Customer retention is an essential part of driving sustainable business growth. Why? Because loyal customers often buy more, refer others to use your product, and cost much less to market to.

In this article, we’ll cover everything you need to know about customer retention, including what it is, why it matters, and how you can improve it. We’ll also talk about eight key customer retention strategies that you can employ today, and how tools like CRMs can support you.

What is customer retention, and why is it important?

Customer retention is essentially your company’s ability to keep existing customers over time. To be more specific, it’s turning one-time buyers into repeat customers, and ideally, advocates for your brand.

So here’s why retention is important: it costs much less to retain a customer than to acquire one. Research suggests that increasing retention rates by just 5% can improve profits anywhere from 25% to 95%. This is because loyal customers tend to spend more, engage more often, and they even tend to leave more valuable feedback, which helps you improve your service over time.

Focusing on customer retention can improve lifetime value (LTV) while leading to more predictable revenue and improved brand trust.

What are the 8 C’s of customer retention?

When we’re talking about keeping customers around for the long haul, we can look at the 8 C’s of customer retention, which will help you have a much more effective retention strategy.

1. Customization – This means tailoring experiences and the way you communicate with customers based on their preferences and behaviors.
2. Communication – This is all about creating a two-way conversation between you and the customer, understanding their needs while sharing what you can do for them.
3. Care – You need to show genuine concern for your customers’ needs and pain points.
4. Community – Developing a sense of belonging and connection among your users goes a long way in building brand trust, which is key to retaining customers.
5. Convenience – When doing business with you is easy at every step, customers will want to keep coming back.
6. Character – Being transparent, reliable, and consistent shows strong character, which helps build trust.
7. Culture – If you provide a branded experience that resonates with your audience’s values, you will form deeper connections with them.
8. Commitment – Always aim to exceed expectations and keep your promises to the customers.

These eight concepts will help you create more meaningful customer experiences, which will help you build the long-term loyalty you’re looking for.

What is a customer retention strategy?

A customer retention strategy helps you keep your customers engaged and satisfied over time. It involves any systems, processes, or tactics that you use to provide value to customers after their very first purchase.

So, your strategy could focus on building relationships, meeting evolving needs, and removing friction across the customer journey. To do this, you might put efforts towards personalizing the onboarding process, creating loyalty programs, or ramping up ongoing support and education.

Regardless, your strategy should be able to measure your success while remaining adaptable as customer behaviors and expectations change.

How to measure customer retention

Before diving into the process of improving your retention, it’s important to get a good idea of how you’re doing currently.

Here are the customer retention metrics you should be tracking:

• Customer retention rate (CRR): This is the percentage of customers you retain over a specific period.
  Formula:
  ((E – N) / S) x 100, where:
  E = Customers at end of period
  N = New customers acquired
  S = Customers at start of period
• Customer churn rate: The flip side of retention, this shows how many customers you’ve lost.
  Formula:
  (Lost Customers / Total Customers at Start of Period) x 100
  
• Customer lifetime value (CLTV): This is the total revenue a customer is expected to generate during their time as a customer.
  
• Net Promoter Score (NPS): A metric that gauges customer loyalty based on their willingness to recommend your brand.
  
• Repeat purchase rate: The percentage of customers who make more than one purchase.
  

By tracking these KPIs regularly, you’ll be able to better spot trends, test improvements, and adjust your strategy so you can keep producing results.

8 customer retention strategies to keep customers coming back

Now, let’s dive into the eight strategies that will help you increase retention, reduce churn, and improve your relationships with your customers.

1. Improve onboarding experiences

As you likely know, the customer journey begins when you onboard a new client, which will set the foundation of that relationship. If you have confusing instructions or lack the necessary support, you may be dealing with early drop-off.

To avoid that, ensure you have a clear, friendly, and helpful onboarding process in place that sets expectations for your customers and introduces key features of your service.

Your goal is to help customers feel confident and supported from day one. This means you could use things like guided tutorials, welcome emails, or have a dedicated success manager to make sure they have a smooth start.

2. Offer personalized experiences

Customers don’t want generic messaging. They want and expect you to understand their needs and personalize all interactions with them. You can do this by leveraging your CRM data to recommend relevant products or tailor communications according to their behavior or preferences.

Say a customer buys a specific service—you could suggest add-ons that match their interests. The more personal and relevant you make your interactions, the more likely your customers will stay engaged, which is necessary for improving retention.

3. Ask for feedback — and act on it

When you request feedback, it shows customers that you value their opinions. What’s even better? Acting on that feedback! It shows your clients that you’re listening to what they have to say, meaning what they say is important.

You can conduct regular surveys with your customers using tools like NPS, post-purchase forms, or even email check-ins. Then, close the loop by sharing how you’ve made improvements based on their responses. This will demonstrate your value in collaboration and help customers become more invested in your business.

4. Strengthen your customer service

While seemingly obvious, customer service is key to delivering positive customer experiences. Even one frustrating support interaction can undo the time spent to build the relationship.

Make sure you prioritize fast, empathetic, and solution-oriented service across all your channels, meaning live chat, email, phone, and self-service. Your team should be trained to solve problems while anticipating customer needs. This consistent, high-quality support will help build trust and make customers want to stick around.

5. Build a loyalty or referral program

Everyone loves rewards! Giving your customers something of value for sticking with you is a highly effective way to encourage repeat business. Loyalty programs are a good way to do this, offering discounts, early access to new products, or points that add up for every purchase.

Referral programs can easily turn happy customers into advocates, which will help you attract new leads and strengthen the loyalty of existing clients.

“When it comes to customers advocating on behalf of your business, it’s not just about what you can get from them – it’s about what value you provide outside of business as usual. Advocacy programs are a powerful way to create a win-win scenario. Think of ways you can give back to them, whether that be treating them to coffee, conference tickets, or helping them amplify their own personal brand. The goal is to make them feel appreciated and empower them to become champions for your brand. This approach often has unseen impact on retention, lifetime value and the overall health of your customer base.” – Karah Blandford, Senior Customer Marketing Manager, PandaDoc

6. Use consistent communication

Even when customers aren’t actively buying anything from you, there are ways to keep the conversation going. By having regular, helpful communication like newsletters, tips, or exclusive offers, you’ll be keeping your brand top of mind.

The key is to avoid overly promotional messaging and opt for value and relevant updates/content that will be of interest to your customers. Consistency will also build familiarity, which will reinforce trust over time.

7. Focus on continuous value

Customers will only remain loyal if you show ongoing value. This could be educational content like webinars, how-to guides, or case studies that help your customers get more out of your product or service. You can offer occasional feature upgrades or new tools to solve problems that have come up.

The key is to make sure customers feel that they are constantly gaining something from your relationship with them, so they aren’t tempted to look elsewhere.

8. Segment your customers

Customers have varying needs, which means not all should be receiving the same message. You can use your CRM to create segments based on purchase history, engagement level, industry, or lifecycle stage so you can customize your communications, offers, and content accordingly.

For example, you could send specific re-engagement campaigns to inactive users while sending exclusive perks to your VIP customers.

How tools like CRMs help to improve customer retention

A solid customer relationship management (CRM) system is highly valuable for improving retention. CRMs centralize all of your customer data, including purchase history, support tickets, and other relevant customer information. This gives your team visibility into each customer relationship.

Here’s how CRMs can boost retention:

• Personalization at scale: CRMs use customer data to provide customized experiences automatically.
• Improved follow-ups: These tools can remind your team when to check in, send updates, or resolve issues. This means nothing gets lost in the process.
• Behavioral segmentation: CRMs can group users based on activity or history to better target messages and campaigns.
• Integrated support: To smooth out issue resolution, CRMs can connect customer service workflows.
• Automated lifecycle marketing: CRMs also have the ability to trigger onboarding, renewal, upsell, and win-back campaigns based on customer behaviors.

PandaDoc offers native integration with top CRM platforms, including HubSpot, Salesforce, and Pipedrive. This means you can create, send, and track documents and sales quotes without leaving your CRM. This will help you create a more streamlined workflow when focusing on customer retention.

With PandaDoc CRM integration, you can:

• Automatically populate proposals, contracts, and renewals using CRM data
• Track engagement (like when documents are opened or signed) to time follow-ups perfectly
• Reduce friction when transitioning from sales to service and the document management process

Read more: How to use a CRM effectively

Improving your document workflows can have a significant impact on customer onboarding, which, as discussed earlier, is a big driver of retention, as it sets the stage for positive customer relationships.

With the help of PandaDoc, our client, Viva, was able to simplify order forms and the entire onboarding process, which has saved them tons of time per contract.

“The ability to send an order form and get it signed within minutes is a game-changer. With PandaDoc, we’re able to staff our customers faster and keep everything moving without the email back and forth.”

– Fineas Tatar, Co-Founder of Viva

Make customer retention part of your growth strategy

Customer retention is a driver for growth, which means it’s not something you should let slide. Focus on driving loyalty, service, and personalization to help increase repeat business, reduce churn, and foster stronger long-term relationships.

Want to see how PandaDoc can work for you? Request a free demo today.