May 27, 2024
Customer retention

Customer retention: what it is and how to realize it?

customer retention

Customer retention is important to the success of any business. Namely, this is the ability to retain existing customers and incentivize them to return for repeat purchases. Retaining existing customers is more cost-efficient than acquiring new ones. In addition, it can help build a loyal customer base. In this blog, we’ll discuss what customer retention is, why it’s important, and how you can implement it.


What is customer retention?


Customer retention, also known as customer retention, is a company’s ability to retain customers and create loyalty. It’s all about creating a positive experience for customers. Satisfied customers are more likely to return for repeat purchases. In addition, they are less price sensitive and may even recommend new customers through word of mouth. The goal of customer retention is not only to achieve one-time purchases, but also to build lasting relationships with customers. In the long run, this can increase a company’s profitability.


What is the difference between customer retention and customer loyalty?


Customer retention is a company’s ability to retain existing customers and keep them coming back for repeat purchases. Customer loyalty is the extent to which customers have positive feelings towards a brand or company and are willing to remain loyal to that brand. Loyalty focuses on creating a stronger connection with customers so that they not only return for repeat purchases, but also actively recommend the brand to others. In other words, customer retention is the number of customers who return for repeat purchases, while customer loyalty is the level of emotional engagement and commitment of customers to a brand. Want to know more about customer loyalty? Then also read this blog!

what is customer retention

Why is customer retention important?


Customer retention is of great importance to businesses for a variety of reasons. Customer relationships provide opportunities for cross-selling and upselling. This means that customers will spend more per purchase, which can increase revenue per customer. In addition, customer retention allows businesses to gather valuable feedback and improve their products or services. By investing in building long-term relationships, businesses can gain a competitive advantage and realize their growth or success. Also, these long-term relationships provide predictability of revenue streams, providing more opportunities to invest.


How to increase customer retention?


There are a number of ways you can increase your company’s customer retention. Below we give a number of examples.


Excellent customer service

Provide excellent customer service and ensure prompt and effective responses to questions or complaints. A positive customer service experience can leave a lasting impression and encourage customers to return.



Know who your customers are and tailor your offers and communications accordingly based on their preferences and behaviors. Personalization makes customers feel valued and understood, which can increase their loyalty.


Loyalty programs

Implement loyalty programs to reward customers for repeat purchases. Offer discounts, points, or exclusive offers to loyal customers to motivate them to come back to you. In this blog, we give a number of loyalty program examples.


Regular communication

Stay in touch with your customers through newsletters, emails, or social media. Also, keep them up to date with new products, offers, and company news to keep them engaged with your brand.


Ask for feedback

Actively solicit feedback from customers about their experience with your business. Use this input to solve any problems and improve your services or products. In addition, by asking for feedback, you create customer engagement. We’ll tell you more about that here.


Exclusive events or offers

Host special events or offer exclusive offers for existing customers. This makes them feel special and reinforces their loyalty.


How to measure customer retention?


To find out if your customer retention has actually increased, you obviously need to be able to measure it. To measure customer retention, you can use a formula. Below is the calculation of this formula.


Step 1: Take the total number of customers at the end of a period and subtract the number of new customers added within the period.

Step 2: Divide the outcome of step 1 by the number of existing customers at the beginning of the period.

Step 3: Multiply the result of step 2 by 100. The outcome of this is your customer retention rate.


Have you calculated the customer retention rate? That’s when increasing customer retention and establishing long-term customer relationships can start!