How to Ace Your Customer Retention Strategy

Customer retention should always be top of mind, regardless of company size or industry. A loyal customer base has always been important⁠—but consumers are increasingly looking for brands they can establish a connection with. Companies need to go above-and-beyond to stand out from the crowd.

Controversial opinion: No matter what business you’re in, customer retention is always more important than acquisition. Of course, everyone has to start from zero and grow their base––but the only thing better than acquiring a new customer is retaining an existing one.

What is customer retention?

Customer retention is everything that a business does to increase their number of repeat customers––and to boost the profitability of each customer as well. 

In short, retention of customers is about keeping people happy.

Rather than focusing on creating new leads, it’s all about extracting more value from your existing customer base. And giving people a positive customer experience with your brand or company breeds trust and loyalty. 

As a user, there’s nothing worse than trying to contact a brand and feeling like you’re shouting into the abyss. Or worse, getting automated replies that don’t even come close to answering your question. One of the best ways to boost customer loyalty and satisfaction is making customers feel heard, seen, and understood by your company. It’s worth investing in a customer service platform to help keep customer satisfaction high.

Of course, customer acquisition is still important, but in this article, we’re focusing on the retention side of things. After all, when you put a lot of effort into acquiring new customers, it makes sense to want to keep them coming back for more. 

Customer retention is a bigger deal than you might think

Harvard Business Review research shows that companies with top Net Promoter Scores or satisfaction ratings for three-plus years grow their revenue around 2.5 times faster than their industry peers with lower customer satisfaction ratings. 

Studies show that returning customers spend more, buy more often, and are more likely to refer friends and family. 

It’s a lot more cost-effective to invest in your existing customer base: it can cost up to 5 times more to acquire a new customer than to get one to return. Existing customers already know about your products or services, so it makes sense to focus your efforts on boosting loyalty with them. After all, we know the value of word-of-mouth recommendations. And good will goes a long way, with one study finding that a whopping 77% of customers would recommend a business to a friend after having just one positive experience.

As a company, you can also tap into the knowledge of your existing customers to help your ongoing marketing strategy. A loyal customer base is more likely to provide accurate feedback on your products and customer service, which can inform how you operate moving forward. 

Especially now, living in the wake of a pandemic, customer loyalty is more important than ever. 

People now have higher expectations of the brands they associate with. And thanks to the capabilities of customer service software, poor communication from a company is no longer acceptable. In fact, bad customer service would convince 39% of people never to use a company again, according to research from New Voice Media.

12 customer retention tips for your business

Let’s make one thing very clear: customer retention isn’t just about answering emails and offering discount codes. You need to give customers a good reason to come back: why is your brand better than your competitors?

Here are some foolproof customer retention strategies to put in place. 

1. Implement a feedback loop

You can’t improve your business if you don’t know what’s wrong. Using surveys, product testers, and feedback forms can be an easy way to get insights into what people want, right from the source. 

2. Set up a newsletter

An engaged customer, who always has your brand at the top of their mind, is much more likely to be a repeat patron of your business. A monthly or twice-monthly newsletter is an unobtrusive way to remain on your clients’ radar. 

3. Ensure you have a super fast response rate

No one reaches out to a brand with the expectation of waiting a week for a response. If a customer has an issue, you need to do your best to resolve it immediately. The longer they wait for service from you, the higher their chance of churning. 

4. Start a customer retention program

Give people a reason to stick with your company. Can you offer incentives that put you above your competitors? 

Perhaps repeat customers can get a 10% discount on their second purchase, or you could offer a referral program for customers who share your brand with their networks. 

5. Adopt a customer service tool

Unless you’re a super-small operation, you won’t be able to field all customer inquiries without some help. The right customer service tool will help you respond to customers promptly, personalize their experience, and be present across a number of platforms. 

6. Be open and transparent

Every business makes its fair share of mistakes. But that doesn’t mean you have to lose a customer. So long as you own up to the issue, address what went wrong, and maybe even offer the customer a consolation gift, you’re far less likely to lose their business. Empathy is essential in customer service.

7. Personalize interactions to boost your customer retention

Customers don’t want generic responses that don’t sound tailored to them. It’s impersonal and takes away from the authenticity of your brand. Greet your customers like a friend, refer to past interactions you’ve had with them, and give them the opportunity to chat with the same agent if they reach out again.

Personalized interactions can go a long way in helping with customer retention.

8. Keep your employees happy

Across the board, in companies of all sizes, there’s a direct correlation between employee satisfaction and consumer satisfaction, according to a recent Glassdoor Economic Research study. Give your employees and customer service agents the tools they need to do a good job without any added stress: after all, happy agents make happy customers. 

9. Push user-generated content on social media

Again, this may not be possible for every brand and company. But using your own customers’ photos, videos, and testimonials on your social channels will go a long way in making your brand seem credible and trustworthy. 

Not only will it help you out on the acquisition and content creation side of things, but according to M2 Technology Group, brands that use UGC have higher brand loyalty and customer retention. 

10. Offer multiple support channels

Some people hate talking on the phone, some don’t have WhatsApp or Messenger, and some can only access the internet on mobile. It pays to be hyper-aware of all the different ways a consumer may want to contact you and cater to each one. That being said, you need to ensure that all communication channels are monitored equally –– you can’t tell customers to DM you on Instagram but only check the app once a week. 

11. Track your churn rate

This is the rate at which customers stop doing business with you. If your churn rate is high, then you know that there are issues to be addressed. If possible, keep track of the reasons why customers churn as well––did they switch brands because of a customer service issue, for example. 

12. …and your retention rate

Your retention rate is the percentage of your customers who remain loyal, measured over a particular period of time. Don’t forget though, that you also have to account for new customers you took on in this time frame so they don’t throw off your data. 

To determine your retention rate you’ll need three pieces of data:

S – the number of existing customers at the start of your time period

E – the total number of customers at the end

N – the number of new customers added during this time

Then you can use this retention rate formula:

Customer Retention Rate = [(E-N)/S] x 100

What’s the bottom line for a customer retention strategy?

Ultimately, the best way to keep your customers on board is to keep them happy. In many instances, interacting with customer service can be headache-inducing, so it’s up to you to stand out from the crowd.

Give your customers the best service they’ve ever had to maximize their lifetime value. Sound overwhelming? You don’t have to go it alone––Dixa can help you do it. 

We empower agents to deliver the best possible customer experiences, relying on personalization and prioritization to maximize customer lifetime value and keep retention rates high.


Mia Loiselle

Mia believes a brand is only as good as its customer service. She explores customer experience strategies, best practices, and trends in her writing for Dixa, where she’s Head of Content.

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