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Simon Lau
August 20, 2021
Landing a sale might feel like the finish line, but for most businesses, it’s just the first lap. Keeping customers engaged, satisfied, and loyal is where the real race for long-term success takes place — because without a clear strategy, even the most enthusiastic buyer can take their business elsewhere.
Here’s why a varied playbook of customer retention strategies is non-negotiable for any sales team. Learn how to increase customer retention with actionable strategies, from gathering customer feedback to building loyalty programs.
Understanding the importance of customer retention
Customer retention is the art of keeping your existing customers engaged and loyal to your brand over time. Although attracting new prospects might grab the spotlight, retaining the ones you already have is just as important to profits and overall business health. Loyal customers keep coming back, and they’re your greatest advocates, sharing their positive experiences and helping build trust with future customers.
A strong customer retention rate (CRR) is a sign that your team is doing more than meeting expectations — you’re surpassing them. When customers stick with your business, it’s a clear sign that you deliver value and create a trustworthy customer experience. Over time, it’s the motor for sustainable growth, predictable revenue, and a strong brand presence.
10 customer retention methods you should know
A positive customer experience takes more than designing stellar products and services. It’s about fostering relationships that make people want to come back for more.
Let’s explore effective strategies and customer retention examples:
1. Tailor and optimize experiences
Customers crave personalization. Businesses that understand preferences and anticipate needs are far more likely to build strong relationships and improve retention.
For example, an e-commerce platform can use purchase history to recommend products or send specific alerts for restocked items. Even something as simple as addressing people by name in email blasts or providing discounts or rewards on a customer’s birthday can stimulate a sense of connection.
2. Improve customer service and support
Exceptional customer service isn’t an option — it’s a baseline expectation. People want quick, effective solutions and interactions that make them feel valued.
Equip your team with tools and processes that improve communication and efficiency. OtterPilot for Sales can take notes during client meetings, cold calls, and training sessions, saving them in your CRM software for continued improvement. With AI-powered technologies, Otter uncovers insights about your CRR and strategies that empower customer acquisition and retention.
3. Gather customer feedback
Collecting customer feedback is a great litmus test to identify customer needs, preferences, and overall brand satisfaction. Use customer surveys or follow-up emails to gather insights.
For example, a software company can ask users to rate the ease of navigating a new feature. Addressing pain points and strengthening positive interactions shows customers that their satisfaction is a priority, helping you retain them over time.
4. Create a customer loyalty program
A thoughtful loyalty program gives people a tangible reason to keep hitting the “purchase” button. Brands can offer exclusive discounts, early access to new products, or special gifts for their most loyal customers. Special offers on exclusive products might even encourage people to purchase items they otherwise wouldn’t have considered.
5. Streamline returns and refunds
Dealing with returns and refunds can be stressful, especially with large purchases. All it takes is one bad experience to increase customer churn.
That's why a streamlined return policy is non-negotiable for your customer retention strategy. Share clear return policies, prepaid shipping labels, and fast refunds to mitigate friction and ensure a hassle-free experience, increasing the likelihood that customers continue to return.
6. Build a customer referral program
You can’t buy word of mouth like a flashy new marketing campaign — but you can encourage it. Offering rewards for referrals turns loyal customers into trusted brand advocates. For example, subscription services frequently use customer retention tactics like rewards and discounts to people who refer a new customer, giving them more incentive to do so.
7. Flexible payment options
Offering a range of payment options — installment plans, financing, or “buy now, pay later” — makes it easier for customers to make purchases. For example, a branding agency can allow customers to pay for a major rebrand in stages, aligning payments with specific milestones. This flexibility reduces financial stress, stimulating a mutually beneficial customer relationship that improves your churn rate and customer lifetime value.
8. Create engaging content
Thoughtful content is a great way to build brand credibility, which boosts CRRs. Blog posts, video tutorials, and thoughtful social media that resonate with your audience’s interests can capture their loyalty and purchasing power. For instance, a fitness brand can offer workout guides and expert tips to help clients stay motivated.
9. Opt for transparency and honesty
Life happens — suppliers fall behind schedule, software malfunctions, and sudden bumps in sales put pressure on the entire team. When these situations occur, be upfront with customers about delays and inconveniences.
For example, if a product shipment is delayed, a proactive message explaining the situation and offering a discount or free shipping goes a long way. Transparency lets customers brace themselves, building trust and customer satisfaction that encourages repeat business despite hiccups.
10. Personalize follow-up communication
Follow up after a customer makes a purchase, asks a question, or even has a problem you’ve already resolved. Customize your follow-up emails or messages to show you pay attention to specific customer needs.
For instance, a salesperson for a CRM software program might send personalized tips for onboarding or schedule a check-in a month after purchase. This kind of thoughtful, individualized communication reflects a culture that values customer relationships and long-term satisfaction — not another sales transaction.
How to calculate customer retention
With a few simple numbers, you can calculate your CRR and understand overall customer success.
Here’s the formula:
CRR = (Customers at the end of period - New customers acquired) / (Customers at the start of period) x 100
And here’s how you calculate:
- Identify a time period: Choose a specific time frame to measure. This is helpful for evaluating the success of a marketing campaign or analyzing year-over-year trends.
- Determine the number of customers: Tally the total number of customers at the beginning of the sales period you want to measure — like at the beginning of the month, quarter, year, or several years. Likewise, tally the total number of customers at the end of the chosen time frame.
- Define new customer acquisitions: Count the number of new customers acquired during the chosen time frame.
- Subtract new customers acquired: This lets you focus on loyal customers you retained throughout the time frame rather than acquisition.
- Calculate the retention rate: Apply the formula to find the percentage of retained customers.
Here’s an example to calculate the CRR over a year:
- 1,500 customers at the start of the year
- 1,100 loyal customers at the end of the year
- 150 customers acquired throughout the year
The calculation would be: CRR = (1100 - 150) / (1500) x 100 = 63.3%
A high CRR indicates your business effectively encourages repeat business, which is more cost-effective than acquiring new customers. A low retention rate suggests your business faces customer churn issues, and you might need to focus on building customer loyalty programs, better customer support teams, or stronger products.
Keep your clients coming back with OtterPilot for Sales
Whether cold-calling new prospects or following up with a loyal customer, OtterPilot is a useful tool for applying customer retention strategies.
OtterPilot for Sales is an AI-powered meeting assistant specifically made for sales professionals — empowering you with automated call notes, customized Sales Insights that automatically sync to your preferred CRM system including Salesforce or Hubspot, and generated content like email follow-ups. Try OtterPilot for Sales today.
