Key Building Blocks for Your Customer Retention Strategy

Al Chen

Do you have a well-defined customer retention strategy? Many companies prefer to focus on customer acquisition since increasing your customer count and closing new deals is the lifeblood of your business (and it’s always a morale booster when you sign new clients).

However, the cost of acquiring customers can be very high, especially in the SaaS world. The cost to retain customers, on the other hand, can be much lower if executed correctly. By building customer loyalty, you can potentially upsell more products and services to the same patron.

What is customer retention?

Customer retention refers to a company’s efforts to keep customers from defecting to another business.

At the end of the day, you want to prevent customer churn and keep them coming back. In terms of business performance, Zendesk offers this way of measuring customer retention:

"Provide context around how well a business is keeping its existing customers happy and satisfied."

What the industry says

"In a November 2018 Retail TouchPoints survey, retailers' spending on acquisition and retention weren't radically different on the surface. Most budgets for both tactics hovered in the 10% to 40% range, but nearly three times as many retailers allocated 50% or more to acquisition." - eMarketer

Customer Retention Strategy for OnlineBusiness
Source: Traveltalkmag

Retailers use a variety of methods to retain customers. These include discounts, free shipping, and loyalty points to encourage buyers to shop even more at their store.

An important metric to monitor

According to Oracle's 2013 Commerce Trends survey, 42% of respondents say customer retention strategies are a top metric by which they measure success. Needless to say, it's one of the most important metrics for your business as you consider how to plan your marketing strategy, loyalty programs, and sales processes.

Photo by Toa Heftiba on Unsplash

Some would argue that SaaS companies should always focus on customer retention over customer acquisition. It really depends on the industry you are in, the lifecycle stage of your business, and other factors which I’ll discuss below. First, let’s look at the most important metric you are thinking about: cost.

Cost of customer acquisition

If you own a SaaS company, you already know the overhead with customer acquisition can be very high. You have advertising, sales people, events, and PR — all to attract your target customer. If you happen to work in a competitive space like SaaS CRM tools, your expenses can be even higher.

The average cost of customer acquisition can be 10X the monthly expenses for SaaS companies. You also have to consider customer churn once you’ve acquired the sale; that’s where customer retention comes into play.

Lifecycle stage and customer retention

In addition to costs, your customer retention strategy depends on the lifecycle of your business. If you are a brand new business, you will direct most of your marketing and sales efforts on customer acquisition. All you want to focus on at this stage is growing your customer base. As it  expands, customer acquisition will become more costly as you begin to saturate your target market. At this stage, you should shift your efforts to customer retention so you can capture the most revenue for your existing customer base.

Why is a shift from customer acquisition to customer retention important? See the chart below from Shopify:

Source: Shopify

There are two stores featured in this example: one retains customers at 5% and the other retains at 10%. While the growth rates start off the same, once they reach about month 20, the store that retains 10% begins to grow exponentially since that one sees more repeat sales from their existing customers versus trying to acquire new ones.

Meeting your customers one-on-one

Sometimes it is worth getting to know your customers one-on-one so you can understand their true motivations for remaining a loyal customer.

These types of customer interviews are usually led by your research team, but sometimes your marketing or sales team can facilitate the interview. It never hurts to have more teams at your company getting to know your customers more in-depth! You should aim to interview some of your top buyers to see what brings them back to your company or brand every day, week, or month.

The benefit of these interviews is you can bring detailed feedback to your product and engineering team. This information can increase the customer experience, which ultimately leads to higher customer retention for your company. When you conduct customer interviews, create a script of questions to ask and an easy-to-use meeting template to ensure you capture all the meeting minutes and action items from the interview.

Photo by Brooke Cagle on Unsplash

Keeping your customer messages personal

While it may be difficult to interview all your customers one by one, that personal touch goes a long way towards building a lasting connection with your customers. When personal interviews are not scalable, you can use technology to provide an individual experience. Nothing shows a customer you care more than a personalized message, which leads to them being more loyal to you over time.

E-commerce customers see products based on purchase history

If you are running an e-commerce business, you will have troves of data on your customers' buying habits, and you can recommend products they might like based on previous purchases. The more data you gather about your customers, the more targeted your e-mails and notifications will be, convincing your customers they are being taken care of. This is in stark contrast to outbound customer acquisition strategies where you need to test different marketing messages to see what sticks with your target audience.

A great example of personalized marketing messages is from the retail giant, Amazon:

"From personalized onsite content to personalized emails and offers, the company delivers dynamic, data-powered messaging in real-time." - Lilach Bullock, Forbes

Photo by Christian Wiediger on Unsplash

Similar to shopping at a brick-and-mortar store, sometimes you browse Amazon and end up buying products you did not intend to buy in the first place. This is great news for Amazon, since they are getting more sales from you as a repeat customer, and it all started with personalized recommendations for you.

The power of content marketing

If you are running a B2B business, you have probably invested quite a bit in content marketing. Not only is this customer retention strategy good for customer acquisition, but it also is advantageous for search engine optimization. More importantly, content marketing helps explain the benefit of the new features and products you are adding to your company.

Case studies for customer validation

One of the most powerful tools in content marketing is a case study. When your existing customers sees a case study from a reputable company, they feel more compelled to stay on as a customer and remain loyal to your brand. You can store all this content in a "customer resource center" so existing customers have a single place to go to learn about your products and services.

Here is an example of a great resource center from Intuit meant for their enterprise customers:

Quick retention strategy with education
Source: Intuit

Webinars to scale personal conversations

An incredibly effective strategy to retain your customers is using webinars, because they serve two purposes for SaaS companies:

  1. They keep your customers updated on new product features and announcements.
  2. They give your customers a chance to ask questions and engage with your team.
Webinars for retention and education
Photo by Wes Hicks on Unsplash

Above all else, webinars provide your customers an opportunity for human interaction. For expensive SaaS products and services, you have SDRs and a field sales team building personal 1:1 relationships with your customers. If they are not frequently contacted by your sales team after their purchase is made, they may start to feel neglected. Although they are no substitute for 1:1 human interaction, webinars do offer much more than e-mails.


While there are countless strategies you can use to build your customer retention program, focusing on the tips provided above will take your company far, along with building a successful customer retention strategy. The common theme of all this advice is: talk to your customers.

Customer retention involves knowing your customers deeply so you can create the right products, offer relevant content, and send targeted marketing communications to keep your customers engaged with your brand over a long period of time.

Developing the right strategy takes time and is a concerted effort that considers your customer support, and marketing and sales teams. Knowing the lifecycle stage of your business is imperative to understand how much to invest in customer retention over customer acquisition. As your business grows and matures, you will begin to see a shift towards customer retention.

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