7 powerful customer retention strategies to boost profits & keep your customers happy+loyal

7 powerful customer retention strategies to boost profits & keep your customers happy+loyal

Customer acquisition vs customer retention: Basic facts

Customer acquisition and customer retention, quite simply put, are the two main pillars that hold up a business, no matter what the nature of the business is. While the former entails the strategy of acquiring new customers through various marketing campaigns, the latter is about converting them to loyal customers by strengthening the buyer and seller relationship.

Like every other business strategy, these two strategies also combine certain processes and expenses to be devised, all the while evaluating the ROI made on them. Of course, it goes without saying that the cost of customer acquisition is more than retention efforts, which as was considered to be five times more than the latter, is actually not really so.

Because, the real cost of acquiring or retaining a customer really depends on customer’s lifetime value (CLV), which can be unique to each company. Other than that, the balance between acquisition strategy vs retention strategy depends on the following three factors:

a) Stage of your business - Technically speaking, retention strategies should be called into play only when your business has amassed a significant customer base. And for that to happen, it would mean that your business has been operating for some decent amount of time.

Businesses set up recently primarily should focus on acquiring new customers before they deploy retention as an objective, as they watch their business grow.

b) Potential for repeat sales with high or medium frequency - This is applicable for eCommerce stores that sell consumer goods like cosmetic products, grocery products, baked goods, food products, tea, coffee, toiletries and so on. When a customer is really satisfied with a particular product, they usually go for a repeat sale to replace the one that they have used up.

Scoring repeat sales would be a clear indicator of brand loyalty, something that every business aims for. However, if you’re not able to trigger repeat sales, in spite of promotional activities, among customers in a long while, it may not be worth your while to focus on them since they may have found a product that they prefer more than yours.

c) Potential for cross-selling on your online store - Not to be confused with upselling, cross-selling is the strategy of gently persuading a customer to buy more than they set out to buy. Adding recommended items related or similar to the product customers buy on the same page is how eCommerce retailers trigger cross-selling, a technique that has reportedly reaped huge dividends for Amazon.

This can be applicable to more than just consumer goods, also including durables like clothing, fabrics, appliances, furniture, electronics, home and gardening goods, footwear, sports and fitness goods and so on. Most aggregators will also come under this category.

A customer who is satisfied with their first purchase, will return for a cross purchase if they have knowledge of a good range of other options available on your store. On an extended note, here are some great persuasion techniques for cross-selling.

Customer acquisition vs customer retention has varying level of importance for different businessesSource: medium.com

How to measure customer retention rate

In case you didn’t know, there is a formula to measure the customer retention rate (CRR) for your business. And it goes something like this: CRR = ((E-N)/S) x 100, where

  • S represents the number of customers that you start with at the beginning of a period of your choosing
  • E represents the number of customers you are left with at the end of that period
  • N represents the number of new customers you acquired during that period

And now to calculate it. Let us assume that you’re targeting a period of three months to measure your CRR and you started the period with 200 customers, lost 20 customers along the way, but managed to acquire 10 new customers. At the end of three months you’ll be left with 180 customers, which will be represented by E. Hence, your CRR would be:

((190-10)/200) x 100 = 90%

This CRR is in itself a good rate, soaring above the highest average CRR scored by any industry globally as revealed by a Statista survey for 2018. Yes, the average customer retention rate is different for different industries, which can both be a relief or a challenge for you, depending on the industry your business falls under.

Average customer retention rate globally in 2018 according to industry
Source: statista.com

The retention metrics that should be under your radar

In your efforts to boost the customer retention rate for your business, there are basically three key metrics that’ll help you measure your performance, and that’s what should be under your radar.

a) Customer purchase ratio - Take the number of unique customers that you have in your total customer base, divide them by the purchases made during a given period (let’s say 12 months) and you have your customer purchase ratio. Here’s the formula: total orders / total unique customers = customer purchase ratio

b) Repeat purchase rate  - To measure the repeat purchase rate of your business, divide the number of customers in your unique customer base by the number of repeat purchases that they have made over a given given period, say, the last 12 months. The formula: repeat customers / total unique customers = repeat purchase rate

Click here to find out how valuable repeat customers are for your business.

c) Average order value - Average order value (AOV) is what you arrive at when you take the total revenue generated by your store and divide it by the orders on the same store in a given period of time (12 months for the sake of uniformity). And the formula is: total sales value / No. of orders = AOVAOV, even though considered to be an important metric to monitor your business growth, isn’t without its fair share of flaws.

Click here to know more about average order value and how you can give growth to it.

These metrics enable you to focus your strategies on the right step. For example, if you are doing well on the first two metrics, but the average order value is rather moderate, then you need to focus your energies on the last metric. Here are 10 customer retention metrics plus ways to measure them that you should be focusing on to stay ahead in the retention game.


“Whatever you do, do it well. Do it so well that when people see you do it, they will want to come back and see you do it again, and they will want to bring others and show them how well you do what you do.” – Walt Disney (American entrepreneur, animator, writer, voice actor and film producer)

Improving performance to retain customers

All things said and done, it would be an error in judgment to focus on merely on metrics in your efforts to give your business the edge it needs. And that’s because metrics simply measure the performance of your business post facto.

The true source of all business incurred, including repeat business, remains in the satisfaction perceived by the customer. Which in turn is derived from the following sources:

  1. Products or services as per the need of the customers
  2. Website experience and ease of navigation
  3. Appropriate pricing and customer’s willingness to buy at those prices
  4. Promotion & marketing communication to inform customers about your products
  5. Customer incentive programs to trigger purchases
  6. Keeping customers satisfied & loyal for repeat purchases
  7. Increasing average order value of customers

1. Products or services as per the need of the customers

How do you evaluate that your product portfolio is matching up to customer approval and, therefore, generating purchases? In this case, it would be best to go straight to the customer to find answers to such questions.

Whether offline or online, customer research on product feedback is of immense value. One of the most effective and rewarding steps you could take would be to follow customer reviews on your own site as well as those of competitors.

In fact, you can use customer reviews to your advantage and optimize conversion rate, which is surely a win in my book. Additionally, you can also create an online or offline customer panel to accept periodic feedback on your product portfolio, its quality, prices and so on.

You must realize that ultimately it's your product that customers spend money, and the stronger you are in this area, the longer lasting success you may expect. Your objective should be to lower customer churn rate so you don’t lose your valuable customers.

Customer review statistics for local businesses in 2019, 82% customers read reviews before buyingSource: wordstream.com

2. Website experience and ease of navigation

If you have a winning product but a sub-par website design, not much can help it from receiving its due recognition. Website user experience is what visitors go through when they are navigating through your site, and if it’s anything but user friendly, then it’ll literally spell trouble for your business because your customers will make their way to your competition.

Unappealing design, complicated navigation, missing product details and demo visuals, elusive customer reviews and too long of a checkout process - these are some of the features that will scare away your customers. Your customers aren’t exactly the epitome of patience you think they are, and if you are not going to help them, they will find someone else who will.

Whether you run an online or physical store, you should be able to offer your customers a pleasant shopping experience and not a harrowing one. You may employ some of the market research techniques explained above to check on the customer experience that your eCommerce store is providing.

Meanwhile, here are some proven methods that you can follow to improve your website’s user experience.

3. Appropriate pricing and customer’s willingness to buy at those prices

Needless to say, sales take place only when customers are okay with the price that you’ve quoted. Setting the right price for your products is never an easy task. Asking for higher prices than your competition will rob you off valuable customers, asking for much lower than them will dent your sales figure.

As much of a quandary as that may sound, there is a safe way to doing it right. A thorough study of competitive pricing is imperative before you work out your own pricing structure. Shipping costs also get added to the purchase cost and it’ll help your customers if they know of it on the product page itself.

It can be highly frustrating for a customer to spend precious time in populating the cart, entering shipping details and then finding out that the shipping charges are way too high compared to other stores. Read this practical guide to pricing strategies that’ll make sure neither you nor your buyers are in for a shock ever again.

4. Promotion & marketing communications to inform customers about your products

In the world of marketing, your business doesn’t stand much of a chance against competition if you’re not reaching out or communicating with your target audience. Thankfully, with the explosion of outreach channels and the power of social media, marketing communications, including promoting and advertising your products has opened up novel ways of garnering attention.

SEO campaigns and paid ads on popular social platforms like Facebook, Instagram and Twitter, YouTube, Pinterest, eBay, etc. are efforts that can pay off big dividends. Acquisition of new customers requires casting your net sufficiently wide to catch a large chunk of your target audience, but not too wide to address irrelevant audiences while increasing your cost exorbitantly.

Integrated Marketing Communication (IMC) is a model aimed at achieving marketing campaign objectives using multiple promotional channels
Source: medium.com

5. Customer incentive programs to trigger purchases

Although it may seem like a good marketing move to incentivize customers by offering attractive discounts and even occasional freebies, don’t forget that it just adds up to your costs exponentially. Not just that, it may even ultimately render your business non-viable because of the losses you will have incurred through those programs.

No, I’m not saying customer incentive programs will definitely spell your doom and that you shouldn’t even touch it with a 10-feet bargepole. However, it would be in your interest and business health to practice caution before setting out on an incentivizing spree.

Play on your product strengths, while keeping discounts minimal, and you should be on a steady path to business growth. And because we care, here are some great customer incentive & appreciation ideas that you can adopt to drive customer loyalty.

6. Keeping customers satisfied & loyal for repeat purchases

Understanding customer expectations is always a challenge for any business; keeping them happy and loyal to your brand more so. Persuading customers to make repeat purchases of the same products that they bought initially, under such circumstances, takes more than just marketing and promotional campaigns.

Initiating loyalty programs to keep customers motivated toward making repeat purchases can be an effective method. The loyalty program can be points-based, with points being redeemable on purchase of any product. There could be a bonus at every third or fourth purchase and so on. 

Use of videos in emails to the customers has also proved to be an effective strategy. The videos may be about new product launch, enhanced product features, product demos, 360 degree view, or they may be about the latest trends in that particular industry. Videos about skill development in that domain also prove to be useful for customers.

For all types of customers, building a community program, which focuses on skill or knowledge development in areas related to your products can be a lasting way of keeping your customers engaged with your site.

Though customers should be offered a choice of opening an account or checking out as a guest, the former can slowly build up to a sizeable number and become a major resource for your repeat purchase programs. Here are eight ways to keep your customers loyal to your brand.

7. Increasing average order value (AOV)

This is a major strategy, which will ultimately be responsible for generating high profits for your store. This hinges on your addition of high value and premium products to your portfolio as you go along.

However, the products must be seen as items that offer real value and benefits to your customers. Once you have such a lineup, encouraging customers to browse through these products with “Recommended Products” tag can prove to be an effective strategy.

Encouraging customer reviews and testimonials for such products can also help in a big way. Of course, basic tools such as product demos and videos remain critical here.

Global online shopping average order value by traffic source in 2019Source: medium.com


One of the biggest mistakes that online store owners can make is viewing customers as mere one-time patrons in an impatient bid to strike it big. Every customer has the potential for repeat visits and purchases.

The concept and importance of customer lifetime value (CLV) need to be understood and acknowledged here, because that’s the total business or sales value a customer may give you in the long term. 

Fundamentally, it is the quality of the website experience and your products itself that will lead to customer retention, but certain engagement strategies can greatly support your efforts. These include regular email marketing, paid advertising, email reminders, invitation to write reviews, loyalty programs, community building, video marketing and incentivizing the customers.

Overall, a healthy balance of customer acquisition and retention strategies, depending on the type and stage of your business, will go a long way in improving your store performance. You can reach out to our marketing experts, who can help you strike that perfect balance so you never lose a valuable customer again.


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