Top Customer Retention Strategies

Picture this: a bustling bakery where the scent of freshly baked cookies wafts through the air, a cozy corner café that makes your daily latte just the way you like it, or that quirky bookstore where the owner somehow knows exactly which book will tickle your literary taste buds. 

What’s the secret behind these small businesses that make customers not just visit once but keep coming back for more? It’s the magic of customer retention marketing, a delightful dance that turns one-time buyers into lifelong fans!

Unlock the key to customer retention strategies for small business to maintain your loyal fan base.

The ultimate goal of customer retention is to establish a loyal fan base that not only makes regular purchases but also becomes a brand advocate. Businesses employ customer retention to assess customer loyalty over time and evaluate their overall level of effectiveness. 

To determine the Customer Retention Rate (CRR), use this formula:

CRR= ((E-N)/S)) X 100 where;

S= amount of customers the business has started

E- number of customers at the end of the period

N= new customers within the same period

So, let’s say your business started with 100 customers, gained 10 over a certain period of time, and ended up with 105 customers. In this case, your retention rate is 95%. 

What is a good retention rate, you may ask? Well, it depends on the industry and the time period you are calculating. Small businesses can expect at least a 20% retention rate, and this is a bare minimum in 8 weeks. 

According to MixPanel, SaaS and e-commerce industries can expect at least 35% of CRR in 8 weeks, while media and insurance companies can anticipate 25%. For other industries, the expected CRR is below 20%.

CRR is calculated along with the churn rate to determine the optimal strategies. If your churn rate is higher than CRR, it is time to rethink your marketing plan. Coming up, we’ll talk about customer retention strategies for small business, so stay with us!  

Businesses often forget that balance between pursuing new customers and nurturing existing ones. Profit Well reports that within the last 5 years, client acquisition costs have risen over 50%. Despite that, the probability of selling to new customers is 5%-20%, while to current ones, it is 60-70%. (Source)

So, what’s up w/ith this weird fixation on chasing after new clients instead of nurturing and retaining current ones? Possibly the allure of quick wins or the desire to rapidly secure a large number of customers. Have they not realized that Rome wasn’t built in a day and that great things take time and effort? More on that soon, but before we do, let’s discuss the key advantages of retention. 

The main customer retention benefits are:

• Cheaper than acquisition: Harvard Business Review reports that acquisition costs 25x more than retention. And let’s not ignore the fact the likelihood of closing sales with new clients is 5-20%, while for existing ones, it’s 60-70%.
• Higher Customer Lifetime Value (CLV): Throughout customer lifecycle stages, the goal of any company is to gain as many loyal clients as possible. This is because 77% of clients remain loyal to the brand for more than 10 years (Source). Ultimately, retention marketing helps to establish long-term relationships and secure a stable revenue stream.
•  Word-of-mouth marketing: Happy customers who make repeat purchases from your business become brand advocates of your referral campaigns. Without spending a penny, they can bring revenue by referring your product or service to their peers, family members, etc.

Coupled with the listed benefits, retained customers can also provide valuable feedback about your product or services. The feedback helps you identify areas for improvement and refine your offerings to meet customer needs better. Coming up, we’ll talk about how to map out your customer retention strategies, so stay with us. 

Building customer loyalty is like planting a garden – you don’t just toss a seed and expect a rose garden the next day. You need to nurture those relationships and watch as they bloom into a beautiful bouquet of loyal fans. But this bouquet can be up for grabs only if you have a strong grasp on how to properly take care of it. That’s why we’re going to look at customer retention strategies for small a business that can ensure a happy, loyal fan base. Grab your pen to take notes!

The most influential factor in purchase decision-making is trust and credibility in your company or product. According to the report, 81% of clients find trust the most influential component in their decision-making process (Source).

To gain their trust, improve your support team, and regularly ask for feedback using the metrics such as NPS, CSAT, etc. Incorporate these with the below-mentioned strategies to strengthen trust in your business.

According to the New Epsilon research, 80% of customers will likely repurchase if companies provide personalized experiences. So, customize your offerings with personalization to match each of your customer’s unique needs and preferences.

 This ensures that businesses treat customers as individuals, not just numbers. You can use customer data wisely to tailor experiences. From sending birthday discounts to recommending products based on past purchases. It’s like whispering, “Hey, I remember you!”

Don’t forget to craft fun and creative newsletters that puts smiles on your client’s face. See how MeUndies does that.

What’s more, the biggest complaint customers have is that AI chatbots don’t understand their unique needs. This is because it lacks empathy, which is something that every customer will demand from a business. Especially for small businesses, an emotional connection with customers is crucial for success which brings us to the next strategy.

As discussed above, treating your customers as mere data won’t get you anywhere. You should create a strong bond with them by understanding and addressing each of their needs and preferences. And it pays off. The study reports that customers who feel emotionally connected to a business provide 306% higher lifetime value (Source). 

If you use an advanced marketing automation platform, you can group your customers’ preferences with psychographic and behavioral segmentation and create strong connections through shared values. For instance, for customers who are concerned about environmental issues, let them know about any efforts being made by your company to tackle or resolve those issues.

Don’t expect to have a loyal fan base when putting zero effort into the loyalty program. A loyalty program is like a VIP pass that makes your clients feel special. Loyalty program rewards can be:

• Tiered
• Point based 
• Gamified
• VIP

And ir doesn’t matter which reward system you choose; the allure of discounts and freebies will hook customers, encouraging them to make repetitive purchases.

And last but not least, onboarding your clients properly is a crucial element in customer retention. You can incorporate a welcome message with onboarding instructions or send those emails one by one. 

The onboarding newsletter can include the following:

• A walk-through process to navigate through your website
• Educational materials to inform them about your product or service

Onboarding helps to significantly reduce the churn rate and improve customer satisfaction resulting in a higher retention rate. 

1. What is Customer Retention?

The goal of customer retention is to establish a loyal fan base that not only makes regular purchases but also becomes brand advocates.

2. How to do Retention Marketing?

Use an advanced marketing automation platform to send messages tailored to each customer’s needs and preferences. 

3. Average Customer Retention Rate by Industry

SaaS and e-commerce industries can expect at least 35% of CRR in 8 weeks, while media and insurance companies can anticipate 25%. For other industries, the expected CRR is below 20%.

4. Customer Retention Benefits are:

• Cheaper than acquisition
• Higher customer lifetime value
• Word-of-mouth marketing

5. Customer Retention Strategies for Small Business

• Build trust and credibility 
• Provide personalized experience
• Create an emotional connection
• Launch loyalty reward system
• Onboard them properly