Successful businesses are not only identified by their ability to acquire new customers but also by their ability to retain new customers. Returning buyers are assets. They already trust your brand and are always ready to defend and market your products to their family and friends. Besides, customer retention is cheap and affordable. It takes about 5X the amount required to keep a customer to gain a new one.

Therefore, small businesses must consider and add a customer retention strategy to their marketing campaign. We’ve researched the best customer retention strategies that have helped big and small companies turn first-time buyers into returning buyers. These include those that leverage customer convenience and those that prioritize personalities.

But before we break them into pieces, let’s clearly understand customer retention and retention rates.

What is the customer retention rate?

Customer retention rate is a metric that describes the level of customer loyalty received by a business over a particular period. It tells how well a business is performing in keeping its customers. A high customer retention rate shows that a business is doing fine, and a more significant percentage of its new buyers are converted into returning customers. Otherwise, they need to adopt or improve their customer retention strategy.

How to measure a business customer retention rate?

The customer retention rate is calculated by dividing the number of returning buyers in a month (R) by the number of customers gained before the period (S). The result is expressed as a percentage by multiplying it by 100.

R = Total number of customers acquired at the end of the period – number of new customers acquired during the period. Here’s an example.

According to the record of Tony electronics, the store had 245 customers at the beginning of December 2018 and gained 30 more customers before the month’s ending. Within the period, 7 of their customers unsubscribed from their Loyalty program. The customer retention rate of Tony electronics is calculated by;

Total number of customers gained by the end of December = 245 + 30 – 7 = 268

R = 268 – 30 = 238

Customer retention rate = (238/245)*100 = 97%

How to improve your customer retention rate?

It should be in the heart of every small business owner to improve their customer retention rate. This metric determines the success of a business. Therefore, all hands must be on deck to ensure that it improves every time.

Now that you know your business customer retention rate, the following are ways of converting most, if not all, of your first-time buyers into returning customers.

1. Give them a great onboarding experience

Their first impression of you counts greatly and gives a lasting impression on your first-timers. Your interaction with customers, both physically and online, should be simple. People that visit your office or brick-and-mortar store should be able to speak of the excellence of your customer service. Meanwhile, your web visitors should be able to navigate your website without needing to read a manual.

Excellent online onboarding practices include welcome messages and emails that appreciate visitors for choosing your brand over your competitors. Also, an interactive and short walkthrough that teaches and illustrates how to navigate your websites and web tools. Feature callouts are another excellent tool for showcasing the benefits your products offer. Combined in a beautiful sequence, all these can make web visitors choose your brand for the rest of their lives.

2. Personify the buying experience

No system, platform, or online store converts first-time buyers to returning customers like one that knows their needs and recommends similar products or solutions. Besides, a survey by Evergage (now salesforce interaction studio) reveals that 99% of marketers agreed that personified marketing has helped to produce strong relationships with their customers. And some other 78% said it has dramatically impacted their conversion rate.

The first step to improving buyer’s personification experiences would be to perform buyer’s profiling. Buyers’ profiles are data that describe your customer’s demographics, geographic location, and psychological behaviors, including their buying patterns and purchasing history.

You can obtain these data using tools like Salesforce marketing cloud and Adobe Analytics Elite. This information will guide you on what product suggestions to give to your customers when browsing your app or website. They will feel more motivated to purchase from your business when you suggest what they need.

3. Use a feedback mechanism

A business best serves its customers when their complaints and challenges are being considered. Whatever design you’re using on your website is for them, and they are in the right position to say if it’s helpful. For this reason, ensure there are regular surveys to hear their opinion. The survey could be the star rankings after a session with your customer support or product reviews.

Also, the outcome of these surveys should be shared with other departments of your business. Your web designers can use this feedback to build a more engaging and exciting browsing experience. Product designers can also use it to improve their product design and quality. All these will help you to meet their expectations and serve them better.

4. Keep a customer communication calendar

How about reaching out to them when they refuse to take your surveys or haven’t interacted with your brand for a long time? The best approach for this is to have a customer communication calendar. It’s a chart that keeps track of your brand’s and customers’ communication. With it, you can see which customers you have long interacted with and reach out to them before they choose another brand.

This calendar can also help to perform upsell and cross-sell. It will help you remove roadblocks on customers’ buying journey even before they realize it. An example is notifying customers of their subscription expiration, even before it happens. Reaching out to them shows that you care and you’re not just after their money but also their well-being.

5. Build trust with your customers

Customers don’t stay long with a brand unless they have developed trust for the business. It usually takes some time for companies to gain their customer trust. But, when they finally do, the one-time buyer automatically becomes their loyal customer and brand ambassador. They will also convince their relatives and associate to patronize your business.

A survey to confirm trust as an essential purchasing factor shows that 81% of participants need to trust a brand before becoming loyal customers. You should do whatever it takes to gain their trust. However, you need to know that it takes time to earn their confidence, and you should not assume that you have their trust because they are buying from you.

Knowing these two rules will guide you in making the right decisions to gain their trust every day. It will eliminate the lie that “gaining buyer’s trust is a destination” but a journey you must take every day.

6. Provide unique offerings and services

What’s your unique selling proposition? It would help if you gave them a reason to patronize your business and stay loyal to you forever. These reasons are your unique selling propositions. They are features, offerings, or services that make your brand different from others in the same niche.

It doesn’t have to be something huge. Your unique selling proposition could be a slight difference yet significant and memorable. For example, Canva’s unique selling proposition is “Empowering the world to design.” The platform successfully created a cheap graphic designing tool with a simple learning curve that anyone can use to make beautiful graphics. These features make them different from others, like Adobe Photoshop and illustrator.

Look around, research other brands, and develop something they are yet to add to their products and services. People want to buy value and are ready to stick with a brand that offers the most value at the best price. Strive to be that company, and your customer retention rate will increase exponentially.

7. Begin a customer retention program

Customer retention programs are a combination of strategies that aims at helping businesses keep their customers. These programs give customers reasons to stay and become part of your community. Below are some customer retention programs and various examples of implementing them.

Amazing customer retention strategies

1. Introduce customer accounts and newsletters

There’s no way you can keep buyers informed without having their email addresses or phone number. Without these, you can’t check up on them and demand why they haven’t been active with your business. You need your buyer’s details; introducing a customer account is the best way to collect enough. This is the first step to retaining your buyers and turning them into returning customers.

A customer account can easily be deployed by ecommerce businesses and tech startups providing SaaS services. Ecommerce stores can encourage their site visitors to open an account with them while trying to use the cart for the first time. You can tell them they need an account with your business to use the cart feature.

SaaS companies can always get their web visitor’s info before signing up for a free trial. It would help if you had their email address to contact and inform them about new offers, the expiration date of the free trial, and their first names for addressing them in the email. The service business can use newsletters to get their customer’s info. Loyalty programs are another available option, and we will explain that briefly.

A newsletter is a channel through which businesses and blogs share valuable information and resources with their network of customers or subscribers via their emails. Service businesses with huge knowledgebases can use this method to collect web visitors’ email addresses with the promise of serving them valuable content and promotions about the niche.

2. Use customer service tools

It’s easy to handle positions yourself when the business starts. You can be the manager, the accountant, and also hold the customer support service. However, that can’t last for a long time. The time will come you will need to designate these roles to your employees, most especially customer service. You may need more than one person to handle that role for practical customer support.

However, you can use tools instead of hiring more people in this department. Technological solutions are less expensive than employing people to fill these positions. The customer service of Santa Cruz Bicycles, a manufacturer of mountain bikes in California, is an excellent example of this strategy.

When the company began to experience an increase in customer service demand, it sought technological solutions. The company adopted a Customer relationship management (CRM) tool that records customer interactions and helps them create support tickets. Meanwhile, their employees in the customer service department use the HubSpot Task Tool to mark opened tickets and ensure that all are responded to in a timely fashion.

Later, the company upgraded to Service Hub to centralize all its customer service activities. All tickets are now sent into a single inbox shared by all the customer service staff. With this, they can all collaborate on complex cases. You can also adopt a similar approach to solve your customer’s complaints and provide the best customer support services in your industry.

3. Appreciate your customers, and apologies when need be

Since the last point was about customer service, it’s much better to discuss this now. Sometimes, the things we consider little are the magic that turns the situation around for good. Don’t be that brand that’s always disturbing customers with adverts and promotions emails. Be that company that appreciates your customers and sends wishes during festivals and celebrations. It’s not wrong to wish your customers on their birthdays. It makes them feel like they are part of a big community that cares.

Your customers also deserve apologies when things go wrong, or there’s a mistake. You should apologize for any mistakes, whether it’s your company’s fault or not. These mistakes are not only limited to billing errors or wrong deliveries; they could also be a data breach or an outage. Failure to apologize for these errors might result in losing customers, which is detrimental to your company’s growth.

GoDaddy, the popular domain name registration and web-hosting company, apologized to its customers in 2021 after they had a data breach that resulted in the leak of more than a million website data. In the statement released by the company and emails sent to all the affected customers, GoDaddy apologizes for the security breach. They also updated customers with all the steps they have taken to arrest the situation and gave all affected customers procedures to reclaim their website and data.

This is a bold step and one that every small business should emulate in their dealings with their customers. Apologize instead of making excuses. Customers also understand men are bound to make mistakes. All they care for is an apology. A survey conducted by HubSpot showed that 96% of participants are ready to continue with a business after the brand owns up for mistakes and apologizes.

4. Educate your customers

You will retain your customers if your business offers more value than the competitors. The value could be anything. SaaS businesses should consider this strategy. You can offer free courses on digital marketing, affiliate marketing, and other resources to your customers that will further solidify their online presence and make them win big in their niche.

HubSpot is undoubtedly riding on this strategy. The platform invests a lot in creating courses, most of which are given freely to their loyal customers. Free perks like this will make your customers stick with your business, even for an extended period, to enjoy these extra values that come with choosing your business.

5. Start a loyalty program

Loyalty programs are incentive programs for rewarding loyal customers. It appreciates customers for staying with your business and making repeat purchases. Technically, these customers earn points when they purchase or perform tasks, such as referring a friend or following your business on social platforms. They can redeem these points for bonuses, gifts, or discounts later.

There are many types of loyalty programs used by businesses. The common types are point-based, tiered-based, and subscription-based loyalty programs. You can learn about these types and others in this article on different forms of the loyalty program.

Loyalty programs are working. Almost all the big companies you see today, especially those in the ecommerce business, are running incentive programs to keep their customers. Starbucks runs a tiered-base program, and Amazon uses a subscription program.

6. Inspire with a mission

You can keep customers by leading a good course. Not everyone has the financial capability to support a charity or a sustainability program single-handedly. Therefore, many people don’t mind partnering with other like-minded individuals or being loyal to a business to see that this goal is achieved. It’s fulfilling for customers to know they are making the world better by patronizing your business.

Inspiring with a mission is leveraging the chance of helping others in need or sustaining the environment to get more purchases. All you need to do is to find a suitable course that aligns with your business. It could be charity or planting trees. Inform your customers how they can help the mission’s success and see the magic happens. Also, make sure you fulfill your promises, and there is accountability for all the support acquired.


Customer retention is a must for every business. It must be your goal to make every person purchasing from your brand come back for more. Now that you know the steps to keep your customers and various customer retention forms, your question should be which one is right for your company.

You can’t use every strategy mentioned in this article. Pick one that best suit your niche and fulfills your customer needs. This implies that your customer retention strategy should be developed around your customer needs. Only then can they consider these other values as a reason to keep patronizing your business.