20 Min
Still focusing all your energy on acquiring new customers? It might be time to flip the script. Retaining the customers you already have is where the magic—and the money—happens.
Chewy, a US based online pet retailer, is renowned for its empathetic approach to customer service. In one widely shared story, Chewy not only refunded a dog food order after the customer’s pet passed away, but also sent a handwritten condolence card and flowers.
Despite such standout examples so many businesses still miss the mark, losing customers faster than they can replace them.
That’s why we’ve put together this list of customer retention strategies that actually work, backed by real-world examples.
Table of contents
What is Customer Retention? And Why Do Companies Struggle with It?
Customer retention is the company’s ability to keep its customers coming back over time. Instead of always chasing new customers, you focus on building relationships with the ones you already have—making sure they feel taken care of, and even excited to stick around.
A good customer retention strategy, in turn, encourages customers to stay loyal to your brand and consider you whenever they need the products or services you offer.
Essentially, customer retention measures how well you maintain your customer base and keep churn (the number of customers leaving) to a minimum.
Many companies struggle with customer retention. Here’s why:
1. Prioritizing customer acquisition over retention
It’s exciting to win new buyers, but without strategies to keep them engaged, those customers might quickly disappear. Retention doesn’t feel as flashy as acquisition, but it’s just as critical.
2. Offering subpar customer experience
Customers are less forgiving than ever. A bad customer experience—like delayed responses, confusing processes, or unhelpful support—can lead them to competitors.
3. Neglecting the importance of communication
Staying top-of-mind with customers requires consistent personalized communication—whether through emails, social media, or loyalty rewards. Some companies struggle to engage customers after the initial sale, creating a gap where competitors can step in.
4. Not even measuring retention
Companies that don’t track key metrics like churn rate, repeat purchase rate, or customer lifetime value (CLV) may not even realize they have a retention problem until it’s too late.
Raise the bar for customer experience with knowledge management
How to Calculate Customer Retention Rate (CRR)?
Customer Retention Rate (CRR) measures the percentage of customers a business retains over a specific period.
Here’s how you can calculate Customer Retention Rate or CRR:
Here:
E = Number of customers at the end of the period
N = Number of new customers acquired during the period
S = Number of customers at the start of the period
Example:
Let’s say:
- You started the month with 200 customers (S).
- By the end of the month, you had 250 customers (E).
- During the month, you acquired 80 new customers (N).
Step 1: Subtract new customers from end-of-period customers:
E−N = 250−80 = 170
Step 2: Divide by start-of-period customers:
200/170 = 0.85
Step 3: Multiply by 100 to get the percentage:
CRR = 0.85×100 = 85%
Your Customer Retention Rate for the month is 85%.
See How Jupiter Improved Its CSAT with Knowmax
12 Proven + Out-of-the-Box Customer Retention Strategies That (Actually) Work
Proven customer retention strategies:
1. Turn shopping into a literal reward
Loyalty and reward programs are a great way to increase customer retention by offering them something extra for their continued support. These programs create a sense of value and appreciation.
Starbucks’ app-based rewards program allows customers to earn “stars” with every purchase. These stars can be redeemed for free drinks and food, creating a tangible benefit for their loyalty.
What makes it even better is the gamified approach—customers enjoy earning stars, achieving new tiers, and taking advantage of bonus point promotions. This keeps them looking forward to choosing Starbucks over other coffee shops.
2. Make it personal
Personalization is a customer retention strategy to show customers they truly matter. By tailoring interactions to individual preferences, you create memorable experiences for them.
Spotify’s annual “Wrapped” Campaign is a fantastic example of a personalized customer retention strategy. The data engineers turn user data into a highly personalized, shareable “year-in-review” that highlights each user’s listening habits—favorite songs, artists, and genres.
This personalized experience not only excites Spotify users but also creates a social buzz as people share their results on social media platforms. It’s a fun, engaging way to celebrate their unique connection with Spotify.
3. Listen to, learn and act on the customer feedback
When customers take the time to share their thoughts, they want the product to be better—and acting on their input shows that their opinions matter.
Slack, for instance, invites users to share feedback through multiple channels, such as in-app prompts, email surveys, and online communities.
What sets Slack’s customer retention strategy apart is how quickly they act on this input, releasing product updates and improvements based on customer suggestions.
Win & keep your customers with empathy
4. Focus on onboarding as well as educating
Don’t just stop at showing customers the ropes. Pair customer onboarding with ongoing education, like tips, tutorials, and updates, and you’ll keep their interest as they continue to use your product.
HubSpot provides an extensive library of free tutorials, certifications, and educational content to help new (and existing) users get the most out of its marketing and sales tools.
Customers become more successful with the platform, see tangible results, and are far less likely to churn.
5. Create community around your brand
Encourage your customers to connect—not just with your brand, but with each other. Building a sense of community makes people feel like they’re part of something bigger.
LEGO runs an online platform called LEGO Ideas where fans submit kit designs; top-rated ideas get produced and sold worldwide.
This community creates a sense of belonging where users feel like they’re a part of the brand’s story, not just customers.
6. Upsell and cross-sell but thoughtfully
Upselling and cross-selling don’t have to feel pushy. In fact, when done thoughtfully, it shows customers products or services that can truly add value to their experience.
Amazon’s “Frequently Bought Together” feature is a great customer retention strategy that includes cross-selling seamlessly. It uses browsing and purchasing data to suggest complementary items.
Because suggestions are relevant (and a lot of the time genuinely helpful), customers often add more items to their cart, feeling served rather than sold to.
7. Use the power of convenience and seamlessness
People want products that make their lives easier.
Apple’s ecosystem (iPhone, iPad, Mac) seamlessly integrates with services like iCloud, iMessage, and Apple Music.
By ensuring everything integrates effortlessly, Apple eliminates friction and creates a user experience that’s hard to walk away from.
Reducing friction and offering a unified, easy-to-use experience can make switching to a competitor feel cumbersome.
Out-of-the-box customer retention strategies:
8. Create surprise-and-delight moments
Surprise-and-delight moments are all about going beyond customer expectations in unexpected ways. These little gestures can make a big impact.
Zappos is a great example with its “WOW” customer retention strategy.
They empower support reps to go above and beyond—like sending flowers to a customer in need or tracking down late-night pizza—creates memorable, joyful surprises and helpful experiences.
It’s a creative, personal way to stand out and retain your customer base.
9. Offer “Secret Menus” and other exclusive offers
Who doesn’t love to be in on a secret? Offering “secret menus” or exclusive deals creates a sense of exclusivity and excitement that keeps customers engaged.
In-N-Out Burger’s famous “secret menu” includes items like Animal-Style Fries, which customers can only get if they know to ask for it.
This adds a fun, insider vibe and also builds camaraderie among fans who love being part of something special.
10. Shine a spotlight on the customer’s story
Celebrating your customers’ stories is an often-neglected customer retention strategy. By highlighting their successes, journeys, or creative ways they use your products, you make them a part of your brand’s community.
When you turn the spotlight onto your customers, you’re not just promoting your product—you’re building a lasting relationship.
11. Offer a “White-Glove” onboarding and support
“White-glove” onboarding and support is all about delivering a premium, highly personalized experience.
First impressions matter, and a personalized, high-touch onboarding experience set the tone for the relationship with your customers.
Warby Parker’s Home Try-On Program eliminates the hassle of buying eyewear online by letting customers try five frames at home for free, effectively “white-gloving” the entire purchase process.
12. Leverage innovative referral experiences
Referrals are effective for customer retention and acquisition, but to stand out, you need to think beyond traditional referral programs. By creating unique, engaging referral experiences, you can turn your customers into advocates for your brand.
Dropbox’s referral program rewarded both the referrer and the referred with extra storage space—a reward that directly aligned with their product’s value.
This win-win approach encouraged users to share the service while benefiting both parties.
Keep Customers Coming Back with Knowmax
Offering good customer support is the base of an effective customer retention strategy and Knowmax helps you offer just that.
Knowmax is an AI-powered knowledge management platform that ensures your customer retention strategy actually reaches fruitarian. With its powerful AI search and dynamic content modules your customer support reps can reduce response times and deliver the relevant information effortlessly.
It also provides a robust knowledge base that helps your customers to find answers independently. By integrating with various communication channels such as chat, social media, mobile apps, and websites, Knowmax ensures consistent and fluid information delivery across all touchpoints.
Ensure long term customer retention with Knowmax
FAQs
Some common customer retention examples are loyalty programs, offering personalized experiences, providing exceptional customer service, delivering exclusive benefits, and maintaining proactive communication.
A good customer retention rate varies by industry, but generally, retaining 85–90% of customers annually is considered excellent for subscription-based businesses. For other industries, rates above 70–80% are often seen as healthy.
A customer retention program is a strategy to keep your existing customers coming back. It focuses on building strong relationships through loyalty rewards, personalized communication, exclusive offers, and great customer service.
The 3 R’s of customer retention are:
1. Retention: Keeping your existing customers engaged and loyal over time.
2. Revenue: Maximizing customer lifetime value by encouraging repeat purchases.
3. Referrals: Turning happy customers into advocates who bring in new business through word-of-mouth.
Some common reasons for customer churn are poor customer experience, lack of engagement, better competitor offers, low product value, and misaligned expectations.
