Customer retention: 7 Strategies to keep buyers loyal

What’s the real cost of losing a customer?

Hint: It’s much more than the immediate revenue hit. When a customer churns (stops buying from your business), you’re actually losing their future purchases, potential referrals, and the compounding value they could have brought to your business over time.

To avoid much of that loss, focus on customer retention.

When you prioritize relationships with existing customers and meeting customer needs, you reap the benefits: higher lifetime values, more predictable revenue, and better growth through word of mouth.

In this guide, we’ll cover why customer retention really matters, how to measure it, and strategies to retain customers longer.

What is customer retention?

Customer retention is the process of keeping existing customers engaged, satisfied, and buying from your business over time. It revolves around increasing repeat purchases and reducing churn by delivering consistent satisfaction and support.

Strong customer satisfaction = more repeat purchases = higher lifetime value = more business growth.

Retention goes beyond just persuading customers not to leave. It’s about creating experiences so valuable that customers choose to stay, engage more deeply, and even become ambassadors for your brand.

Before we jump any deeper into customer retention, here are a few terms you’ll need to know:

• Customer loyalty is the emotional connection and preference customers feel toward your brand. Loyal customers may be more likely to forgive mistakes and resist competitor offers.
• Repeat purchases are when a customer buys from your business more than once. Keep in mind that a customer might make multiple purchases without being truly retained or loyal.
• Customer lifetime value (CLV) quantifies the total revenue you can expect to make from a customer throughout their entire relationship with your business, and is critical toward profitability.

Why customer retention matters

Acquiring a new customer costs anywhere from five to 25 times more than retaining existing ones, according to Harvard Business Review. 

Providing current customers with great support and frequent-enough communication tends to cost less than all the campaigns you run and tactics you use to find new customers. Plus:

Returning customers spend significantly more. Your existing customers already made the decision to purchase from you once, so they’ve already broken through that initial trust barrier. In fact, repeat customers spend 67% more than new customers, according to BIA Advisory Services.

Selling to existing customers has much higher success rates. It’s so much easier to convince someone who’s already purchased from you to buy again. Businesses have a 60% to 70% chance of selling to an existing customer, while for a new prospect it’s just 5% to 20%, according to Forbes (referencing the book “Marketing Metrics”).

Retention drives compounding revenue. When customers stick around longer, several things happen to accelerate revenue growth:

• Higher lifetime value through repeat purchases
• Increased willingness to try premium products or services
• More referrals to friends and colleagues
• Valuable feedback that improves your products or services

Strong retention creates healthier growth margins. Companies with high retention rates can invest less in acquisition and more in areas like product development and customer experience. A 5% increase in customer retention can increase profits by 25% to 95%, according to research by Bain & Company.

Better retention enables more accurate forecasting. When you know your customers will stick around, you can predict revenue more reliably and make smarter business decisions.

Retention fuels customer-led growth. Satisfied long-term customers become your best marketers through word-of-mouth recommendations, online reviews, and social media advocacy. Word-of-mouth marketing is the most trusted channel, according to research by Nielsen.

How to measure customer retention

When you know how well you’re retaining customers, you can make the right growth-minded business decisions.

Here are the key metrics to track to understand and optimize your business’s customer retention.

Core retention metrics

These are the essential retention metrics you’ll want to monitor from week to week and month to month:

Retention rate measures the percentage of customers who remain active over a specific period of time. Calculate it by dividing the number of customers at the end of a period by the number at the beginning, excluding any new customers.

Say you have 100 customers at the beginning of March, and 95 of them remain at the end of March. You have a 95% retention rate.

Churn rate is the flip side of retention—the percentage of customers who stop doing business with you during a specific timeframe. A 95% retention rate equals a 5% churn rate.

Repeat purchase rate shows the percentage of customers who make more than one purchase. This metric helps identify whether you’re creating one-time buyers or developing ongoing relationships—and it’s especially relevant for ecommerce.

Active user metrics like daily active users (DAU), weekly active users (WAU), and monthly active users (MAU) are especially crucial for SaaS companies and apps. These metrics show engagement levels beyond just whether someone has an account.

How many users on average are actually using and interacting with your website or app per day? How about per week or per month?

If you’re a Google Analytics user, you’ll find DAU, WAU, and MAU on your “Reports snapshot” dashboard:

Customer satisfaction and loyalty metrics

These metrics indicate how your customers feel about your business or brand. You collect them via survey.

Net promoter score (NPS) measures customer loyalty by asking how likely customers are to recommend your business to others on a scale of zero to 10. Customers who respond with nine or 10 are considered promoters, those who give seven or eight are passives, and anyone rating six or below are detractors.

To calculate NPS, you subtract the percent of detractors from the percent of promoters. Scores above 50 are considered excellent, while anything above 70 is considered world-class.

Customer satisfaction (CSAT) score gauges immediate satisfaction with specific interactions or experiences with your company (like a support message, for example). It’s typically measured on a one to five or one to 10 scale.

Customer effort score (CES) measures how easy it is for customers to get help or complete tasks with your business. It’s typically measured by asking customers to rate their agreement with statements like “The company made it easy for me to handle my issue” on a scale of one to seven, where one means “strongly disagree” and seven means “strongly agree.” 

Lower effort (higher scores) typically correlates with higher retention. Customers are more likely to stay with brands that make interactions simple and frustration-free.

Advanced retention metrics

These advanced customer retention metrics dive into the nitty-gritty details of your performance building a loyal customer base.

CLV calculates the total revenue you can expect a customer to generate during the course of their entire relationship with your business. This helps you understand how much you can invest in retention efforts.

If you’re a Google Analytics user, head to the “Explore” tab and choose the pre-built “User lifetime” template:

Google Analytics will then spin up your CLV report:

To use the report, pay attention to which values are higher than others. Which channels are sending you your most valuable customers over time?

For more on monitoring CLV, check out Google’s report guide.

Cohort retention curves track groups of customers acquired in the same period to see how retention changes over time. This reveals patterns and helps predict future behavior.

You can also create a “Cohort exploration” in Google Analytics:

This report follows specific groups of users over time. It helps you find retention patterns and measure the long-term impact of marketing campaigns or product changes.

For example, if you break the report down by first user campaign, you might discover that customers acquired through email campaigns have better three-week retention rates than those from paid social. Which can help you decide which marketing channel to prioritize.

There’s a lot you can do with this report. For a full tutorial on setting it up, visit Google’s help guide. 

Net revenue retention (NRR) is particularly important for SaaS businesses. In addition to recurring revenue, it also measures revenue growth from existing customers (e.g., upgrades or expansions) and downgrades or churn.

This metric provides insight into the health of your overall customer base and helps you assess its growth potential.

Time to value (TTV) is another important metric for SaaS business. It tracks how quickly new customers take to realize value from their use of your product or service. Faster TTV typically leads to better long-term retention.

For example, a project management software company might define “value” as when a new customer successfully creates their first project, invites team members, and completes their first task. For an email marketing platform, the value point might be when a customer sends their first campaign and sees open rate data. 

The key is identifying the specific moment when customers experience the core benefit your product or service promises. This “aha moment” is what drives long-term customer engagement and loyalty.

The customer retention lifecycle: Stages and strategies

Each stage of the customer lifecycle requires different strategies to keep customers delighted and engaged. Review recommended tactics for each stage of the customer journey, and then audit your own strategy to make sure you’re building trust and retaining customers at every point in their lifecycle.

7 Customer retention strategies that work

Now that you understand the customer retention lifecycle of the customer journey, let’s explore specific tactics to use at different stages.

1. Personalization and segmentation

Set up personalization and segmentation to treat customers differently based on their behavior, preferences, subscription level, and more.

You can use customer data and AI tools to customize everything from product recommendations to communication frequency and channel preferences.

For example, Netflix’s recommendation engine segments users based on factors like viewing history, time of day preferences, and device usage. It creates a personalized “Because you watched…” section. And even customizes thumbnail images based on which one is more likely to appeal to individual users.

Netflix’s segmentation and personalization efforts help it maintain a churn rate of only around 2%.

Here are a few personalization and segmentation ideas to add to your playbook:

Segment customers strategically

Group by customer behavior patterns, lifecycle stage, and RFM (recency, frequency, and monetary value). Then, tailor retention tactics to what matters most to each group. 

For example, power users who log in consistently should be treated differently than seasonal users who tend to log in once or twice a year. Power users typically appreciate deeper dives into advanced features, whereas seasonal users might be fairly low-touch.

Set up triggered messaging

Set up automated email campaigns based on real customer actions (or inaction). 

For example, send: 

• Reengagement emails when your last 10 emails haven’t been opened
• Congratulatory messages when customers hit milestones
• Different promotions based on the feature pages customers visit

Use predictive analytics to anticipate churn

Predictive analytics can identify customers at risk of churning before they actually leave. This gives you time to intervene with different kinds of targeted retention efforts.

For example, predictive analytics models analyze behavioral data like declining logins, reduced feature usage, decreased purchase amounts, longer time between purchases, or increased support ticket volume to assign each customer a churn risk score. If the score gets to a certain number, you might intervene with a targeted message.

2. Proactive customer service

Great products can certainly drive repeat purchases. But stellar customer service tends to turn customers into loyal brand ambassadors.

The best customer service teams are proactive instead of reactive. They create step-by-step tutorials and build out the most useful self-help hub, send emails to ask customers how they’re doing, and add support channels.

For example, Zappos’ call center employees go through a full four weeks of training on how to help customers before they start taking calls. Customer service representatives have sent flowers to customers, free shoes to a best man who arrived shoeless to a wedding, and more.

What does that kind of over-the-top customer service achieve? Repeat customers drive 75% of the company’s business—and provide plenty of word-of-mouth referrals.

Here are some customer service tips to improve your retention strategy: 

Offer multiple support channels

You’re always going to have customers with different communication preferences. Some only want to chat one-on-one, whereas others don’t mind asynchronous emails. And not everyone uses WhatsApp or Facebook Messenger. 

So, make it ridiculously simple for customers to contact you through the channel that works best for them. Offer live chat, chatbots for simple questions, and human support for complex issues. Let customers choose how they want to get help.

Create extensive self-serve resources

Build easy-to-search help centers, knowledge bases, and tutorial libraries that let customers solve problems on their own.

They might take time and resources at the outset. But both you and your customers will be happy later when users can resolve simple problems without the need for support.

Turn customer service into a revenue driver

Everyday support interactions present countless opportunities for upselling. Customers can be more open to learning about additional solutions when they’re receiving help.

So, train your support teams to identify upsell and cross-sell opportunities. Provide them with scripts they can use or reword slightly to fit their needs.

Monitor and respond to customer feedback proactively

When you communicate with customers across so many social media and review channels, it’s important to keep an eye on their feedback. Use social listening tools and review monitoring to address concerns before they escalate.

Set specific response time goals—like responding to negative reviews within 24 hours and social media mentions within 2-4 hours during business days. Also, use feedback to drive internal improvements: if multiple customers mention the same issue, escalate it to your team to address the root cause rather than just responding to individual complaints.

3. Loyalty and rewards programs

A loyalty and rewards program is a fairly easy way to create emotional connections and provide even more reasons for customers to choose you over competitors.

In fact, customers who subscribe to a free loyalty program are 30% more likely to spend more on the brand, according to McKinsey research. Those who subscribe to a paid loyalty program are 60% more likely to spend more.

For example, Starbucks Rewards has more than 30 million active members who account for 57% of the company’s transactions. The loyalty program uses a points-based system where customers earn stars that they can redeem for free drinks and food. Members also get personalized offers based on their purchase history, early access to new products, and free birthday rewards. 

What makes it so successful? It’s all in the simplicity and immediate value customers receive.

Here are a few loyalty ideas you can use:

Design tiered loyalty programs

Create multiple levels so that high-value customers get exclusive benefits. This encourages customers to upgrade. And it makes those in the top tier feel like VIPs.

Use surprise and delight tactics

Unexpected rewards and gestures often have even more impact than predictable benefits. Add a few little random acts of appreciation into your loyalty program to create delightful, memorable experiences.

Offer meaningful rewards

Small discounts don’t adequately reward customers. Instead, offer cash back, credits, or early access to new products. Make sure rewards align with what your customers actually value.

4. Win-back campaigns

Customer churn is inevitable. But in many cases, you can reverse the trend with targeted win-back campaigns.

Spotify, for example, targets users who haven’t opened the app recently with things like personalized playlists based on their listening history. Their “Your [year] Wrapped” campaigns not only reengage dormant users but also drive a ton of social sharing, with users posting their listening stats.

The Wrapped campaigns are particularly helpful for reactivating lapsed users.

Here are a few ideas to try:

Use multi-channel reengagement

Multi-channel re-engagement works by increasing your chances of reaching disengaged customers. Start with your primary channel (usually email) and move on to secondary channels if there’s no response. 

You might send an initial re-engagement email, follow up with an SMS a few days later if they don’t open it, and then try a targeted social media ad or push notification. Each channel should deliver a consistent message but adapt the format to fit the platform (emails can include detailed explanations while SMS should be brief and urgent, for example). 

Create time-sensitive offers

Time-sensitive offers work because they tap into the principle of FOMO (fear of missing out). When inactive customers see they have limited time to act, it creates urgency. 

For example, a subscription box company might email disengaged customers something like: 

“Limited-time offer! Come back in the next 72 hours and get 40% off your next box—but this offer expires Friday at midnight.” The specific deadline creates pressure to decide quickly rather than putting off the decision, while the discount provides more motivation to make the purchase.

Develop “we miss you” campaigns

“We miss you” campaigns can activate emotions and compel customers to come back.

Try using personalized messages that acknowledge your relationship and offer specific value based on the customer’s past behavior.

Here’s an example from an online fitness platform:

“Hi Sarah, we noticed you haven’t logged a workout in 3 weeks. We remember you loved our yoga classes—we just added 5 new beginner-friendly sessions this month, including the morning flow you requested. Come back this week and we’ll give you a free 7-day extension on your membership.” 

Test different win-back incentives

Just like people prefer different communication channels, they’re also going to prefer different incentives.

Some customers respond well to discounts, others to exclusive access, and still others to educational content. Test to find what works for each segment.

5. Post-purchase journeys and feedback loops

Your customers’ post-purchase interactions shape their long-term relationship with your business. And provide valuable insights for improving your product or service.

For example, Airbnb’s post-stay email sequence includes a thank-you message, a request to review the host, suggestions for future trips based on the guest’s travel preferences, and eventually an invitation to become a host themselves. Then, the company uses reviews to make meaningful changes to their booking process, safety measures, and host standards.

Here are a few after-purchase ideas you can use to encourage customers to stick around:

Automate review requests and follow-ups

Try to send review requests at optimal times when your customers are most likely to be satisfied. If possible, automate them.

For example, if your SaaS product takes time to get set up and integrated, you wouldn’t send the review request on the day after the purchase because your customers haven’t had long enough to experience the awesomeness of your product yet.

In fact, a study by Harvard Business Review found that sending a review request the day after purchase decreased the likelihood of receiving a review. Whereas waiting 13 days to ask for a review increased the likelihood that customers would leave a review.

The key is experimenting to figure out when the optimal time is to ask for a review for your particular product or service.

In your feedback emails, prompt customers to leave a review on the best review site for your business. You might direct them to TrustPilot one month and Capterra the next depending on which networks need more reviews.

Always follow up on negative reviews to address concerns and show that you’re engaged and ready to help.

Automate NPS collection

Automatically send NPS surveys as part of an email campaign. Then, automate your next steps based on customers’ responses.

For example, if someone chooses a 6/10 or below, you might send that response straight to the support team so they can reach out and find out if there are issues they can help resolve.

Close the feedback loop

Always follow up with customers who provide feedback—especially negative feedback. If possible, show them how their input led to improvements.

If their feedback was positive, make sure to thank them. Interactions like these feed customer delight.

Create post-purchase education sequences

Set up an automated email drip campaign to help new customers get the maximum value from their purchase. Speed up TTV with tutorials, tips, and best practices.

Tell customers how to get in touch with you (your support team) in every message and encourage them to ask questions about your product or service as they arise.

Provide easy returns, exchanges, or refunds

When a customer isn’t happy with your products or services, make it easy to fix with a return, exchange, or refund (within a reasonable amount of time). This way, you get the chance to delight that customer, even if they’re not blown away by the end product.

6. Community building and social engagement

When your customers belong to a community centered around your business, they feel more connected to your brand. Which can make them more likely to stick around long-term.

One stand-out example of community building belongs to Peloton. The fitness company’s massive community features leaderboards, virtual high-fives, and social features that let users follow friends and compete in fitness challenges. 

This community aspect has been crucial to Peloton’s retention strategy. In fact, the company’s connected fitness subscribers have a staggering 92% retention rate.

Build customer communities

Create spaces where customers can connect with each other, share experiences, and get help. This can be forums, social media groups, or in-person events.

You don’t need to build your own forum or social app from scratch to accomplish this. Platforms and sites like Discord, Slack, and Reddit are great places to build your community.

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Dig deeper: Unlocking growth: The power of user communities for B2B SaaS companies

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Encourage user-generated content (UGC)

Encourage customers to share their experiences, create tutorials, or showcase their results using your product or service.

User-generated content makes customers feel more connected to your brand when they see their content featured, creates authentic social proof that encourages other customers to stay engaged, and provides you with free marketing materials that resonate more than your branded content does. 

Plus, customers who create content about your brand become more invested in your success. They’re essentially turning into brand advocates who are much less likely to churn. 

Incentivize UGC through contests, featuring customer stories in newsletters, or creating branded hashtags that customers can use to share their experiences on social media.

Host exclusive events

Both virtual and in-person events can strengthen customer relationships and create additional value beyond your core product or service. Try webinars (you could even invite special guests), live video events, or in-person meetups.

Use social proof

Showcase customer success stories, testimonials, and case studies to reinforce the value of staying engaged with your brand.

For example:

• A SaaS company might feature a case study showing how a business increased productivity by 40% using their platform.
• An ecommerce brand could showcase photos of customers wearing their products with quotes about quality and fit.
• A fitness app might highlight transformation stories from users who achieved their goals.

7. Subscription and membership optimization

Businesses with recurring revenue models can use specific retention tactics to reduce churn and improve loyalty. 

For a great example of a recurring revenue model that reduces churn, take a look at Slack. When Slack users reach the limit of their 90-day message history, they receive notifications reminding them to upgrade to a paid plan for full historical access.

Here are a few tactics you can use now:

Optimize billing and payment processes

Don’t let expired credit cards cause churn. Reduce involuntary churn by setting up smart retry logic for failed payments and providing multiple payment options.

Create upgrade paths

Design clear upgrade funnels that encourage customers to move to higher-value plans or purchase the next best product as their needs grow.

Make the funnel super clear, but make sure not to overdo your promos and offers. There’s a fine line between doing it well and overdoing it, losing customers instead of growing them.

For example, a project management tool might trigger upgrade prompts when users hit 80% of their current plan’s limits. Using a usage-based trigger like this can make customers more likely to upgrade, since they’re actively experiencing the limitations of their current plan.

Limit upgrade prompts to twice per month or so to avoid annoyance, and always lead with the benefit (“Get unlimited projects to support your growing team”) rather than the feature list. Consider offering a free trial of premium features for 7-14 days to get users on board.

Create pause options

When budgets fluctuate, your product or service might be on the chopping block. You can mitigate some budget-related cancellations by setting up a pause option.

Give customers the ability to pause their subscription temporarily rather than canceling entirely. This can reduce immediate churn and give you time to win customers back.

How customer retention fits in your growth strategy

At first, customer retention might seem like a defense strategy. 

But that’s not true. Effective customer retention is also about playing offense and driving sustainable business growth.

Here are a few ways customer retention can fit into your growth strategy:

1. Higher retention rates allow for higher customer acquisition costs. When customers spend more money with your business over a longer timeframe, you can afford to spend more to acquire them. This competitive advantage allows you to outbid competitors for some of the best marketing channels and opportunities—or spend more on out-of-the-box campaigns that are a little more experimental.
2. Retention helps you prove marketing ROI beyond acquisition. While acquisition metrics focus on short-term results, retention provides more long-term value from your marketing investments. This helps justify marketing budgets and growth spending.
3. Strong retention accelerates customer-led growth. Happy, long-term customers become your most effective growth engine through referrals, reviews, and word-of-mouth recommendations. 
4. Retention creates a data flywheel. The longer customers stay engaged, the more data you collect about their preferences and behavior. These insights lead to better products, more personalized experiences, and even stronger retention.
5. Loyal customers provide expansion revenue. Existing customers are much more likely to purchase additional products, upgrade to premium tiers, or increase their usage over time, leading to more expansion revenue. Expansion revenue is additional revenue generated from existing customers beyond their initial purchase. Repeat business is super valuable because it doesn’t have any acquisition costs!
6. Retention helps build a foundation for continuous growth. Companies with strong retention can reinvest their predictable revenue into growth initiatives like product development or market expansion. When you’re not constantly replacing churned customers, more of your resources can go toward scaling the business rather than just maintaining it.

Building your retention strategy: Next steps

Businesses that thrive long-term are the ones that understand and prioritize customer retention.

If you implement some of the strategies in this guide and continuously optimize your approach based on data, you can build more customer relationships that fuel sustainable growth.

Want to dive deeper into creating the most successful B2B marketing strategy? Check out our guide on seven proven strategies for effective B2B customer retention.