Updated on February 27, 2024

Admit it. Most of your business’s efforts are geared towards acquiring a new customer in 2022. But according to this Harvard Business Review report, it often costs upto 20 times the resources to gain a new customer than retain an existing one.

So the question is: Are you putting your marketing efforts in the right direction?

If you want to know the right answer to this problem and also find out more about customer retention, we have put together a list of 12 customer retention strategies that actually work.

But, but, but… before all that..

What is customer retention?

Customer retention is a subset of customer loyalty, and refers to the customers who repeatedly buy products or services from you as a brand over a period of time, repeatedly. And keep note of the word repeatedly here, because one loyal customer who pays several times your business is much more valuable than a few customers who make a one off purchase and never look back again.

But why is customer retention so important?

There are a lot of reasons why you should pay attention to retaining your existing customers, some of which include:

  1. Bringing in new businesses in the form of referrals / word of mouth publicity.
  2. Enhancing brand perception.
  3. Improving time to revenue.
  4. Reduced efforts to reach financial targets
  5. Creating greater product stickiness.

Now that you know why retention is important, let us look at a few of the retention strategies.

12 Productive Customer retention strategies

  1. Measure and fix the churn rate.
  2. Create a communication calendar
  3. Surprise your customer
  4. Exceed customer expectations
  5. Bring back your lost customer
  6. Feature them on your website
  7. Exceptional customer support
  8. Consistently engage your customers
  9. Leverage customer feedback
  10. Measure lifetime value
  11. Build a community
  12. Customer loyalty programs

1) Measure and fix the churn rate

Churned customers are the customers who have canceled their subscription and stopped paying you. Subsequently, the churn rate is the number of such customers measured at a particular time frame, say a month or a quarter.

A simple way to measure the churn rate is as below.


If company X had 200 customers at the beginning of the month and only 170 at the end of the month. The churn rate would be:

Churn rate = (No of customers at the beginning of the month – No of customers at the end of the month)/No of customers at the beginning of the month

= (200-170)/200 = 30/200 = 15%

Here are a few quick tips to reduce customer churn:

  • Prioritize your loyal customer base
  • Design a specific usage guidance
  • Analyze your customer behavior using the latest technologies  

Detailed article: How to reduce customer churn

2) Create a communication calendar

The simplest way to build a longterm relationship with your customer is by communicating with them frequently. 

This is a customized succession of :

  • Letters,
  • Telephone calls,
  • Thank You’s,
  • Exceptional offers,
  • Subsequent meet-ups,
  • and cards or notes with a personal touch.

Create a communication calendar and stick to it. Frequent communication with your customers will make them feel valued and important.

3) Surprise your customers

Who doesn’t love surprises?

Yes! We all love surprise as it makes us feel more special.

Surprise your customer with any valuable offer which will not cost you a fortune. It could be even a small thank you note, greetings on special occasions, free add-ons or any other freebies. 

We have created a lot of freebies for our customer such as :

You can create any freebies related to your niche and share with your customers.

4) Exceed customer expectations

Every customer loves to get extra or more than expected. But it is not easy to over deliver always.

Formula for success: Underpromise and Over deliver.

-Tom Peters, Business Management Writer

Most of you might have come across the salespeople or customer success executives who overpromise, just to escape from the situation and they already know it’s not possible for them to deliver. 

This will set the wrong expectation in customer’s mind and they feel fooled after knowing that, it was intentional.

Eventually, it will hurt the customer’s ego and there is a high chance that the customer might churn. 

Example for underpromising and overdeliver:

You might have ordered a product from Amazon and delivery time mentioned was 3-4 days at the time of order but you received within 2 days.

And you might be given a higher rate for their service at that time.

It’s actually a trick used by most of the companies to satisfy their customer.

Bonus: How to exceed customer expectations

5)  Bring back your lost customer

The cost of retaining an old customer is always more than generating a new customer.

  • Take out the list of your old loyal customers who have churned.
  • Make a plan and schedule a call with them to know the reason for discontinuing your service.
  • Approach them with a right offer and rebuild trust with them.
  • Let them know, you still value them and ready to go the extra mile.

Once you get them on track, ask for referrals to add more customers.

6) Feature them on your website 

This is one of the best ways to build a long-term relationship with your customer. 

Who doesn’t like to get a free backlink and drive visitors to their website?

The simplest way easy to collaborate with your customer for writing a case study on them and feature it on your website.

Here is the sample email template to approach your customers for a case study.

This is the easiest customer retention strategy anybody can implement without even spending a penny.

It will also help you to create more trust in the market as most of the new customers look for references before making a purchase decision.

7) Exceptional customer support

Customer support is the greatest tool to position your company in the market.

It can act as the main differentiator from your competitor.

But most of the companies fail to understand and lose a customer just because of poor customer service.

Few tips to improve your customer support.

Recommended Read: How to improve customer support

8) Engage your customers 

A simple way to keep your customers engaged by delivering valuable content.

Then create content distribution calendar and share with your target audience through Social media, Q & A forums, Newsletters.

You can use auto scheduling tools like Buffer, Quick Sprout, Active Campaign and Mail Chimp.

Here are few effective customer engagement techniques:

  • Reward your customers
  • Introduce live chat apps
  • Conduct surveys

Check here for detailed article: Customer Engagement Techniques You Must Try in 2018

9) Leverage customer feedback 

Most of the companies tend to neglect customer feedback and they forget there is no business without customers.

Create customer surveys for different channels and gather all the feedback you can. Then use it in a constructive way to improve your products/services.

Asking feedback to your customer makes them feel like part of your important journey.

This is one of the most reliable customer retention strategies.

10) Measure lifetime value

CLTV is one of the most important metrics to measure. It mainly helps you in deciding on “customer retention budget”.

Customer Lifetime Value(CLTV):

“The total amount of revenue can be generated in future through a particular customer based on their present cash flow”.

The basic formula to calculate lifetime value is :
(Order Value in average) x (Number of recurring Sales) x (Estimated retention time)  

If customer A pays $500 per month and estimated retention time of a customer is 4 years.

Then CLTV based on the above formula is

$500 /month x 12 months x 4 years = $24000 CLTV) 

CLTV also helps in deciding

  • Sales team – Targeting right customer
  • Customer support team – Deciding on service cost
  • Product development team – Cost of customization

11) Build a community 

Build community on your website to gain trust from your customers. This can act as an effective customer retention strategy as they are part of the biggest trustable community.

Just have a look at the LEGO IDEAS community board,

Source: Marketing insider group
  • Lego encourages the user to share own ideas & feedback.
  • This can be used to announce new features, products, services.
  • Use it to provide freebies or surprising offers to the customer.

Basically, it drives more customers to your website and keeps them engaged.

It also acts as social proof to encourage new leads to become your premium customers.

12) Loyalty programs

In recent years, loyalty programs have been part of marketing strategies. It has gained good recognition in a shorter time due to its profitable benefits.

Example for loyalty program:

Sephora has different rewards system-the more customer purchase, the more rewards and benefits they get.
As per the stats, it has more than 16 million members and 80% of sales are driven by the reward system. The best part is a customer can choose to use their rewards as per their convenience.

Some of the benefits of creating loyalty programs are:

  • Boosts the revenue
  • Saves money
  • Collecting valuable data
  • Boosts up the sales
  • Customers feel appreciated
  • Increase in customer retention

You can create a loyalty program using these guidelines.

There are many more ways to retain your customers. But these are the most important strategies worked for most of the companies.

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Devashish Mamgain

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