How to increase customer retention

Why should you care about retention

Acquire new customers is much more expensive than selling to existing ones. Everybody knows it. In other words, every dollar invested into developing existing customers yields 5 – 10 times more in sales than a dollar invested into acquiring new customers.

What is your marketing budget for acquiring new customers? And what is your budget for developing existing customers?

Regarding the customer retention Forbes accurately remembers old proverb “Make new friends, but keep the old. One is silver, the other gold.”

While you have to remember to acquire new customers, you should focus even more in keeping the existing ones. You should manage your customer retention.

Managing retention

You can not manage what you can’t measure. So the first step to retention management is to establish a system to regularly evaluate customer retention. One of the most prominent methods to measure the retention is cohort retention analysis. While it is not a rocket science, it is quite laborious to do it manually even if you are skilled Excel user. That is why we developed a simple Excel application for Automated Cohort Retention Analysis. Everyone can download it’s basic version here and use it for free. It enables you easily evaluating your cohort retention on weekly or even daily basis.


Now, when you have established a retention metric, what comes next? You start a regular communication. As a marketing guru, Larry Weber, states: “People don’t want to be sold. What people do want is news and information about the things they care about.”
And this sentence is illuminating not only regarding the importance of communication but also about what to talk about. Let’s read it once more what matters:“news and information about things what they care about.”

Of course what people care about most is themselves. Therefore make feel them important, show them your gratitude not only when they buy. Appreciate them, their value, their loyalty. Personalize your messages, using their name and focusing on their interests according products they purchase from you.

Research shows that most of the satisfied customers don’t return again if they don’t feel connected by some other bond than the purchase itself. Creating a mental link between you and them itself is what makes them purchase from you again and again.


Once you make them feel connected you can make them also a sales proposition. Use any opportunity you can think of. The more personalized, the better: name day, anniversary of their first purchase, passing certain number of days after their last purchase, new product release related to what they buy. Stay focused on them. And incentivize. The free stuff or additional discounts always work well, if they are connected with customer’s needs and preferences. Don’t annoy them with irrelevant offerings. Unless…


You may want to increase your customer engagement by making them purchase products of the other side of your portfolio. It is proven by research that the customers who purchase a broader spectrum of products in a certain seller are more likely make repeated purchase than those who buy products from just one or few categories. Cross-selling thus creates additional profit twice. First time by the additional sales itself and the second time by prolonging the customer’s life cycle.

However you still want to avoid that your customer feels you are overwhelming him with uninteresting or offerings. Therefore your cross-selling offer has to be related with products your customer already bought or has to be presented together with some other relevant offer.

If you need assistance with all this (analysis, campaign creation, realization and evaluation), we will be delighted to help you. Just contact us here.