Are you working hard to please your customers? If so, you’ve likely spent a lot of money on marketing strategies, raising awareness, and looking for lots of useful tools to optimize your store to get the customer to come back. So what is the most effective method that you have done?

With the expansion of the ecommerce industry, every merchant from small to big business is feeling the competitiveness of the market increasing more and more over time. Successful entrepreneurs know that the customer-centric approach is essential. Hence, owning the customers’ relationship, your sales and revenue will increase. Not only that but when customers keep returning to your store again and again, your reputation will inevitably be improved.

You will find everything you need to know about customer retention in this post. We’re going to give you some proven tips to answer the question of how do you get customers to come back. Even if you only implement these tips and nothing else, you’ll put yourself at a significant competitive advantage.

What will you find in this article?

What is Customer Retention?
Customer Retention vs. Customer Acquisition
The Benefits of Customer Retention
When Should You Care About Customer Retention?
Key Metrics to Measure Customer Retention
7 Customer Retention Strategies That Work

Sounds good? Let’s get into it!

What is Customer Retention?

Customer retention means the process of maintaining or keeping customers once you have acquired them. It’s all the activities that a company must do in order to keep their customers around. The goal is to build a long-lasting relationship between the brand and consumers. Once a customer becomes loyal to your brand, not only he will buy more from you than a normal customer but he’ll spread good words about your business, increase your reputation.

Once a customer becomes loyal to your brand, not only he will buy more from you than a normal customer but he'll spread good words about your business, increase your reputation. Click To Tweet

On the other hand, we have customer acquisition, which means the process of gaining new customers. Although they are related, they are two completely different strategies.

Customer Retention vs. Customer Acquisition

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Customer Acquisition

The initial goal of customer acquisition is to gain new purchasers. It is likely a monumental challenge to young startups, small and medium enterprises. With the process focusing on marketing, which is basically communicating with or attracting new customers through targeted messages.

Most enterprises use marketing via ads or commercials to trigger the excite of potential clients. Companies may also use direct marketing, which is when an employee of the company speaks directly to potential clients in hopes of gaining their business.

A successful business can’t be operated without acquiring new customers. However, regardless of the marketing strategy that any other company chooses to use, it is still costly and time-consuming. More importantly, the company can’t be sure that they will even gain a new customer through these processes. Although your sale team works very efficiency, customers come to your store may also depend on other factors such as products, service, the reputation of the brand, etc. Your strategies will go on failure if it has one thing wrong. So the whole effort of your business will end.

Yet, the wrong is many companies devoting too many resources to customer acquisition, but not enough to customer retention. So, if you make a mistake while acquires new customers, you will fail in the whole strategy and lose your clients.

Every strategy has its weaknesses. The downside of customer acquisition is its cost. To attract new customers, you have to spend a lot of money. According to Invesp, more than 70% of respondents agreed that it’s cheaper to retain than acquire a customer.

o attract new customers, you have to spend a lot of money. According to Invesp, more than 70% of respondents agreed that it's cheaper to retain than acquire a customer. Click To Tweet

Customer Retention

In marketing, the terminology “customer retention” is the process of engaging current customers to continue buying products from your business. The goal of client retention programs is to retain as many shoppers as doable. Retention marketing includes the careful campaign and customer retention techniques that companies use to form trust and customer loyalty, fight back competitors, and smoothy lead buyers back to their business again.

Hence, only with nurturing the relationship with current customers, they will continue to purchase the products and services that your company is offering.

Although customer retention is important, it is anything but easy. Some of the toughest obstacles were competition and losing sales to lower-priced marketplaces. It is obvious that in order to turn normal clients into loyal ones, you’ll have to invest in many programs such as sale-off, customer loyalty, brand loyalty initiatives to compete with other businesses.
Challenges for customer retention strategy
Some challenges of customer retention strategy (Source)

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    The Benefits of Customer Retention

    So with a brief comparison between customer retention and customer acquisition you must have an overall awareness of the benefits from them. Though both of them have challenges to adapt to your business, customer retention is more appropriate in many cases. Here are some outstanding benefits of customer retention.

    • Improve Conversion Rate

    80% of a company’s future revenue will come from 20% of its existing customers. According to Invesp, the success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%. Bain & Company’s research found that when customer retention increases by 5%, it leads to increase interest by 75%. All these data show that most of the company gets to profit from current clients. So if you want to improve your conversion rate, you better have a customer retention strategy.

    According to Invesp, the success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%. Click To Tweet
    • Old Customers Buy More

    Loyal customers prefer buying and tend to spend more money on shopping in your store. Statistics show that engaged consumers purchase 90% more frequently, spend 60% more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. On average, they’re delivering 23% more revenue and profitability over the new customer.

    Statistics show that engaged consumers purchase 90% more frequently, spend 60% more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. Click To Tweet

    A valued client trusts your business and believes that you simply provide a superior service compared to competitors. They believe that your business listens to their needs and requests. So it is important that you do so! Pay attention to those brands with lots of loyalty strategies as they’re a lot of seemingly to form further purchases at your business.

    • Reduce Marketing Cost

    Customer acquisition costs significantly more to attract a new client than customer retention does to allure an existing one. As we mentioned above, customer retention saves you cash and cut back your selling expenses by keeping your recent customers who are already familiar with your products and services. Familiarization along with your merchandise and services means that your business doesn’t need to spend much time on client support.

    • Get More Feedback From Engaged Customers

    It is necessary to hear customer feedback because most of them are valuable feedbacks. 97% of consumers said they are somewhat likely to become more loyal to a company that replies their feedback in careful, whereas more than half of consumers said they are not willing to continue being a client of a company that ignores their feedback. When a customer feels uncomfortable to you because of unanswered feedback, they may continue sharing unsuitable comments about your product. It even worse if they told their friends, these people would suspect your service. So you better listen to what your customers are saying.

    Sometimes customer feedback is the best marketing strategy. They are frequent customers so they will know which areas of your business may well be improved. If their feedback is approved, they will extremely excite and support your company with their best ability. They can even promote your company with their friends, the family also. Ask your loyal customers about how you can serve them better. This may lead to new opportunities that you may have overlooked.

    Your loyal customers are going to be your best supply chain of business. Although online and mobile marketing, social media campaigns are developing, the best way to turn a new client into a loyal one is referencing from familiar people like friends, siblings, neighbours. According to research, the customer will promulge the reputation of a brand’s exploits – 90% share their brand preferences online.

    When Should You Care About Customer Retention?

    Your customer retention rate is a sign that tells whether your marketing strategies or customer retention techniques work. But you should know that the customer retention technique is not simply seeing the result of your sales teams made. The effort also depends on the maturity of your company and the lifespan of the product.

    Almost the ratio of customer acquisition-to-customer retention in your marketing bases on your business lifecycle. If your company has just appeared on the market and looking for the first buyers to purchase something, there’s a good chance that not many people are going to come back to your store. However, you can send emails, launch customer service after buying, sale-off event, etc and ready to serve your customers when they are back.

    After a time when the number of sales gets stable, it’s time to add a customer retention strategy. Take consideration of a loyalty program or referral system. When your business is well-established, it’s time to pay attention to advanced marketing automation workflows and dedicate even more effort on retaining your customers. As you know, the retaining method is used for a company with stable revenue and customers. The following steps will show you how to classify your customers and create a detail customer service strategy for your future loyal clients.

    Customer retention vs acquisitionThe general guidance on your business’s potential investment levels. (Source)
    Apart from your business maturity, the nature of your product influences your customer retention strategy. Your business is also affected by product lifespan. If your product is in high value, you can focus on the new customer. But if you sell normal price products you would rather start launching customer retention techniques.

    Key Metrics to Measure Customer Retention


    • Customer Churn Rate

    Customer churn rate (CRR) is the rate at which clients stop buying from you. A churned customer refers to a customer that your business unsuccessfully got back. Churn rate is also a way to calculate the percentage of your customer loyalty. With this statistic, you will know your frequent customers and be able to make some grateful programs for different groups of loyal customers.

    So how to calculate the customer churn rate? Normally if your churn rate is more than 5-7%, you won’t worry about the churned customer. But an unexpected high churn rate implies your product failing to meet your customers’ expectations. Let me clarify. A low CCR means higher customer loyalty because there are fewer customers lost. While a high CCR indicates the range number of customers lost and means lower customer loyalty.

    How to calculate churn rateCustomer Churn Rate Formula (Source)
    There are two ways to measure CCR. The first way is taking your retention rate subtracted from 100 percent. The other method that can be used to measure CCR is by dividing customers lost by the number of consumers at the beginning.

    • Repeat Purchase Rate

    Repeat purchase rate (RPR) refers to the percentage of customers who’ve made more than one purchase at your store. Your repeat purchase rate provides you with a clearer snap of the effectiveness of your entire retention strategy, providing proof that each of your techniques is functioning.

    Here is the formula: the number of customers who’ve bought more than once in a year is divided by the total number of customers.

    How to calculate repeat purchase rate
    Repeat purchase rate formula (Source)

    • Loyal Customer Rate

    Loyal customer rate (LCR) shows you the percentage of customers who are truly loyal to your brand. With so many options out there, it is hard for customers loyal only with your business. So it’s time to start retention marketing in the first place.

    You want to ensure that your retention efforts are working to take back and retain customers who are truly believed in your brand. In the long run, these loyal customers are who will help allure new customers into long-term shoppers, making them priceless to the success of your business.

    Let’s say a loyal customer is someone who purchases more than four times in your store. Of course, you define a loyal customer in other ways, but the method doesn’t change. Based on that depiction, you can measure your store’s loyal customer rate with the following method:
    How to calculate loyal customer rate
    Loyal customer rate formula (Source)

    • Average Order Value

    Average Order Value (AOV) refers to the average amount of money a customer spends per purchase. This important data permits you to see how much each of your customers is worth. If your store had many clients go shopping, you wouldn’t worry about how to take customers to your shop. But in fact, most of the businesses worry about competitive ad games to other companies. To calculate your AOV, take a look at the total amount of return you’ve obtained and the number of orders taken.
    How to calculate average order value
    Average Order Value (AOV) formula (Source)

    7 Customer Retention Strategies That Work


    • Communication Calendar

    A communication calendar is what you use to stay in-tuned with your customers at regular intervals. The calendar is normally a programmed sequence of events, phone calls, special offers, written notes, etc, that you send to your clients using an automation app.
    An example of a communications calendar
    The programmed sequence of events is essential for pre-sales, sales, and post-sales processes (Source)

    • Loyalty Program

    A loyalty program will bring to you such great profits for the long term. This program can reward customers for their continued use/purchase your products. The loyalty program can be divided into many parts such as normal, premium, gold member cards. This keeps customers happy with occasional events with sale-off for a different kind of card. The more customers go shopping, the higher the bonus points added in their cards. It helps your store keep more loyal customers.

    • Gather Customer Feedback

    Listen to feelings of customers about your products and services is a great way to cement the bond that already exists. Besides, due to customer feedback, you can develop content for customer retention. When customers express their feelings about your brand it may help you to improve your product. In their complaints, be sensitive enough to catch the pain points. Get to understand the areas they’re not happy concerning and why.

    • Have An Exceptional Customer Service

    Think about further value when the customer brings back to you that I’ve mentioned in the above part. So take the first steps to train your staff to form exceptional customer service. You can prepare surprise gifts to them at special moments. Or you can make thanks cards stick with your products. Simply caring makes satisfaction.
    Personalization in action: a handwritten letter
    The handwritten letter from Jawbone to their customers (Source)

    • Produce Valuable Content

    Having a content marketing strategy is no longer optional for ecommerce businesses. If you have an ecommerce store, that store better has a blog. Content is king and without it, you’ll have a very, very hard time building a strong brand. When people talk about content, they generally refer to it as a way to attract new customers. But it’s not necessary just about that. When you keep providing informative, helpful content, your brand will become authoritative, your reputation will increase. Therefore, customers will put more trust in you and keep coming back.

    • Address Customers’ Complaints

    Complaints account for an important part of success in customer service. It also enhances the growth of a business. Hence, you have to pay attention to each complaint from clients. Overall, 69% of good comments for customer service based on customer issues that firms have solved quickly.
    Survey on customer service
    The response from customer about customer service (Source)

    • Customer Advisory Board

    A customer advisory board (CAB) could be a chosen cluster of representatives from your most vital customers. You create an open forum for them to voice their concerns as well as their satisfaction.

    The dialogue that takes place in these conferences ought to drive future product updates. It also provides you with valuable insight into the minds of your customer base. The location of the meeting is based on the place of customers. If your customers are local, you can organize these meetings in person at your office. If you have customers in various places, you can hold these meetings via video conference like Skype.

    Besides, the CAB is the representative for general customers, they collect feedback and present it selectively. Of course, they have collected surveys before they show the concerns and satisfaction of products and services. Their words are so useful in the development of products and services. They can give strategies that your business may hardly think about it.


    To conclude, having the right customer retention strategy will keep your company grows if you know how to take advantage of it. Your customers will find their way back and continue buying stuff from you. At the end of the day, what you need to do is fulfilling your customers’ needs, listen to their complaints and provide professional solutions. If your customers feel like they are valued, they will become increasingly loyal to your brand.

    Author bio:

    MinaMina is a content creator at Avada Commerce. Exploring different cultures and travelling are her hobbies. She is willing to spend time learning new fields, namely technology, eCommerce and marketing.


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