retaining current customers while acquiring new ones is the best way to grow your business consistently year over year. Plus, this approach costs less, is more profitable, and takes less effort.

In this article, we look at what customer retention is, why it matters, and how to calculate your customer retention rate. Then we provide you with 10 customer retention strategies you can implement to support continuous business growth.

LinkedPhone serves the small business community with local & toll-free business numbers that work with your cell phone, desk phone, & laptop. Add a 2nd phone number to your cell phone with our mobile app. Talk & text with clients on the go. Add team members too. Finally break free from the desk phone. At LinkedPhone, freedom rings! 🔔📱💻☎️

Question mark

What is Customer Retention?

Customer retention is the process of using various strategies to increase your business’s repeat customer rate to boost their value over time. The goal of initiating customer retention practices is to reduce the number of existing customers lost by improving customer satisfaction. Ultimately, you want these customers to become lifelong loyal fans of your business.

Ratings and Reviews Icon - Should I Be a Freelancer for Upwork or Fiverr

Why does Customer Retention Matter?

Customer retention is essential for the long-term health of your business. Existing customers who are already familiar with your company and products are also the easiest to sell to. That makes them the most predictable source of new revenue.

That’s why continually losing current customers while acquiring new ones is like digging a hole in sand; you run the risk of ceasing to grow, or worse yet, losing revenue. Retaining existing customers enables you to steadily grow your customer base, boost revenue, and increase profitability.

Special Promotions and Offers - How to Get More Customers for My Small Business

Benefits of Retaining Loyal Customers

Focusing on customer retention offers your business many benefits, such as:

Increases average order value

The longer you retain your customers the more they trust you and your products, so they are more likely to purchase more from your company on each visit. According to a study by Bain & Company, customers spend more with your company depending on how long they have been doing business with you. The study revealed the average repeat customer spent 67% more in months 31 through 36 of doing business with you when compared to the first six months of their relationship with you.

Boosts profits

Long-term customers are more willing to try other products from a company they trust over an unknown brand. So greater customer satisfaction boosts your profits across all of your product lines.

The same Bain & Company study referenced above found almost 70% of longtime customers more willing to buy different products from businesses they know and trust than from an unfamiliar company. Another well-known study also found that increasing customer retention rates by as little as 5% increases profits by 25% to 95%.

Word of mouth advertising

Customer retention helps you create fans who promote your brand to their friends and family. In fact, 88% of consumers trust word-of-mouth recommendations from people they know over other sources such as advertisements. So, there’s no replacement for the referrals from loyal long-term customers when it comes to growing your business.

Reduces selling costs

It costs less to sell to existing customers. Acquiring new customers can cost up to five times more than it costs to retain existing customers. Most businesses will want to focus greater efforts on customer retention, since it’s more cost effective and profitable than constantly searching for new customers.

Different Business Types - Sole Proprietorship Structure

What is Customer Retention Rate?

Your Customer Retention Rate (CRR) shows you how effective your organization is at keeping customers happy, so they want to continue doing business with your brand. This metric is the percentage of customers who stay with your company by taking actions like repeat or additional purchases, upgrades, or subscription renewals. This measurement can be calculated for any period of time and should be calculated on a regular basis to ensure your company’s customer base is continuing to grow.

Sales funnel consideration

Why Measure Your Retention Rate?

Measuring your customer retention rate allows you to confirm that you aren’t losing customers as fast or faster than you’re acquiring new ones. This can help you identify necessary adjustments to company operations, so you meet your growth targets. CRR is also an excellent predictor of revenue for the upcoming quarter, the quality of your customer service in the eyes of your customers and tells you when it’s time to add or adjust your loyalty program.

Networking - How to Get More Customers for My Small Business

How to Determine Retention Rate

The next section is going to be a bit technical, but don’t worry if math isn’t your best subject. Just plug in the numbers where indicated and you’ll get your current CRR.

To calculate your CRR you need to designate a time period such as a month, a year or a quarter. Next, select start and end dates for the period.

Gather the following information:

    • Number of retained customers at the start of the period (S)
    • Number of retained customers at the end of the period (E)
    • Number of new customers acquired during the period (N)

Then plug these numbers into the following formula:

CRR = ((E-N)/S) x 100

This formula is less complicated than it appears. Simply subtract “N” from “E”. Then divide the resulting number by “S” and multiply that number by 100. This gives you your retention rate as a percentage.

For example:

If you start with 1,800 customers (S), end with 2,000 customers (E), and added 300 new customers (N) during the period, your formula looks like this:

((2000 – 300)/1800) x 100 = 94%

This tells you that you kept 94% of your customers and lost 10% through churn.

Once you have these results, you should dig deeper to determine if this level of turnover is a threat to the growth of your particular business. For example, if your new customers are spending more than the ones you lost, this may not have a major impact on your bottom line. But, if the customers you’re retaining are spending less, this could cause problems in the long term. The cost of customer acquisition for your specific business should also be considered here.

Follow Up With Potential Customers - How to Get More Customers for My Small Business

10 Proven Strategies to Retain Existing Customers

Depending on what product or service you are selling, there are dozens of great ways to retain existing customers. Below are ten tried and true strategies across a wide variety of industries to get you started in formulating which approaches you choose to employ to reduce customer churn.

1. Provide Excellent Customer Service

Short response times, consistent first-call issue resolutions, minimal delivery issues, and making it easy for customers to contact your company all add up to excellent customer service. Providing superior customer service is an effective customer retention strategy because 78% of consumers will do business with a company offering exceptional service after a mistake.

You can achieve this level of service by doing things like offering live chat, phone, email, and social media contact options. This makes it easier for customers to reach you when and where they choose. This makes your customers happier because they don’t need to use additional effort to resolve issues, make purchases, or request information. Click to learn more about improving your own customer service.

2. Say Thank You

It used to be common for businesses to thank customers for supporting their small business, but today it’s an unexpected human exchange and wonderful surprise. Your customers’ experience consists of all of their engagements with your company including your sales agents, customer service, your product, tech support, and delivery agents. Showing appreciation by saying Thank You boosts their impression of your organization regardless of if you thank them verbally, through an email, or by sending a handwritten note

What’s more, research shows that 60% of customers stop dealing with a business if they feel their business is not appreciated.

3. Request Feedback

Customer surveys give you a way to learn what you are doing well and where you need to improve. Use these tools to gather input following customer service calls, deliveries, installations, and other milestones in your customers’ experiences with your business.

This enables you to glean insights into the performance of individual service agents, delivery drivers, accounting staff, or others engaging with your customers. Surveys also help you identify ways to improve your product or service offering to continuously boost quality in terms of customer perception.

Embracing feedback not only helps you enrich your product or service, but also shows your customers that you care and are interested in continuous improvement.

4. Apologize for Mistakes

When customers file a complaint or give you negative feedback, it’s your opportunity to overcome the negative with a positive experience and earn a customer for life. This process includes a sincere apology even when you don’t agree with what the customer is saying. It’s a cliché, but worth remembering: the customer is always right.

5. Leverage Personalization

Consumers have grown to expect personalized experience when engaging with brands. This means sending messages and emails tailored based on insights you have gathered about your customers through their interactions with your business.

Personalization boosts customer experience when engaging with service personnel without needing to provide historic information repeatedly. A great way to document your customer insights is in a Customer Relationship Management (CRM) application, such as LinkedPhone’s Client Notes feature. This makes it easier to customize customer communications and recommendations while boosting customer satisfaction and retention.

6. Offer a Subscription

Product or service subscriptions offer convenience while automating repeat business. For example, if you offer heating and air conditioning services, you can offer an annual preventive maintenance subscription. Customers who sign up for this subscription pay an annual fee for two routine maintenance visits at the beginning of heating and cooling seasons. You send out an email or post card to these customers every six months to remind them to schedule their maintenance appointments. This makes it easier for them to remember to take care of their heating and cooling equipment while retaining customers.

Busy clients will not only appreciate this, but they will also save money since annual subscriptions often offer a cost savings. This is a win-win for both you and them, since it costs you less to maintain this program than to acquire new customers.

7. Create a Loyalty Program

You can increase engagement with your customer base by starting a loyalty program. These programs often incorporate gamification techniques to inject an element of fun into the program.

Loyalty programs typically are designed to encourage repeat purchase. For example, you can issue a punch card to customers who come to your sandwich shop. Every time they buy certain items on the menu, they receive a punch on their card. And when they have accrued a certain number of punches, they receive a free menu item or a reward of some sort.

This doesn’t have to cost your business a lot of money, but it saves you a significant amount in marketing dollars while boosting your bottom line.

8. Educate Customers

Depending on the product or service that your business offers, there are a variety of ways that you can educate your customers. Educating your clients provides them with added value and improves their ability to get the most out of your product or service. The end result is a superior customer experience and greater customer satisfaction.

A few ways to educate your customers include:

    • Product onboarding in the form of tips and tutorials to help customers get started after purchasing your products.
    • Routinely emailing existing customers various use cases and examples of how other customers are enjoying your products. You can also share tips and tricks for improving their specific experience with your products.
    • Offer one-on-one or group training sessions to learn how to most effectively get started using your product
    • Provide a full complement of online self-service training videos and resources for using your products

9. Toot Your Own Horn

Get customers excited about new features, specials, and upcoming events by sharing your excitement about them. This gets them looking forward to these things and encourages participation by your existing customer base. Plus, it gives them something to talk about with their friends and family who might be interested potential customers.

10. Build a Community

Create a user community online through social media or on your website where existing customers can interact and support one another with use case suggestions and answers to common questions. Depending on your type of business, this can even become a community where new friendships are developed. When your customers enjoy being a part of your supportive community they’ll relate these positive feelings to your brand.

Re-Engage with Prior Customers - How to Get More Customers for My Small Business

Grow Your Business with Loyal Customer Advocates

Customer retention is essential for continuous business growth. Without implementing retention strategies, growing your business becomes more difficult if not impossible. Start by calculating your current customer retention rate. Then determine which strategies are most beneficial for your business based on the product or service you offer.

Implement one strategy at a time until it is established and then add on as you see fit. The goal is to develop loyal, long-term customer advocates who continue to buy from your company and promote your brand.

Looking for a virtual phone system that includes a client notes function to facilitate customer retention? Sign up for a 7-day free trial of LinkedPhone today!

Business Growth Toolkit

Get the latest thought leadership insights on growing your business plus occasional LinkedPhone updates. We respect your inbox!

Small Business Resources

Add a Business Line to Your Cell Phone
Small Business Podcasts
Books for Business Growth
Small Business Mobile Apps
Top Entrepreneur Forums
The 30-Second Elevator Pitch
Perfect Voicemail Greetings
Add Click-to-Dial To Your Website
What is VoIP? How Does it Work?
Guide to Small Business Software
What is a Virtual Phone System?
How to Share a Team Phone Number
Toll-Free vs. Local Business Number
Learn the Parts of a Phone Number
Inspirational Small Business Quotes
Mastering the Art of the Cold Call


A special high five to Margot Howard for her outstanding research and contributions to this article. We love working with and supporting like-minded entrepreneurs who are passionate about business success strategies. Thank you Margot! ❤️

Get In Touch

We would love to hear from you.
Please contact us at any time with questions or feedback.

Get a Number Now - Try Us Free!