All you need to know about customer retention

Customer retention, or the rate at which customers stay with a business over a given period of time, is a key metric for almost all B2B and B2C businesses. In general, the lower the churn rate, the more loyal the customers are, and the more successful the business is. In this article, we will explain why customer retention is important and how businesses can measure and improve it.

Why Is Customer Retention Important?

For many businesses, customer retention or churn is a key KPI because a company’s ability to retain existing customers is fundamental to both its short-term and long-term success. Some of the key reasons why customer retention matters include:

  1. Cost-effectiveness: It is often much cheaper to retain existing customers than to acquire new ones. Sales and marketing acquisition costs usually outweigh costs related to customer service and ongoing customer satisfaction.
  2. Repeat customers: Loyal customers tend to be repeat customers, meaning they are valuable. Increasing customer retention increases the chance that a customer will become a loyal, repeat customer, which can massively increase profits.
  3. Upselling and cross-selling: It is more effective for businesses to upsell or cross-sell to their customers as they already have a relationship built on trust and product satisfaction.
  4. Referrals: Happy customers can often lead to gaining new customers through referrals.

It is clear that customer retention should not only be an important metric but also a core goal of almost every business. So let’s first look at how we can measure it before discussing different ways to improve it.


How Do You Measure Customer Retention?

To calculate your customer retention rate (CRR), you can use the following simple formula involving the customers you have at the start (S), at the end (E), and the customers acquired during the period you’re measuring (N). It looks like this: CRR = ((E-N)/S) x 100.

For example, let’s say you have 130 customers at the start of a month. In that month, you lose 9 and gain 23 new customers. The number of customers at the end of the period is 144, the number of customers at the start of the period is 130, and the number of customers acquired during the period you’re measuring is 23.

CRR = ((E-N)/S) x 100 CRR = (144-23)/130 x 100 CRR = 93%

In general, businesses should aim for as high a retention rate as possible. In reality, businesses aim to hit more than 85%.


11 Great Ways To Increase Customer Retention Rates

The following tips provide businesses with a good starting point when it comes to improving customer retention. Taken together, they can serve as a solid foundation for a successful customer retention strategy.

  1. Improve user onboarding: One key reason for churn is that users simply do not understand how to get the most out of a product. During the onboarding process, a company should ensure that the client is aware of the key benefits that a product offers. One great way to do this is through training sessions that teach users about best practices and standardized workflows. Giving your customers the tools they need to succeed will maximize customer satisfaction and decrease churn over time.
  2. Create an achievable roadmap with your customers: Be realistic when it comes to setting and delivering on customer expectations. What levels of service or support can customers expect, and when? How frequently will they hear from you? These are all questions that you should be able to answer clearly for your customers.
  3. Use client feedback to find weaknesses and constantly improve: Regularly asking your clients for feedback can help you identify areas where you may be falling short. This feedback can then be used to make improvements to your product or services.
  4. Create a referral program Referral programs can be an incredibly effective way of acquiring new customers, while also improving customer retention rates. By encouraging existing customers to refer their friends and family, businesses can benefit from the trust and loyalty that these referrals bring with them. Referral programs can take many forms, from simple discounts or rewards for referrals to more complex programs that offer bonuses based on the number of referrals or the value of the referred customer’s purchases.
  5. Provide exceptional customer service Customer service is the backbone of any business. Providing exceptional service at every touchpoint is critical to building strong relationships with your customers. Whether it’s answering a phone call, responding to an email, or engaging on social media, every interaction counts. Make sure your customer service team is well-trained, empathetic, and responsive to customers’ needs. Always go the extra mile to exceed customer expectations and show them that you value their business.
  6. Offer a seamless omnichannel experience Customers expect a seamless experience when interacting with a brand across different channels. Whether they are browsing your website, visiting your store, or using your app, they should have a consistent and cohesive experience. To achieve this, you need to integrate your systems and processes to provide a unified view of the customer. This will enable you to track their interactions, preferences, and behaviours, and tailor your messaging and offers accordingly.
  7. Personalize your communication Customers are more likely to engage with brands that provide personalized communication. By leveraging customer data, you can create targeted and relevant messaging that resonates with your audience. Use dynamic content, such as product recommendations, personalized offers, and dynamic pricing, to create a sense of exclusivity and urgency. Personalization also extends to your tone of voice and messaging style. Make sure you use language that reflects your brand personality and resonates with your target audience.
  8. Understand your customers with customer experience and journey mapping Customer experience mapping and customer journey mapping refer to the process of charting your customers’ interactions with your brand across all touchpoints. The more you understand the different journeys customers take en route to purchasing, the more you can optimize their customer experience. By identifying pain points, friction, and areas for improvement, you can enhance your customers’ satisfaction and loyalty. Brands like Aston Martin were able to create a truly unique and highly personalized customer experience, benefiting from extreme customer loyalty and excellent retention rates.
  9. Get personal with social media support Social media is the channel of choice when it comes to immediate response. Clients expect immediate and personalized customer service, and social media lends itself well to this task. Social media is a great way to quickly resolve potential customer support issues or queries. What’s more, it’s also a great way to create a connected and unified customer experience.
  10. Segment customers to deliver the right content at the right time The way a business collects, groups, and ultimately acts on data is vital to its success. Sales CRM software like Twib, usually allows the segmentation of prospects and customers into groups based on how they interact with your brand. Businesses can use these insights to tailor marketing campaigns to the individual level of awareness of their customers and prospects. When it comes to retargeting efforts, email segmentation is the key to delivering the right content at the right time. A loyal existing customer does not want to receive offers for an initial purchase.
  11. Use automated emails to encourage inactive users to take action One way to increase retention is by ensuring customers are as active as possible. If a user has remained inactive for a while, an automated email through your CRM system can induce this user to take action. For example, if you are tracking how users interact with your product and notice that they have only used a small portion of the product’s features, an email explaining how to use other features could re-ignite their interest. This approach leverages the power of personalized communication to drive user engagement and help them derive more value from your product or service. Automated emails can also include educational content such as best practice guides or successful case studies from other customers, making them an effective tool for nurturing leads and building strong relationships with customers. However, it’s important to note that this strategy is best aimed at relatively inactive users, as users who are already comfortable and active with the product may find a barrage of automated emails annoying or intrusive.



In conclusion, customer retention is a key metric for almost all businesses, both B2B and B2C. Retaining existing customers is usually much cheaper than acquiring new ones. loyal customers tend to be repeat customers who can help to drive profits through increased sales, upselling, and referrals. By measuring customer retention rates and implementing a range of strategies to improve them. Businesses can build lasting relationships with their customers, drive profitability, and ensure long-term success.

Whether you’re improving user onboarding, creating a personalised customer loyalty program, or using automated emails to encourage inactive users to take action, there are many ways to increase customer retention rates. By focusing on providing exceptional customer service and building strong relationships with your customers, you can improve retention rates, drive profitability, and set your business up for long-term success.

So, if you’re looking to improve your customer retention rates, start by measuring your current retention rate, identifying areas for improvement, and implementing some of the strategies outlined in this article. By doing so, you’ll be well on your way to building a loyal customer base and driving sustainable growth for your business.

Take action today to improve your customer retention rates and drive profitability with Twib, the client management app that utilizes technology to help you build lasting relationships with your customers. From personalized loyalty programs to automated emails, Twib has all the tools you need to increase customer engagement and retention. Don’t let your customers slip away – start using Twib now to secure your business’s long-term success.

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