Master these 11 customer retention strategies to unlock stellar success

In today’s digital landscape, customer retention strategies are more crucial than ever. According to Coveo’s 2023 Customer Service Relevance Report, 56% of respondents are now opting not to speak up after a bad experience.¹ Rather, they’re quietly "ghosting" brands to seek better options elsewhere.

To win in this cutthroat environment – in which customers are willing to drop businesses quickly and with little regard for loyalty – companies must find novels ways to prioritize retention.

In this article, you’ll learn about the importance of customer retention strategies, key initiatives worth pursuing, and successful examples that will help you build lasting relationships – all of which collectively ensures that you stay one step ahead of the competition.

What is customer retention?

Customer retention reflects a company's ability to foster repeat clients and cultivate loyalty over time. It’s defined as the rate at which a business can retain its paying customers, whether they are subscribers, service users, or product buyers.

By measuring customer retention, companies can assess not only their success in acquiring new clients but, more importantly, how well they satisfy and serve the needs of current ones. Regardless of a business’s growth stage or strategy, retaining customers will always remain a profoundly important goal.

What is a customer retention strategy?

A customer retention strategy covers the initiatives and processes companies implement to build lasting customer value. These strategies provide the framework for fulfilling brand promises through consistently delivering on the customer experience.

What is the importance of customer retention strategies?

Retention is often viewed as a means to reduce user loss, but its true value extends far beyond that. In fact, robust customer retention strategies stand as some of the most potent levers to drive business growth by strengthening loyalty and nurturing valuable relationships.

According to a study conducted by Paddle, the impact of a 1% increase in customer acquisition on the bottom line is relatively modest, at just over 3%. In contrast, by improving retention and lowering gross churn by a mere 1%, you can witness a substantial 7% increase in customer lifetime value (CLV) and ultimately bolster your bottom line. 

In other words, retention has proven to be more than twice as influential as customer acquisition.

With consumers now holding back on non-essential spending, maximizing the lifetime value of existing customers deserves an even greater level of focus. Strategic retention initiatives can fortify your organization against short-term headwinds by preserving hard-earned revenue streams and sustaining loyal relationships.

It’s worth mentioning that nowhere is high customer retention more essential than for subscription and SaaS businesses, which rely on recurring revenue streams. For these companies, retention acts as a key performance indicator, helping evaluate elements like onboarding, support, and feedback that impact long-term customer relationships.

11 customer retention strategies

Here are 12 powerful customer retention strategies for you to try out.

1. Design a strong onboarding process for new customers

Designing an optimal onboarding experience for new users represents a key part of any customer retention strategy. These first interactions can make lasting impressions, so companies must view this initiation period as critical to their prospects of fostering future loyalty. 

Beginning with their initial purchase, users deserve consistent, straightforward guidance that seamlessly answers their questions and resolves their issues. Any service gaps or confusion with onboarding risks establishing an unfavorable perception that could stick to a business and become difficult to supplant.

While fixing mixed or outright negative first impressions are possible, for many customers, that bitter aftertaste remains. 

Instead of combating the repercussions of a flawed first impression, a well-calibrated welcome process can smoothly immerse new users in a product and set the stage for a long-term, mutually beneficial relationship. 

Strong onboarding confirms a brand's ability to follow through consistently on its promises, making satisfied users more inclined to remain with a business for the long term. 

A well-executed onboarding process demonstrates a clear commitment to each individual customer and sows the seeds for repayment through retention.

💡 Pro tip: When running usability tests of your onboarding process, be sure to use a thinking aloud test methodology. Have new users work through the process while continuously verbalizing their thoughts, questions, and decisions as they interact with the interface.

2. Get proactive to engage and support your customers

Proactive support is your first line of defense against potentially disgruntled customers. This approach means anticipating your customers' needs and delivering solutions before concrete issues even arise. It's about being one step ahead of potential problems through strategic, targeted engagement.

For instance, we’ve already mentioned onboarding, which can be a proactive way to support your users. However, the proactive customer retention strategy doesn’t stop there. 

You can and should also send targeted messages with relevant content, invest in help articles for common questions, and incorporate announcements into places where your users already are so they don't have to go searching for answers later.

By being proactive, you can minimize queries and ensure a smoother support experience for both your customers and your support team.

💡 Pro tip: Use a customer service platform to automate the identification of common issues and pressing questions, sparing your team from manual tagging and exhaustive searches.

3. Personalize each customer's experience

Personalization plays a critical role in driving business growth. According to Intercom’s Customer Service Trends Report 2023, 89% of support leaders recognize personalized support as a key competitive differentiator.² Additionally, support teams that offer personalized assistance are twice as likely to witness improvements in customer satisfaction and retention.

While support is only a fraction of the whole experience, Intercom’s insights highlight the importance of personalized approaches. No two customers have the same exact needs, and many of them may be looking for tailored solutions from your business.

Personalization starts by learning the basics – including names and interests – directly from customers. However, leveraging data collected from interactions and utilizing channels preferred by each customer takes personalization to the next level.

This kind of understanding builds strong connections that, over time, foster a sturdy sense of loyalty. According to McKinsey & Company, 78% of customers agree that personalized communication makes them more likely to repurchase.³

💡 Pro tip: Leverage automation and AI to provide personalized, relevant experiences to customers. Tools like AI chatbots capture customer profile data in real-time and seamlessly route inquiries to the best-equipped support representatives. 

For example, a bot can determine if a user needs help with billing, training, or implementation just from their message. It then routes the ticket appropriately, while also capturing actionable insights like plan level and urgency.

Learn more on how to drive retention from customer support with 4 easy steps.

4. Treat customers like humans, not numbers

At the end of the day, numbers on a screen don't mean much if you're not seeing your customers for who they truly are – real people looking to feel understood. 

While data has its place, interactions conducted with genuine care and empathy give you real insight into what's working and what's not.

If you make an effort to connect with customers as individuals – rather than just anonymous names on a list – they'll feel invested in your business and will want to keep coming back. Any of the customer retention strategies you employ require personal touches and thoughtful conversations in order to build loyalty over time. 

Taking a real interest in each person is what eventually turns them into brand advocates and helps your business thrive through not only customer retention but also word-of-mouth recommendations that organically grow your enterprise. 

💡 Pro tip: The most successful customer service interactions are those where the representative can understand a person's perspective and connect on a human level. Make sure your reps are properly prepared for this through comprehensive training. The time invested in this level of training pays off through increased satisfaction, resolution, and retention rates.

Download The Customer Retention Starter Kit and learn how to create a powerful retention messaging campaign that makes more customers stick around.

5. Earn trust through reliable service

Building trust with customers is vital for any business seeking long-term success. However, trust is not something that can be achieved overnight. Developing reliability, and thus earning the trust that comes with that reliability, takes consistent effort over time.

The best approach is to first set clear, manageable expectations, and then work to exceed them through excellence in product quality and service. Throughout the customer journey, make sure to consistently follow through on any and all commitments you’ve made to your customers.

By delivering excellent service in each and every interaction, you’ll demonstrate to customers the reliability they can expect from your company. Over time, they’ll come to view your offerings as a sound value that always prioritizes their needs.

This consistent, proven dependability will gradually increase the level of confidence customers have in your brand, and they’ll feel more and more secure coming back to a company they now consider a trusted partner.

💡 Pro tip: Go above and beyond for your customers when providing service and support. Deliver more than promised so they see how you value them. While it might take some extra effort up front, it almost always pays off in the long run.

6. Respond quickly to customer queries

When a customer reaches out with a question or concern, responding promptly can make a significant difference in whether the customer will remain with your business or not. 

Even if you can't provide an immediate solution, acknowledging their query shows that you value their time and are actively engaged in addressing their needs. A quick reply can take the form of a brief message confirming that you've received their question. 

This approach demonstrates your dedication to finding a resolution and helps cultivate patience and understanding in your customers. By promptly responding to customers’ queries, you start to build that all-important sense of trust and provide them with a smoother, more positive experience.

💡 Pro tip: Boost customer support efficiency with an AI-powered chatbot. By collecting customer context beforehand, your representatives can jump into conversations fully prepared to make an immediate impact.

7. Collect and act on customer feedback

Implementing a feedback process helps businesses assess what’s working well and where opportunities lie for improvement. It’s a great way to engage customers and foster long-term loyalty to your brand.

Collecting input through periodic surveys, reviews, or focus groups establishes a baseline for tracking sentiment. Whether it’s a quick Net Promoter Score (NPS) questionnaire or invitations to participate in product tests, always prioritize ease of response to encourage participation.

Analyzing trends across participant feedback can help reveal both strengths to maintain and weaknesses to address. Acting on these insights throughout operations ensures that the entire organization prioritizes addressing the issues that are most vital to client satisfaction.

💡 Pro tip: Add quick reactions to your help center articles – it's a simple way to understand what's working and what needs improvement. If someone isn't satisfied, your team will know straight away, and you’ll have a chance to jump in and clarify points of confusion or make edits based on their feedback.

8. Use gamification to keep customers engaged

Leveraging principles of gamification is an effective way to boost customer loyalty and engagement beyond individual transactions. By incorporating game-like mechanisms that reward achievements and progress, businesses can turn customers’ relationship with their product into an ongoing “adventure.” 

Customers naturally seek feelings of engagement and accomplishment similar to those enjoyed while gaming. Providing missions, incentives, and other game-like features motivates them to continue interacting with your brand. 

This type of gamification builds stronger relationships, as users feel increasingly invested in their journey. It’s a potent customer retention strategy that taps into the innate human desire to feel rewarded for sustained involvement over time.

💡 Pro tip: When designing a gamification strategy, start by focusing on engaging mechanics that directly tie to your business goals before worrying too much about points, levels, and other superficial elements. Concentrate rewards on valuable customer behaviors you want to encourage rather than meaningless achievements.

9. Educate your customers through a self-service program

Self-service options are not only beneficial for empowering customers and reducing support inquiries, but they can also serve as a valuable retention strategy by facilitating further education. 

When you provide more advanced features for other businesses, for example, it becomes especially important to offer educational programs as part of your B2B customer retention strategies. This is particularly true when you offer modern solutions to businesses that require a learning curve.

While knowledge bases and AI chatbots may come to mind as common self-service tools, it's important to consider more comprehensive educational programs, such as an online academy, where users can engage in deep learning experiences.

By establishing an online program with training materials and resources, you can offer self-service training options for customers who prefer to learn independently and may appreciate the opportunity for a deeper dive. This approach enhances their knowledge and proficiency, encouraging a stronger bond with your brand and increasing the likelihood of retention.

💡 Pro tip: Take a look at Intercom Academy, a go-to resource to master our platform. Our customers can learn everything from essential considerations before transitioning to Intercom from another tool to initiating interactions with Fin, our AI chatbot capable of resolving 50% of support queries.

10. Create an engaging community

Beyond interactions, today's customers seek engagement with brands they value. You can nurture such relationships by establishing an online community where your users can collaborate, learn from each other, and develop a sense of belonging.

Whether discussing new features or troubleshooting together, a community provides an additional support structure. And by actively participating alongside your customers, you can both demonstrate sustained commitment to their success and gain real-time insights.

💡 Pro tip: Designate community managers to regularly post discussion topics, acknowledge user contributions, and ensure interactions stay constructive. Community managers become familiar faces that help newcomers feel welcome.

11. Implement a loyalty program for existing customers

One of the most effective customer retention strategies examples is a loyalty program designed for existing users. By acknowledging and showing appreciation for customers' allegiance to your brand, you provide an additional incentive for them to remain committed to your company.

A customer loyalty program should recognize and reward your clients’ ongoing commitment. The program should be designed to provide increasing benefits as they engage more with your products, services, and business. 

This comprehensive approach also boosts customer satisfaction by offering them value that extends beyond the core product or service.

💡 Pro tip: For maximum impact, tier your loyalty program to clearly define progression and associated perks at each level. Customers want to feel that they are advancing in status as their engagement increases. Higher tiers could receive personal discounts, exclusive experiences, or VIP treatment to cultivate a sense of prestige.

How to measure the success of your customer retention strategies

To determine if your customer retention strategies are effective, it's important to establish key metrics. Continuous measurement provides insights into performance over time. 

Consider the following metrics:

Customer retention rate

The customer retention rate is the percentage of customers from a past period that remain active in the current period.

To determine the rate, you should first define the measurement period. Then, count the number of customers at the start of the period (S), how many are still active at the end of the period (E), and any new users added during the period (N).

• How to calculate: [(E-N)/S] x 100 = Customer Retention Rate.

Churn Rate

Churn rate is the percentage of customers lost during a set time period. 

• How to calculate: (Lost customers / Total customers at the start of a given period) x 100 = Churn Rate.

Customer lifetime value

Customer lifetime value is the total revenue generated from an individual over the lifetime that they are a customer with your business.

• How to calculate: Average order amount x Purchases per year x Retention rate = CLV.

Repeat customer rate

Repeat customer rate is the percentage of customers that make additional purchases after their first one. 

• How to calculate: Number of return customers / Total number of customers x 100 = Repeat customer rate.

Successful customer retention strategies: Examples from Zwift, Amplitude, and Bitly

In wrapping up our discussion, we’ll share a few successful examples of customer retention strategies.

Zwift builds real value through its community

Zwift, the online cycling game and training platform, knows how to keep its users engaged and committed. While the app itself gamifies the cycling experience, it's the strong sense of community that serves as Zwift’s most distinctive customer retention strategy.

When users launch the app for a workout, they immediately see a list of current riders, with their friends conveniently displayed at the top. Joining a ride with a friend is as simple as tapping their name.

Once connected with friends, users can chat with them – as well as with friends on other rides – using the app's text chat feature or through integration with Discord for voice chat. Zwift also offers community events, badges, and more to enhance the joy of riding with others.

By fostering social interaction, Zwift keeps its customers engaged and motivated throughout their fitness journeys. The power of community is a key ingredient in Zwift's sterling customer retention example.

Amplitude boosts retention through in-context guidance

Amplitude is a product intelligence platform dedicated to empowering users and helping them achieve their business objectives.

At Amplitude, empowering customers to succeed is a top priority. Through dedicated in-context support and guidance, its team aims to maximize product adoption and ensure positive experiences.

When implementing Intercom, Amplitude’s goal was to increase net customer retention over time. To achieve this, the team developed an "Activation Autopilot" program that provides proactive, tailored assistance to help users implement core use cases swiftly from the start.

By getting customers up and running quickly, Amplitude accelerates value realization so they understand how to leverage the full capabilities of the platform. With effective onboarding and support, the company strengthens relationships and cultivates long-term loyalty and success.

Bitly uses customer feedback to increase retention 

Bitly is a leading link management platform used by businesses worldwide to strengthen customer connections across digital channels. 

One of Bitly's successful customer retention strategies involved gathering feedback. The company sent out surveys through Intercom, soliciting detailed feedback from a representative cross-section of their user base, and collecting input on things like workflow, use cases, and desired features.

Additionally, Bitly created dedicated inboxes in Intercom for teams to directly engage with users. This helped teams stay closely connected to customer needs as they worked to gradually enhance the platform. 

Through ongoing feedback capture and collaboration, Bitly was able to ensure its solution continued meeting evolving customer expectations and requirements.

How to leverage Intercom for your customer retention strategies

As this article has hopefully demonstrated, the importance of customer retention strategies cannot be overstated. By implementing strategies focused on retention, businesses can foster long-lasting relationships and advance ongoing growth.

Companies that truly understand individual needs and consistently deliver excellent service are ensuring themselves repeat customers and sustainable profitability over the long term.

With Intercom, you can start implementing many of the strategies we’ve outlined. Our comprehensive customer service solution allows you to:

• Design an engaging onboarding experience to guide new users.

• Be proactive in your support by anticipating questions and issues.

• Leverage an AI chatbot to quickly address common queries.

• Educate and empower customers with self-service options.

• Ensure continuous improvement by regularly collecting customer feedback.

Experience Intercom’s features for yourself: Start your free trial or ask for a demo today.

Sources

1. Coveo, 2023 Customer Service Relevance Report. Arlington Research conducted an online survey of 4,000 adults across the U.S. and UK aged 18+ who use a computer as part of their work in companies with 250+ employees. Responses were captured between January 12-25, 2023.

2. Intercom, Customer Service Trends Report 2023. We commissioned an independent market research firm to survey a random sample of 1,775 global customer service leaders and decision-makers. The study’s margin of error is +/- 2.3% at the 95% level of significance.

3. McKinsey & Company, Next in Personalization 2021 Report. McKinsey surveyed 1,013 people, sampled and weighed to match the US general population 18+ years.

4. Sprout Social, Championing Change in the Age of Social Media. Sprout Social surveyed more than 1,000 U.S. consumers to better understand how people want brands to communicate their position and engage in conversations on political and social issues.