Customer retention is critical to any successful business: in the article find out what it is, how to measure it and why it can't be missed in your marketing strategy.

I'm sure you've read or heard it several times: it's easier to convince your repeat customers to repeat a purchase than to find new ones. This is even more so in the oh-so-crowded world of e-commerce, where clicks and conversions seem to be getting more and more expensive.

I also tell you about it in my article on the churn rate, where, for the very same reason, I reiterate how critical it is to know how easily your users leave you.

So, I ask you, when was the last time you tried and implemented new strategies to further engage your customers, rather than just investing in promotions to grab new ones?

Have you ever worried about getting them back after an initial contact or purchase?

Yeah, because you might as well increase the number of people who decide to rely on you and your services, if most of them then give you the full beans in no time.

I am referring to the importance of implementing a whole series of actions that fall under the customer retention, i.e., the ability to retain customers-a key aspect of increasing their lifetime value and consequently your revenue by building effective, long-lasting relationships.

This should be your goal: to help people consistently see value in your offering and meet their needs using your product or service, through a process that promotes communication, trust, and mutual growth.

All of this plays a crucial role in the success and lasting sustainability of your business.

But what exactly does it mean customer retention? 

Let's see it in detail now.

What is customer retention?

The Italian translation is. customer loyalty: in a nutshell, it is The ability to turn customers into repeat buyers, increasing profitability for each and maximizing their lifetime value.

It is a term in marketing for all those processes and strategies that aim to further engage current customers so that they will continue to interact with your offering by purchasing your products or services.

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Put another way, customer retention consists of the following. Measuring and evaluating customer loyalty, in order to plan and implement various actions to reduce the dropout rate.

The reasoning behind a customer retention strategy is very simple: after a user has purchased from you, considering the effort you have put into reaching him or her and the resources expended to convert him or her, the best thing you can aspire to is that he or she will remain loyal to your brand through a stable, long-term relationship.

Customer retention then allows you to understand whether your offering meets the needs of your audience and encourages them to return. This also includes obviously knowing your industry and your competitors, to prevent people from deciding to go elsewhere.

The more your customers stay loyal to you, the more the churn rate will be low, the more your income will remain positive.

Quite different, of course, from the lead generation, whose goal is to find new contacts to put on your mailing list-which you can then leverage to convert into customers through various strategies, such as email marketing.

How do you measure customer retention?

To find out how effective your business and strategies are in building customer loyalty, you can calculate the customer retention rate, or retention rate: a metric expressed as a percentage that measures how many customers remain as such by the end of a given period of time.

As with churn rate, you should always consider it as a key performance indicator (KPI) critical to the success of your business.

Let's see now how to calculate it.

The formula is simple, but very powerful: it gives you insight into how you are building relationships and attracting existing customers for subsequent purchases.

The first step is to identify the time period you are interested in monitoring, which can vary according to your needs (month, quarter, semester, year, etc.). You then need to quantify other factors, such as:

  • the number of customers at the beginning Of the period;
  • The number of customers at the end Of the period;
  • the number of new customers acquired in that duration.

At this point, you have to subtract the clients acquired by the total number of customers after all of the period. Then you take this number and divide it by the number of clients you had at the beginning Of the period. Multiply by 100 and you have your retention rate.

I'll make it easier for you by showing you the formula:

[(customers at the end of the period - customers acquired during the period) / customers at the beginning of the period] x 100

customer retention rate

Let's take a practical example right away.

Suppose you have 2,000 customers at the beginning of the quarter and have then acquired another 400, but at the end of the quarter your active customers are 1,300. Applying the formula you will have:

[(1.300 - 400) / 2.000 = 0.45] x100

This means that you have maintained the 45% of your customers for the past three months.

Why customer retention is important

Customers who are loyal to the products or the brand are always the source of revenue that needs to be maintained and taken care of the most: customer retention is one of the most important factors for any successful business, for a whole host of reasons.

First of all, retaining a user and stimulating them to return to buy products helps you to avoid waste of resources. In fact, it costs much more to acquire a new customer than to keep one: by working on customer retention you can save a lot in terms of marketing and promotions by engaging those who have already interacted with your offer.

Customer loyalty is also the key to a sustained growth: not only is it much easier to sell to an existing customer, but also to sell more to that customer. Along the same lines, you have a better chance of convincing your existing customers to try your new product than trying to sell it to new audiences. 

Not to mention the word of mouth advantage: Loyal and happy customers offer a company the advantage of zero-cost promotion. They are more likely to tell family and friends about your brand, products and services. And since people often care about the opinion of those around them or whom they trust, they will in turn be more likely to buy from you. This also ties in with the concept of referral marketing (I tell you about it at this article).

By interacting with your brand over time, repeat customers can you provide valuable feedback which, when implemented, enable you to act more effectively and efficiently. Their suggestions are easily accessible and help you take advantage of new opportunities, leading to increased sales and retention rates.


Think about it: you work hard to attract customers through a mix of marketing, social media and brand positioning. You invest a lot of time, effort and money to gain people's trust-it only makes sense that you want to hold on to them tightly.

What can you do then?

The key to high customer retention is to determine what is causing your customers to abandon you and then employ strategies that create a loyal group of people who will buy more and more often from you.

To improve retention, considers the entire customer experience, that is, everything he perceives and experiences when he meets your brand, and try to make it as good as possible. The ultimate goal should be to ensure that her needs are met, to foster a vibrant, long-term relationship.

This last point is crucial: remember that this has to do not only with transactions, but also and especially with the reports. People look for brands that are trustworthy, authentic, and aware of what matters to them.

Now, it is clear: customer retention does not improve overnight. What you have to do is implement the right strategies: you have to know your customers, know what they want and what they need. Only then can you find ways to surprise and motivate them. 

So act accordingly: stimulate contact, ask for feedback and testimonials, make them feel special, and tell them you appreciate their loyalty. This will make them much more likely to continue their business relationship with you.

Photo by Dan-Cristian Pădureț on Unsplash

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