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Loyauté · 

8 minutes

3 Strategies to improve your Customer Retention

Tony O'ConnorPiggy

When it comes to customers, every business has two clearly-defined areas that they focus on: 

  • Customer Acquisition - where you try to find new customers. A vital part of any business. 

  • Customer Retention - where you focus on engaging with your existing customers, with the goal of building a long-term relationship.

A lot of businesses focus on acquisition - because new customers bring growth however, as this guide will show you, retention can often be far more valuable in the long run.

This blog has three main goals:

  • To help you understand customer retention in 2021

  • To show you ways of measuring customer retention

  • To give you a strategy to maximise customer retention


Why Retention Deserves More Of Your Attention

Ecommerce has been growing every year for the last couple of decades - and this process has been enormously accelerated by the consequences of the global pandemic. Traditional acquisition channels, such as advertising and sponsorship, are proving more expensive and less effective every year.

There are a lot of reasons for this, but one of the main changes is just how easy it is to expand online these days - with platforms like Woocommerce and Shopify. However, it’s also made it easier for your competition too, which means that the price you end up paying per-click, or for conversions, is also increasing every year.

Regardless whether your business is online or offline, with acquisition costs increasing, repeat customers will be responsible for an increasingly large amount of your revenue. 

This means that shifting even a small amount of your acquisition budget to retention can have a big impact on not only sales and revenue - but the long term success of your business.

Increasing your retention rates can lead to a big increase in revenue

Customer retention is an investment that can pay out exponentially over time. The secret lies in increasing your retention budget now, even by just a little, and then reaping the rewards in the future.

Focusing on customer retention also greatly enhances how much your customers enjoy doing business with your company. These positive interactions create a stronger relationship, which not only lasts longer, but often leads to referrals - another form of customer acquisition.

Balancing Acquisition With Retention

Usually, as businesses grow, so do their market share. As this happens, their focus begins to shift from new customers, to existing customers.

Every business will have its own balance based on its growth rate, its industry, its objectives and how successful it is.

Over time, as more customers are acquired, that balance will naturally shift towards retention. There are a number of tactics companies can use to enhance retention, including loyalty programs, more intensive customer experiences and enhanced personalisation.

The long-term objective is to transform your long-term customers into advocates for your brand. This word-of-mouth advertising is often the most powerful form of acquisition - and it’s free. 

How To Measure Your Current Customer Retention

Everything we’ve discussed so far sounds fine, in theory, but this is business, so let’s look at some numbers.

The following ratios can be easily calculated to give you a quick overview of where your business currently stands, when it comes to customer retention.

Over time these rations will also let you see which areas of your retention strategy are working, and which need more work. 

Customer Lifetime Value (CLV)


Average Order Value x Purchase Frequency x Average customer lifespan*

*Not their actual lifetime, but the length of time spent as a customer of yours.

This equation tells you the total amount you can expect the average customer to spend with your store.

This can often be a surprisingly large number. It certainly helps you put into perspective how valuable it is to invest even a small amount in customer retention. 

Purchase Frequency (PF)


Total number of orders (365 days) / Number of unique customers (365 days)

This formula simply tells you how often your customers make purchases.

You might be surprised how much time passes between purchases. The good news is that once you have established the frequency, there are a number of tactics available to improve this figure.  

The Repeat Purchase Rate (RPR)


Number of Customers who have purchased more than once / Number of unique customers (365 days)

This shows the percentage of customers that have made more than one purchase over a particular time period.

It’s important because it gives you an idea of how effective your current retention strategy is. The lower it is, the more room there is for improvement.

Average Order Value (AOV)


Total revenue / Total orders taken

This simple equation shows how much the average customer spends when they make a purchase.

You can use this amount to easily see whether or not your repeat customers are spending more on average than one-time customers. In our experience they almost always do, but this is an accurate way of messing the difference. 

Three simple strategies for enhancing your customer retention

Now that we’ve covered why customer retention is important, and given you formulas to help measure it, it’s time for the really important part - how to improve it.

Obviously every business is different, with a different audience and different strategy - but the following three strategies have been universally proven to improve retention in almost every type of business.

While the examples we’ve included might not match your company exactly, you may still be able to find some inspiration that you can apply to your own situation.

Strategy 1 - Making sure customers have a positive experience

Whether your business is online or offline, the experience your customers have while doing business with you is more important than ever.

Another way to look at this is to ask - do your customers know you care?

In physical stores this is easy to see, simply by how new customers are greeted and cared for while they wait and go through the purchasing process.

Things like eye-contact, smiling and politeness are standard, but should never be overlooked. However the biggest thing customers respond to is feeling cared-for. So, ask yourself, does your team care about your customers? If so, you’re in a good position. If not, perhaps a little bit of training might be required? 

With an online business it’s more difficult to show your customers you care, but it’s still possible. Intuitive design, well thought-out FAQs and friendly copy can minimise frustration, and ensure your customers complete their transactions with a smile. 

Expanding your support to multiple channels

Everybody has different channels they prefer to use for communication - and it’s important that you make it possible for customers to reach you using the channels they prefer using. 

This doesn’t have to be a big investment in time or money. Setting up instant replies on your WhatsApp, Instagram and Facebook accounts takes a matter of minutes. Twitter can be great for answering queries quickly during business hours, and automated emails can also be helpful.

Whichever channels you decide make the most sense for your business, always remember that your customers will always prefer to deal with a real person whenever possible. 

Giving your favourite customers the occasional surprise

People these days are always wary of companies trying to take advantage of them. Especially online.

So when a company offers them something for nothing, or adds a personal touch to a transaction, it’s possible to create a reaction of genuine delight.

If you have a webstore, you may not get to look your customers in the eye, but you can still give them a smile by recognising how important they are to your business. Offering free shipping or including a free gift are two simple ways to achieve this, and there are plenty more, depending on your business.

Another technique that any company can use is including hand-written notes with transactions. It doesn’t matter who the customer is, or what they’ve bought, finding a hand-written note thanking them for their business is bound to brighten up anyone's day. Moreover, using an essay writer can help businesses craft personalized and impactful messages, ensuring that each note resonates with the recipient and leaves a lasting positive impression. 

Sharing your expertise with your customers

No matter what industry or niche your business covers, you will have learned a lot since you started, and it’s great to share this with your customers. It’s also a great way to keep a communication channel between you open and active - and build a stronger relationship over time.

There are many different ways you can do this from organizing masterclasses, to writing a blog, or posting video-guides on Youtube. Of course, these activities can also be used as content to populate your social media channels - which can help with both retention and acquisition. 

You can even flip the model and ask your customers to generate the content for you...

One example of this is Cupshe, who openly invite their customers to post photos of themselves in Cupshe comments by simply asking them to include the @cupshe tag in their personal social media posts.

This technique is called ‘User Generated Content’ and it’s a powerful way to build a social media community, by making your customers the stars.

Strategy 2 - Starting your own Loyalty Program

A loyalty program lets you reward customers every time they make a purchase with you.

This process is based on the concept of reciprocity. To put it simply, it’s a way of creating a mutually beneficial relationship that has a deeper layer than the simple exchange of money for goods or services. This deeper layer often creates an emotional connection that greatly increases the chances that a customer will choose to shop with you again.

In addition to choosing to shop with you instead of your competitors, increased loyalty has other commercial benefits too. Members of loyalty programs have been shown to shop more often, and spend more every time they do.

There are a lot of different ways a loyalty program can be leveraged to help increase customer retention. However, the main objectives remain the same. First of all you want to reward your best customers, and secondly you want to convert one-off customers into repeat customers. Here are a few tips on how a loyalty program can help boost your overall customer retention.

Always offer a couple of easy rewards

The long-term success of any loyalty program depends on its ability to attract customers. After all, that’s the first step in converting them into loyal customers, but you need to do it one step at a time.

The best way to do this is to offer participants a couple of small, easy-to-earn rewards. Perhaps a reward they can earn after just a few visits, or even on their first visit. This is vital as it gives people a taste of what it feels like to earn a free reward.

Once they have experienced how easy it is to achieve, and how nice it feels to receive free rewards, there is a much greater chance that they will start looking at more purchase-intensive rewards. 

Offer a broad range of rewards

All of your customers are different, so you need to make sure you have rewards that are attractive for all of them. The easiest way to do this is to include a few rewards that require only a couple of purchases, a few that require 5-10 purchases, and a couple of rewards that only a regular customer would save up for.

Always try to give whole gifts, instead of discounts.

The psychology of receiving rewards is really interesting. If you were to ask a lot of customers what they would like as a reward, they will answer ‘a discount’ or ‘lower prices’. However, in our experience that isn’t entirely true.

A lot of the thrill of receiving a reward is receiving an actual, tangible thing. Whether it’s a donut, an accessory, or a leather belt. There is nothing special about receiving a discount, it simply means you pay a little bit less for something you were probably going to buy regardless. A gift, on the other hand, stays in people’s memories and generates a lot more positive associations with a brand.

Strategy 3 - Building retention with personalized and automated emails

Email is quickly becoming the most effective way to keep in touch with your customers. It lets you update them on your latest news and offers, bring their attention to value-added content, while also adding your own personal touch.

With modern email providers - and even some loyalty programs - you can now set up automated programs that do a lot of the work for you. These automated emails can increase sales, reduce churn and more, making customer retention easier than ever. 

If you can add customer segmentation, this can be even more effective. By grouping your customers into either demographic or psychographic groups it makes it much easier to send them messages that are more relevant to their situation and their buying patterns.

There are a number of different email platforms out there who will let you set up automated messages for different groups of customers. Some of the more sophisticated loyalty programs let you do the same thing. Here are some examples of automatic emails that work best when sent to specific groups:

Happy Birthday messages

If a customer gives you their date of birth, it’s a great idea to send them an annual congratulatory message. You could also consider offering them a special deal, to help them celebrate. 

Also keep in mind that they might be pretty bust around this time, so acknowledging this and letting them take advantage of the offer up to two weeks after their birthday is a considerate touch.

Customers you haven’t seen for a while

With the right loyalty program, you should be able to set up an email that is triggered if a customer doesn’t visit over a specific time-period of your choosing. This can be a great way to reduce churn, and give your customers a gentle reminder that you really value their business.

You could also offer this group a ‘welcome back’ offer to entice them back to your business. It’s impossible to know why they haven’t returned for a while, but with the right message, you can retain a customer and increase their lifetime value at the same time.

Generate positive reviews

Online reviews can be incredibly valuable to all types of businesses - and with triggered emails, linked to a loyalty program you can generate them without lifting a finger.

Simply set up a triggered email to request a review after customers visit for the 4th or 5th time. These customers keep returning, so they clearly like what you’re doing, and are therefore excellent candidates to tell the world how great your business is. 

Not only is it possible to personalise the email using the information in your customer database, but you can even link directly to your preferred review site directly from the email.

Conclusion - How to build a successful retention strategy

  • Measure your current retention values

Establish your current retention ratios, which will guide your performance in the future.

  • Focus on your customers 

One of the keys to retaining customers is providing them with a personal experience, or investing in processes that minimise frustration and help develop an emotional relationship. 

  •  Invest in a loyalty program

A sophisticated loyalty program will not only help ensure your best customers keep returning, but it will also provide you with the data you need for an effective marketing program.

  • Create an automatic email program

This is a great way to send your customers messages that are specifically relevant to them, while also keeping your brand top-of-mind.

If you search online there are plenty of loyalty programs who can help with some of this, or have a look around our website.

The Piggy loyalty system has been specifically designed to be affordable and quick - helping you create more loyalty customers and take advantage of automatic emails - leaving you more time to spend focusing on your customers and growing your business.

Find out if Piggy is right for your business by booking a 30-minute demo here.

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