Complete Guide to Retention Marketing


Businesses (whether big or small) spend a lot of time and money on marketing. Regarding marketing, it’s easy to focus only on acquiring new customers, new leads, and new sales. However, you must also focus on retaining your existing customers to get the most out of your marketing efforts.

Statistics show that about 50% of existing customers are more likely to try new products, which means repeat customers can keep your business strong. So, instead of only targeting new leads and customers with your marketing efforts, focus on creating solid relationships with your existing customers to retain them. Luckily, you’ve come to this post as it looks at everything you need to know about retention marketing.

Understanding Retention Marketing

Retention marketing is a new but smart strategy that has become popular in the digital world. Ideally, retention marketing aims at retaining existing customers—customers who have spent their hard-earned money on your product or service. Instead of only focusing on getting new customers, retention marketing focuses on the profitability of the existing customers.

In other words, retention marketing involves activities geared toward enhancing the chances of a consumer making a repeat purchase which means more profits for your business. Companies make significant sales from existing customers. Besides the profit, this translates to satisfied repeat customers who can refer your product or service to others and reduced operational costs. Companies that work towards retaining existing customers can get anywhere between a 25% and 95% increase in profit.

Despite the benefits of retention marketing, very few companies invest in it. Some companies argue that their products and pricing are great for the right customers and assume that will automatically attract customers. They don’t realize that customers are more interested in the experience they get when shopping from a company than the pricing. If customers have a good experience when shopping for your products and the pricing is fair, they are more likely to buy from you and refer other customers to you.

But retention marketing is not the only solution you need to take your business to the next level. You still need to work towards getting new customers using other marketing methods. However, what makes retention marketing unique is that it leads to repeat purchases, as customers who have bought from you will likely do it again.

Reasons Why Ecommerce Brands Need Retention Marketing


Reasons Why Ecommerce Brands Need Retention Marketing

Having a solid retention marketing strategy is essential for eCommerce brands. This section looks at the benefits of retention marketing.

Retaining Customers is Cheaper Than Acquiring New Ones

Nothing feels good like acquiring new customers for your business. However, the process is way more expensive than retaining existing customers. To acquire new customers, you must constantly reach out and engage potential customers through campaigns, paid ads, boosted content, events, etc., which are costly and time-consuming.

On the other hand, you won’t need as much resources to convince existing customers to buy your products as they have interacted with you before.

Satisfied Customers Means Repeat Customers

Customers who have a better experience buying from you are more likely to return. When they return, they become a retained customer, meaning they will return again and again in the future.

It’s not magic, but your happy customers will likely return to your website and make a purchase. The customer journey consists of several steps: awareness, consideration, purchase, retention, and advocacy. Customers who want to skip the research and comparison process (which most do) are likely to head to the shop where they had a good experience and make the purchase.

To make it easier for repeat customers to buy from you, provide them with the option to create an account to save their shipping and billing information.

More Repeat Customers Mean More Brand Advocates

Satisfied customers are more likely to refer your brand to their friends and family, which can translate to more sales and repeat customers. Imagine a group of people discussing an upcoming event or a particular product, and someone mentions your brand and how they had a good experience shopping there. 

Just like that, you’ll have an unpaid audience willing to try your product or service without paying an advertisement fee.

Word of mouth marketing is still a thing when it comes to influencing organic discussions about your brand to acquire new customers. If you don’t know, about 92% of consumers trust suggestions from family and friends more than advertisements. That means your loyal customers can become your brand ambassadors if they have a good experience when shopping with you.

Return Customers Spend More Than First-Time Customers

Customers who have purchased from you will likely spend more when they return to your website. Ideally, repeat customers develop a sense of trust, which increases their chances of spending more on your eCommerce store. Since they have tested your product or service, they won’t hesitate to do it again if you have good customer service.

Customer Retention Metrics to Consider When Launching Customer Retention Campaign

Now that we’ve looked at the benefits of retention marketing, let’s look at the critical metrics to consider when launching a customer retention campaign:

Customer Churn Rate

This metric looks at the rate at which customers stop doing business with you. In other words, customer churn helps track your rate of losing customers. To determine your customer churn rate, subtract the customers you had at the beginning of a set period from those you have at the end. You then need to divide the number of lost customers at the set period by the total number of customers and multiply by 100.

For instance, if you started with 6000 customers and lost 500 customers after one year, your churn rate would be 8.3 percent.

There are different types of customer churn, including involuntary and voluntary churn. Involuntary churn is when customers have challenges buying due to things you have control over, like payment processing issues. On the other hand, voluntary churn occurs when a customer unsubscribes on their own without being influenced by the experience in your store

Revenue Churn Rate

This refers to the percentage of revenue you lose when existing customers cancel service with your business. Revenue churn works better with SaaS and subscription businesses as it allows them to determine the monthly returning revenue (MRR) lost when customers deactivate their accounts.

Customer Lifetime Value

This is another essential metric to measure for your eCommerce. Customer Lifetime Value (CLV) helps determine the business you can expect from a single customer during the time they’ll be doing business with you.

A unique thing about this metric is that it is mainly dependent on your customer support efforts. The actions of your account managers, loyalty reward programs, and customer service representatives will determine whether the customers will continue buying from your brand.

Repeat Purchase Rate

As the name suggests, repeat purchase rate refers to the percentage of repeat customers your brand gets. This percentage helps determine the number of customers returning to buy from you.

To calculate it, divide the number of returning customers by the total customers and multiply by 100.

Net Promoter Score (NPS)

This metric helps determine how likely a customer would recommend your brand to a family member or friend. NPS categorizes customers into three: 

  • Promoters – these refer to high loyal customers (score 9-10) who are likely to recommend your brand to others
  • Passives – these customers are satisfied with your brand (score 7-8) but not good enough to recommend it to others. In fact, they may be looking for alternative options to your brand
  • Detractors – these are unsatisfied customers (score 0-6) who can share negative experiences about your brand through word of mouth

Conducting an NPS survey is an excellent way to know the level of customer satisfaction and provides an opportunity to connect with unsatisfied customers.

Tips to Build Retention Marketing Strategy

Tips to Build Retention Marketing Strategy

If your marketing efforts only focus on acquisition, you’re losing a lot of the opportunity to make profits from your existing customers. Without a proper retention strategy, your business will remain in the endless cycle of costly acquisition campaigns to get customers you will likely lose after the first purchase. This dangerous trend leads to lower return on investment (ROI) and uncertainty for your business.

To achieve the benefits of retention marketing, you need a well-thought strategy for your brand. To that end, here’s how to build a perfect retention marketing strategy.

Understand Your Customers

To retain your customers, you need to understand them. So, if you still send mass email blasts and newsletters to your subscriber list, you better change your tactics. About 66 percent of customers expect companies to understand their unique needs and not be treated as numbers.

Different users discover your brand differently, with each having different expectations.

One of the best ways to understand your audience is using the user journey map—it can help answer questions like:

  • Who are your users?
  • What do your users use your platform for?
  • Where are your users found?
  • Why are users churning?
  • When do users stop using your platform?

By understanding your users’ expectations, including where, when, and how they interact with your platform, you can personalize their experience to meet their specific needs.

Prioritize Onboarding and First Purchase

Ensuring your users have an excellent first-time experience is crucial for your retention marketing strategy. That means the initial retention phase is vital. For instance, about 77 percent of users stop using an app less than 72 hours after downloading it.

If you don’t provide your users with a good first-time user experience, the chances of returning to your brand are minimal. Luckily, you can effectively prevent churn during onboarding. Onboarding has three main goals:

  • Setting up: Involves guiding new users on the registration and login process
  • Educating: Show users the product benefits and how it works
  • Collecting data: Gather data about your user to help build their profile and personalize user experience

Tips for an effective onboarding include:

  • Keep it simple
  • Ask for permissions when collecting data and for push notifications
  • Allow users an option to skip through tutorials for a streamlined experience

The most important thing is to ensure that your onboarding process structure delivers value to new users.

Create Personalized Customer Communications

Retention marketing aims at connecting with customers at a personal level. It’s about better user experience and deepening their relationship with your brand.

However, to connect with customers and get their attention, you need valuable insights into your customers. Luckily, you can use mobile marketing platforms to create detailed users’ profiles according to:

  • Users intent: Segment customers according to behavior and preferences
  • Demographics: Categorize according to age, gender, occupation, income, etc.
  • Technographics: Segmenting by technology, including operating system, browser, or software
  • Psychographics: Categorizing by implicit factors such as attitude, personality; values, interests, etc.

Collecting and analyzing customer data gives great insight into your customers and their behavior when they visit your eCommerce. It helps to know how to engage them and where you need to improve to meet their needs.

Encourage User Feedback

Enhancing customer relationships makes it easier for customers to communicate with your brand. One way to achieve this is by asking for user feedback to identify areas that distract customers in their purchase journey. This way, you can identify their pain points and correct them before those customers stop doing business with you. After all, users want to do business with a brand that can listen and work on their suggestions, requests, and complaints.

Determine Current Retention and Churn

Identifying your most satisfied customers and why they are happy is crucial when creating a retention marketing strategy for your brand. However, it shouldn’t end there. Identify your unhappy customers as well and determine what makes them unsatisfied.

Cohort analysis can help determine the number of customers who churn, when they do so, and why. Cohort involves grouping users according to their traits. For instance, you can group customers according to when they first bought from you or the product they purchased.

When tracking your users, pay attention to how various factors affect retention. For instance, you could notice that customers from a particular source become repeat customers, or customers who receive a specific messaging campaign spend more on your product or service.

Ideally, cohort analysis helps determine what’s working and what’s not and provides insights into what you need to improve to increase conversions and retention rates.

Customer Retention Strategies You Can Count On

Customer Retention Strategies You Can Count On

Having read this far, you want to try retention marketing for your business. Here are strategies to use to retain past and current customers and increase profits.

Personalized Deals and Offers

Retention marketing is about creating a personalized experience for your customers. People who interact with your business want to feel that personalized connection, not just another addition to your book accounts.

One way you can make customers feel valued is by creating personalized deals for individual customers. Offering personalized deals acts as incentives and makes even the hesitant customers confident to purchase from your brand.

Amazon is an excellent example of a company that uses personalized deals to encourage customers to make purchases. They send product deals based on purchase history and emails based on recent browsing history. This strategy can work for your business as well.


People love to feel special, and your customers are not exceptional. As such, consider creating an exclusive membership to make your repeat customers feel they have access to something designed only for them. For instance, if you’re in retail, you can create special events or discounts for people who spend a certain amount in your store. If you’re in B2B, you can give repeat clients access to product features still in development to make them feel special.

Loyalty Program

If you’re looking for a way to benefit loyal customers directly, consider creating a loyalty program. When customers sign to your loyalty program, they can get involved in activities that earn them perks while influencing their shopping habits.

For instance, you can create a loyalty program where customers earn points when they share your product messaging on social media.

You can also create paid loyalty programs where customers pay a recurring monthly or yearly fee to get exclusive benefits. Of course, some customers may be hesitant to pay extra fees for services, but it works. An excellent example of a paid loyalty program is Amazon Prime.

Referral Marketing

Referral marketing is designed to encourage customers to return to your business so they can refer potential customers to you. Engaged customers constantly participating in a referral scheme become retained or repeat customers.

A robust referral program helps retain your current customers and encourages new customers to do business with your brand. The trick is to start the program early enough for maximum participation and have a solid system to help scale up the growth.

Email Marketing

Email marketing is still an effective form of marketing if done right. People receive marketing emails daily, but many of these emails add no value to the recipient and end up in the spam folder. You need to position your brand as a company that people would love to hear from to get a higher open rate and interaction rate

Like any other marketing messaging, email marketing is all about providing value. For instance, you can use email newsletters to let customers know that you’ve published new content on your blog or have exciting discount offers on your eCommerce store.


Retargeting is a form of online advertising based on a user’s browsing history. This marketing tactic aims to encourage the shopper to complete the transaction they might have abandoned. According to the Journal of Marketing Research, retargeting can bring about 14.6 percent of browsers back to your eCommerce store, making it an effective marketing strategy.


Setting up an advocacy program can also help retain your customers. Think about that one thing dear to your heart—it can be reducing pollution or helping people live healthy lives. Most customers feel good when they’re associated with a good cause and will likely continue doing business with you because they feel connected. They are also likely to refer new customers to you.

Offer Exceptional Service

Offering exceptional service is a sure way to retain your customers. High-quality service boosts customer retention, leading to higher customer commitment.

It is best to ensure your customers get the best customer service possible when they first engage with your business. For instance, have a fair product return policy and send personalized confirmation emails. Ideally, ensure that your customers get a human experience when connecting with your salespeople and customer service representatives.

Which Customer Retention Strategy Works for Your Business?

Having a solid retention strategy is key to the growth of your business. As much as you want to focus on customer acquisition efforts, don’t neglect retention marketing. Depending on your business, you may want to choose one of the above strategies over the other. The catch is prioritizing your customers and using data to inform your retention strategy. By providing your customers an exceptional experience, you’ll be sure to have happy customers willing to return to you for more purchases and even recommend others to you.


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