No matter the type of business you run, you need to include retention marketing in your various advertising strategies. Without retention marketing techniques, you may find yourself with low customer loyalty and constantly struggling to find new customers.

The following guide will explain retention in marketing, outline some of the best strategies, and tell you how to confirm your plan is on track. 

What is retention marketing?

Retention marketing is marketing that has the goal of retaining your current customers. It also involves retargeting inactive customers.

This marketing strategy aims to keep your customers, so you don’t have to spend as much money recruiting new ones.

Businesses’ need for retention marketing

Two main reasons make it essential for any business to have retention marketing strategies

Repeat customers are more loyal and spend more

First, if you turn people into repeat customers, they will be loyal and likely spend more. Boosting your customer retention by 5 percent can lead to 25-95 percent profit boosts.

The odds of a future purchase also increase with every purchase. If customers revisit you after buying one time, they have a 60-70 percent higher chance of buying again. When someone makes a repeat purchase, they are more likely to become one of your best customers and have a higher customer lifetime value. 

Repeat customers are much cheaper to bring in than new customers

The other reason is that it is much cheaper to get current customers to return than it is to gain new customers. For reference, your chances of selling to an existing customer are 60-70 percent. By contrast, that number is just 5-20 percent for new customers. List building and acquisition marketing are expensive and time-consuming as well. 

You should also consider that getting new customers can cost five times more than keeping one current one. You can also check out what a flash sale is and utilize those to boost those sales. In other words, retention strategies make more efficient use of your marketing budget than constantly acquiring new customers. 

Of course, you should still include acquisition marketing methods; just don’t forget to focus on retention marketing campaigns. 

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Learn retention with these four questions

As you create your customer retention strategy, ask yourself the following questions to gain valuable insights. You can find some of these answers in analytics programs, such as Google Analytics. Other answers can come from surveys and reviews. Some of these are specific to online shops, but all are also relevant to local businesses.

How many users leave my site?

Look at the number of customers that leave your site without making a purchase, as this will help you see how well your on-site retention efforts are going. 

What is the on-site experience for returning customers versus that of new customers?

Ask returning customers what they would change about the website when they return and think about what’s different. Do you display suggested products based on past purchases and cookies? Are they already logged in? 

Do customers feel an emotional connection to my brand?

Ask customers if they feel an emotional connection with your brand. They are more likely to become loyal if they do. You can build this connection via personalized communication, such as through SMS marketing or through effective visual marketing like text logos and slogans. You can also connect via social media to further your retention marketing strategy. 

Why are my customers not purchasing?

You can get some idea of why customers don’t buy based on website analytics, specifically by figuring out what stage they often leave in the buying process. But another great way to find out is by asking existing customers in surveys. 

Customer retention metrics

There are numerous customer retention metrics that you can measure to evaluate the effectiveness of your campaign, but the following are the most important. 

Revenue churn rate

To calculate the revenue churn rate, you need to know the monthly recurring revenue (MRR) at the month’s beginning and end.

Subtract the MRR at the month’s end from the figure from the start of the month. Then subtract the MRR in upgrades (upselling and cross-selling) from that month. Divide the total by the MRR from the beginning of the month.

This will tell you how much revenue you lost from your customers within the month. 

Customer churn rate

The customer churn rate is among the most straightforward and vital customer retention metrics.

Calculate the customers’ churn rate by subtracting the number of customers at the end of the year from the number at the start, then dividing that by the number of customers at the start.

This will tell you the rate at which customers stop buying from you. Just remember that some attrition is natural. If the churn rate is more than 5-7 percent, figure out why and implement retention strategies to reduce this figure. 

Repeat purchases

Your goal with your customer retention marketing is to get repeat customers, so it makes sense to calculate this figure as part of your retention rate.

To do so, divide the number of your returning customers by the total number of customers. The result will be a ratio. You can use this ratio to get an idea of customer loyalty. 

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How can I improve my retention marketing strategy?

The following methods can improve your retention marketing strategy with all of that information in mind. Think of them as retention marketing examples that can help you improve your customer relationships and retain existing clients. 

Understand your users with a user journey map

You want to understand your customers’ preferences and struggles so you can incorporate them into your retention strategy. A great way to do this is with a user journey map and buyer personas. This involves studying actual or simulated customers’ interactions with a brand over time. Then, use lifecycle marketing to target customers at various journey stages.  

Use data to create personalized customer communications

Customers are much more likely to return if they feel that your marketing efforts are personalized to them. To do this, rely on data that helps you target and segment customers. Then, send them personalized content.

Sending personalized content is easier than you may realize. SMS marketing, for example, lets you create templates and automatically fill in specific fields. If you combine this with segmentation, you should see great results in terms of customer retention. 

Make it easy for users to share feedback

One part of customer retention is ensuring that your existing customers are happy. But you can’t fix issues with the customer experience if you don’t know that they exist. Avoid this problem by making it a point to ask customers about their experience, including what they would improve or change and what they like. A simple feedback form or texting a survey link is a great way to do this. Just make sure that it’s easy for customers to give you feedback when they want to so you can gather customer data.  

Create loyalty programs

Creating reward or loyalty programs is among the most effective retention marketing strategies, which is part of the reason that it is so popular. You can use the loyalty program to give returning customers exclusive access, special offers, or discounts. 

One of the best customer retention marketing examples is Starbucks, which offers free drinks or pastries and other rewards to members of its loyalty program. 

Create a community of loyal customers

If you aren’t sure whether loyalty programs are right for you, you can also create a community of loyal customers, such as on social media. You can use the same retention marketing tactics as you would with the loyalty program, such as sharing promotions and exclusive products. 

Remember that engaged customers will become your most loyal customers. Keep that in mind and use social media groups to boost customer engagement in the community. 

Deliver excellent customer service

Your customers are most likely to become loyal if they have a great experience, and part of that comes from customer service. As such, you should prioritize your customer service.

There are several ways to do this, but the most important thing is to make it easy for customers to communicate with you via their preferred channels. This may include social media, texting, and email.

Don’t forget that communication goes both ways. Customers don’t just want to contact you; they also want you to share important updates with them. 

Personalized discounts

We already mentioned personalization, but the most successful retention marketing strategies take this to the next level and offer personalized discounts too. This is another thing you can easily do with SMS marketing or email marketing. Of the two, SMS marketing will be ideal, thanks to its higher open rate. 


Every business needs retention marketing to minimize costs and maximize profits. It is more cost-effective and easier to retain customers than acquire new ones. Optimize the customer experience and offer personalized communications and discounts to maximize retention. Remember that satisfied customers are also likely to engage in word-of-mouth marketing, which will expand your customer base. 

Isaiah Rendorio
Isaiah Rendorio Product Marketing Manager, Campaigns

Isaiah Rendorio is the Product Marketing Manager for Podium Campaigns—helping local businesses tap into the power of SMS marketing to strengthen customer relationships, increase customer lifetime value, and drive more revenue.

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