What Is Customer Retention? 14 Winning Strategies To Retain Your Audience In 2023

What Is Customer Retention? 14 Winning Strategies To Retain Your Audience In 2023

Published By Marilia Dimitriou
February 23, 2023

What is this customer retention thing everyone’s been talking about, and why do I need it? Time to find out!

First of all, retaining customers is 5x less expensive than acquiring new ones. However, is this the only reason why marketers need it?

Well, do you prefer having new visitors who don’t know you, or do you want Tom, your loyal customer, to place his Xth order for this month?

Surely, you’d pick Tom. He is a good guy, but, most of all, he is a loyal customer who trusts your brand. While customer acquisition is essential, retention will ensure the continuous growth of your business.

So, today, you’ll learn how to calculate your repeat purchase rate and the best strategies to increase it like a pro!

Let’s go!

What Is Customer Retention?

Customer retention is a process that businesses use to motivate current customers to keep buying their products/services and discourage them from turning to their competitors.

According to ISS, repeat shoppers have a 60-70% chance to convert compared to new customers who only have a 5-20%! This shows you how retaining customers is equally important and should be part of your sales and marketing strategy.

Now that you know the definition, let’s find out how to measure your retention rate.

How To Calculate Your CRR?

Identifying your repeat customer rate (or CRR) is crucial to monitoring the performance of your business.

To calculate it correctly, you need to know the following variables:

  • CE: Customers at the end of a measured period.
  • CN: New customers acquired during that time.
  • CS: Number of customers when the measured period began.

Now, you can apply these on the following formula:

customer retention formula by moosend

For example, if you had 240 customers at the beginning of a specific period of time (CS), acquired 28 (CN), and ended up with 230 (CE), then your CRR would be 84.2% [(230-28):240 x 100].

What is a Good CRR?

In essence, businesses should have the highest CRR possible. While a 100% rate can be achieved, not everyone is going to hit that number.

To find the best CRR for you, you should compare it to your industry’s average. Here are some retention rates you can use as a reference by Statista:

  • Media: 84%
  • IT Services: 81%
  • Consumer Services: 67%
  • Retail: 63%
  • Hospitality: 55%

As you can see, CRR can differ between industries. Most businesses, though, will aim for an 85%, which I believe is a great starting point.

Furthermore, if your CRR is below your industry average, you really need to optimize your strategy and find a way to retain more customers. How? We’ll get to that. Just bear with me for a few more minutes.

Essential Metrics To Retain Your Customers

Before I show you the best customer retention strategies, let’s see the most important marketing metrics you need to track and how to calculate them:

Purchase Frequency Rate (PFR)

Your PFR shows you how many times an existing customer has bought from you within a given period of time.

Keep in mind that monitoring your PFR will also reveal the level of engagement between your shoppers and business.

To calculate it, you need to divide the total number of orders made during a time period by the number of existing customers:

purchase frequency rate formula

For instance, if you have 240 orders and 180 customers, your purchase frequency rate is 1.33.

Compared to your CRR, PFR indicates the value your customers receive from you. Also, you can use the data to identify purchasing habits and use them to improve your promotional efforts and email marketing strategy!

Average Order Value (AOV)

Your AOV is a crucial metric that helps you discover how much each customer spends when they make a purchase.

To find your AOV, you need to divide your total revenue by the number of orders placed:

average order value customer retention

Monitoring your AOV will help you re-evaluate your pricing model and keep track of the value received by individual customers.

Since your average order value is tied to your company’s performance, calculating it frequently and analyzing the results will ensure your business’s prosperity.

Customer Lifetime Value (CLV)

When we talk about CLV or CLTV, we refer to the amount of money a customer is projected to invest in a business throughout their lifecycle.

CLV is among the most important marketing metrics you need to discover your customer acquisition and retention cost.

To calculate it, you need to divide your average revenue per user (ARPU) by your churn rate:

customer lifetime value and retention

Finding your ARPU & Churn Rate

First of all, you can measure your ARPU by dividing the revenue generated during a specific period of time by the number of active users.

ARPU = total revenue : # of active users

For your customer churn rate, you have to measure the number of customers at the beginning of the month and subtract the customers remaining at the end of it. Then, divide the sum by the number of customers you had at the beginning.

Churn Rate = # customers at the beginning# customers at the end : # customers at the beginning

So, if your ARPU equals $25 per customer ($2,000:80 customers) and your churn rate is 5% (80 -76:80 x 100), you’ll get this:

CLV = $25 : 0.05 = $500

Now, if you multiply it by 12 months, you can find your annual CLV (you can change the “months” value based on the time period you want to measure):

Annual CLV = $500 x 12 months = $6,000

Calculating your CLV is essential to determine your customer acquisition cost, which we’ll see below.

Customer Acquisition Cost (CAC)

Your CAC is the amount of money you spend to win over new customers.

To calculate it, you need to divide your sales and marketing cost by the number of new customers:

customer acquisition cost formula

A good CLV to CAC ratio is usually 3:1, meaning that a customer’s value needs to be three times higher than the acquisition cost.

Knowing your CAC and CLTV will help you keep track of your business. So, if you see that your acquisition cost is more than your CLV, you need to rethink your tactics and focus on retaining existing shoppers more actively.

As we mentioned above, getting old customers to buy is easier than convincing new ones, so keep this in mind when you plan your retention and acquisition strategy.

Now that we examined the most important metrics, let’s see how to establish meaningful customer relationships that will increase your revenue and ensure your business’s survival.

14 Essential Strategies To Retain Your Customers

Establishing a successful customer retention program that will deliver exquisite experiences is the best way to nurture shoppers who will support you no matter what.

Of course, to make it work, you need the help of some old friends: your email marketing platform, social media, support team, and a few more, which we’ll see in a moment!

1. Invite Customers to your Loyalty Program

Consumers love it when you reward them for buying more! After all, you can’t overlook the power that VIP coupons and discounts have! They make you feel special, don’t they?

If you want to promote repeat purchases, invite your audience to your loyalty program. How? Through an email marketing campaign!

Check out how MAC does it:

Subject line: Are You a M·A·C Lover? Join Our Loyalty Program.

mac loyalty program email campaign

Rewarding loyalty is one of the most effective strategies to increase retention and give your audience more reasons to buy from you.

Especially for eCommerce businesses, customer loyalty programs should be an essential part of your engagement efforts. Of course, you can’t run your program manually! To put it on autopilot, you’ll need an email marketing platform with marketing automation capabilities!

This way, you can set up a loyalty workflow that will deliver follow-up messages when your shoppers’ loyalty points change.

If you want to create an effective customer loyalty sequence, sign up for an account and hop into the workflow editor to power up your customer retention!

Try Moosend

2. Provide Stellar Customer Service

Solving customer problems is part of your brand’s lifecycle. Providing instant and valuable solutions to common issues, though, will differentiate you from your competitors.

If you think about it, customer support is the first touchpoint for potential customers who have questions about your product/service.

According to a survey, 84% of consumers claimed that customer service was one of the most important factors in deciding whether to buy something or not. So, this alone shows us that consumers value great customer experiences more than anything.

Also, let’s not forget that good customer service will create reciprocity between you and your target audience.

Here’s a real-life example:

customer service and reciprocity

Helping customers before and after they make a purchase is a must to promote brand loyalty. Don’t forget that customers will respond to a positive (or unexpected) experience by sharing it with their peers. Which can be the ultimate brand awareness boost! Just look at the number of likes and retweets above!

In a nutshell, assisting customers will work in your favor, allowing you to generate more leads and convert them through the power of word-of-mouth marketing!

3. Invest in Customer Success

Customer Success Management (CSM) is a methodology for ensuring that your audience will get the most out of your product/service and achieve their desired outcome.

Compared to customer service, where your team needs to respond actively, customer success aims at being proactive. This approach will help you understand customer expectations and determine the experiences your audience wants to have.

To successfully retain your shoppers, connect your CSM software with your Customer Relationship Management (CRM) database. Through AI, your platform will process the data and give you predictive analytics about your customers’ expectations.

customer success framework


Of course, don’t forget about your customer success team! According to the Customer Success Association, your CSM representatives will ensure that your audience receives the maximum value through onboarding and training.

So putting together a group of people who will integrate your sales, marketing, training, and support activities is one of the best customer retention initiatives you can take to deliver a seamless experience that will convert your leads.

4. Engage your Subscribers 

Sometimes consumers forget about their favorite brands, especially when real-life responsibilities get in the way! To give them a nudge, create an awesome engagement email to show them what they’ve been missing out on.

Engagement emails and their cousins, the re-engagement campaigns, are now easier to set up due to the power of marketing automation. Email marketers can create engagement sequences that will be triggered after a specific time interval or subscriber action.

Here’s a simple yet effective email campaign by Michael Kors:

Subject line: We Miss You Marilia!

Michael Kors customer retention through engagement sequences

Showering your subscribers with relevant recommendations will also rekindle their interest in your brand. And the more you tailor your messages to their needs, the easier it will be to convert and build a solid relationship with them!

Also, don’t forget about the immense power of discounts! From your welcome emails to your engagement sequences, offering exclusive discounts will not only break the first purchase ice but also retain your new customers.

If you are serious about your engagement and re-engagement strategy, join Moosend’s platform to create follow-up sequences that your audience won’t be able to resist!

5. Collect Valuable Customer Feedback

Retention is closely linked to customer experience. So the happier your shoppers are, the easier your efforts will be!

But how do you improve your shoppers’ experiences? Just ask them what they think about you and your products! The best way to collect feedback is to create a customer satisfaction campaign and send it to them like Happy Socks:

happy socks customer feedback campaign

The success of this customer retention strategy lies in customers’ love for sharing their opinion. And getting a 25% off for doing so!

When you create your surveys, make sure to ask the right questions that will reveal potential issues with your product/service. After analyzing the data, you can address your customers’ concerns with a social media post or another email to show them that you take their feedback into account.

And remember, the quicker you respond, the more they will appreciate it!

6. Personalize your Email Content

Personalization is truly the new black! So any message that belongs to the email blast category won’t be met with enthusiasm.

If you want your audience to stay with you, you have to create targeted messages that’ll speak to them. To personalize your emails, collect your subscriber’s information through your subscription forms. This way, you will be able to:

  • add their name to your subject lines and email copy.
  • create dynamic content for each recipient.
  • segment your customers based on their gender, age, location, etc.

Here’s what Sigma Beauty came up with days after I signed up for their newsletter:

Subject line: Marilia, just for YOU – Flash Sale!

sigma beauty personalized email

For me? Oh, you shouldn’t!

Segmentation and personalization are your best allies to better engagement and sales. So make sure to leverage their power to deliver targeted content to your audience and provide a seamless customer experience that will win its heart.

Want to create targeted customer segments and highly personalized emails that will attract your subscribers and turn them into repeat customers? Sign up for a Moosend account, and let us do the work for you!

Try personalization!

7. Create the Perfect Onboarding Experience

As we saw, engagement emails with special offers can increase your customer retention effortlessly. Nevertheless, this is just a temporary solution.

If you want to turn your leads into customers and then loyal advocates, you have to lay a solid foundation. The perfect way to do it is to set up a lead nurturing sequence that will establish strong relationships with your audience.

First of all, designing a welcome email with valuable copy will show your subscribers your true spirit. Then, make sure to infuse your onboarding follow-ups with the right elements:

  • Intrigue: Give first-time purchase discounts, special offers, or free shipping.
  • Value: Provide educational content like whitepapers, guides, and case studies.
  • Uniqueness: Show them how you differ from your competitors and the ways your product can solve their pain points.

Moreover, keep in mind that each subscriber will behave differently. So setting up different onboarding sequences based on their actions will increase the chances of engaging them properly.

email onboarding sequence


The perfect onboarding experience will give you customers for life. And the best part is these shoppers will also help you out by bringing their friends and family over through referrals. That’s two birds with one stone!

8. Power up Brand Credibility

In the era of spam, phishing, and fake ads, consumers need to know whether your company and products are legitimate or not.

Getting scammed is the worst-case scenario. And you know well that when this happens, dissatisfied customers will express their frustration on social media.

To avoid that and retain customers the right way, you need to increase your credibility. How? Through social proof and, more specifically, customer reviews:

customer reviews and retention

To get all those positive comments, you need to keep your promises and deliver a product that will make your shoppers’ lives easier. For Function of Beauty, its satisfied customer base is its secret weapon to convince more people to join.

In a nutshell, social proof is your strongest weapon to make your brand more appealing to new visitors. Use positive customer testimonials on your website, social media, or emails to dissolve any doubt, convert new customers, and give them more reasons to stay with you!

9. Get Customers to Create an Account

I’m sure many of your customers have made a purchase as guests. Which is totally fine. But wouldn’t it be better if you knew more about them? (Personalization is calling! Won’t you answer?)

Letting your shoppers check out without an account is convenient. However, when they create one, they can provide you with a ton of extra information about themselves. Which you can later use to engage them better.

For instance, when a registered user provides you with their birth date, you can use it to create a birthday email campaign with a special offer. For Amazon, this is an old winning practice:

amazon customer account signup

On top of that, Amazon has multiple conversion points to get visitors to sign up. In the last CTA, you can also see how the company adds a little message to show potential customers why they need an account: “See personalized recommendations.”

While this works for Amazon, you can’t really remove the guest option from your checkout because that may inconvenience some users and lead them away. Sadly, lazy customers are a thing…

Nevertheless, try to get them on board by offering extra incentives like a newsletter signup discount to make the registration process sweeter.

10. Adopt the Subscription Model

A single purchase is great. But what if you could turn it into a regular thing?

Undoubtedly, businesses that have adopted the subscription model have found the secret to retaining customers simply and effectively. Just look at Netflix. The brand has been using it for years to keep customers paying for its services every single month!

But what about eCommerce stores and retailers? Well, the subscription model is really easy-to-implement, and you can promote it alongside your one-time purchases.

Here’s how Blueland uses it:

blueland subscription checkout

Subscriptions can work well for companies selling goods like cleaning products, coffee, or even smoothies.

Whatever you sell, show your customers why they should opt for a monthly refill. A discount is the best tactic to intrigue them. Giving them freebies is also a smart practice to get them to act.

Incorporating the subscription model into your business will promote customer retention and increase your revenue. Just make sure that the deal is appealing enough to keep your customers subscribed!

11. Promote your Brand’s Ideals

Consumers no longer see the company as a legal entity but as a living organism with whom they want to relate.

If you want loyal customers, discard the make-a-profit label and adopt a more humanistic approach.

To achieve that, you first need to turn your business into a brand. Then, show your target audience the reasons why your company is worth their time and money.

Highlighting your vision and ideals throughout the customer journey will give your potential customers more reasons to stay. For example, Patagonia is a brand that promotes high-quality products that respect the environment:

patagonia brand mission statement

For its customer base, the brand’s mission is one of the reasons that keep customers coming back. According to a survey by YouGov, 69% of them said that they want to know the origin of the material used to create their favorite garments, and 67% agreed that we should take action to save the environment.

Apart from that, these customers were also charmed by the company’s variety of high-quality products. But, do you know what else made them stick around?

Patagonia’s environmental ethos and its commitment to protecting humans and wildlife!

12. Entertain your Audience

Promoting your products and educating your customers will help you retain them. But do you know what else can win them over? Entertaining content!

This is where social media comes in! Consumers love checking out new products, secret sales, and more. What they love more than anything else, though, is sharing funny content with their friends.

In my opinion, if you make them laugh once, you’ll have managed to lead them a step closer to retention. Why? Because people will not only wait for your promo stuff, but they’ll also look forward to engaging with you on a more “personal” level.

Brands like Wendy’s have used unique social media marketing strategies to power up their engagement and create loyal advocates. This is a small sample of what the brand usually posts:

wendy's social media engagement

Engaging content will solidify the relationship with your followers and turn into something meaningful. Just make sure that the content you post reflects your brand for a more fulfilling and entertaining experience!

13. Don’t Overpromise and Underdeliver

Overpromising is one of the worst mistakes rookie businesses make. And when this is combined with underdelivering, you can find yourself dealing with frustrated customers and negative noise.

No matter how loyal these shoppers are, a mistake like this can create a backlash. And you definitely don’t want a #yourbrandisoverparty or #boycottyourbrand trending worldwide on Twitter.

Keeping your promises realistic will create reasonable customer expectations. And who knows, underpromising and overdelivering might actually be a lot better and even surprise your audience!

An honest business will create a feeling of security that will encourage consumers to keep buying. So next time you promote a new product, keep this in mind to avoid falling into the overpromising/underdelivering trap.

14. Reach out to “Ex-Customers”

Once your loyal customer, now a stranger that doesn’t “talk” to you anymore… Sad, but it can happen at any time! If you find yourself in this situation, it’s best to contact your shopper to determine what happened, especially when this customer has been a regular contributor to your revenue.

I know that starting such conversations with them can be difficult or awkward. However, finding the cause of the problem will give you the chance to win them back and improve your customer retention strategy as a whole. Reaching out to these customers through a personal email is the best way to approach them. Just don’t spam them if they aren’t willing to answer back.

Customer habits and perceptions change all the time. So collecting info will help you improve yourself and your product!

Ensure The Growth Of Your Business

To get from customer acquisition to retention, you need to identify your customer’s pain points and provide them with the best solutions.

As you must have realized, a seamless experience with your brand is all it takes to increase loyalty and turn those first-time shoppers into loyal advocates of your company.

Of course, to achieve retention, you need the help of your CMS, CRM, email marketing, support team, and so on. Also, selecting the best tools for the job will help you streamline your efforts more effectively.

So why not sign up for a Moosend account to have one thing less to worry about?

Now let me see you off with one of my favorite retention quotes: “I don’t know who you are, but I’ll find you, and I’ll retain you!”

You heard Liam Neeson. It’s time to get your business growth back on track!

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