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The Importance of Customer Retention

According to a research by Invesp, there are only 18% of companies that implement the strategy of customer retention. Meanwhile, the majority focuses on customer acquisition. However, the same research shows that the success rate of gaining new customers is only about 5-20%. The number is quite reversed with the profit that customer retention can achieve, 60-70%. How so?

Departing from that research, this article would like to show the assumptions that cause a lot of companies target customer acquisition instead of improving their retention. Then, this article would also like to discuss the importance of customer retention and some of its strategies.

Customer acquisition increases your profit quickly

Customer acquisition means attracting new customers. The research result mentioned above does not mean that you should stop gaining new customers at all. In fact, customer acquisition is the first thing that moves businesses.

The first basic steps to gain new customers is by identifying the qualified potential customers and promote the product or service through relevant media. If the strategy is executed precisely, companies will gain promising new customers.

However, the two processes are not cheap because it requires a thorough research and sometimes expensive promotion platforms. That is why, companies who tend to focus more on the customer acquisition spend more money than earning more profit. Moreover, if companies keep looking for the new ones, the lifetime value of the existing customers might decrease and cause losses to the company.

Why does customer retention important?

For a company that is going through a continuous growth, the focus of the marketing should shift towards retaining the customers.  Customers that have consumed the company’s products or services repeatedly may have a longer lifetime value, help the companies to create personalized content, promote the brand, and join to the referral program.

Furthermore, customers that previously have purchased your products have a higher buying rate compared to the new customers. In fact, 50% of the existing customers have the tendency to try new products and spend 31% more compared to the new customers.

These numbers can be achieved with five times cheaper than the customer acquisition. However, still, only one third of business man that prioritizes customer retention. This is because of several reasons.

First, the strategy of retaining customers is quite different from the customer acquisition. The later depend on the ability of the companies to reach and attract new audiences while the former is more about ongoing engagement, personalization, and value provided over time.

By analyzing factors such as the purchase and search history and feedback from the customers, companies can implement a better personalized marketing strategies to deliver the value that the companies want. In short, customer retention is to offer products to the right people with the right content.

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Customer retention strategies that you can apply

Here are some of the efficient strategies to improve customer retention:

Email Marketing

An ongoing email marketing is one of the most cost-effective ways to retain customers. So, it’s better if companies share new content, relevant offers, and updates if available.

Send the email when your customers is about to running out of your product, leaving items on cart, when it’s been a while since their last transaction, or on a special occasion.

Loyalty and Reward Program

It’s obvious that people love promotion programs. Providing points that can be redeemed for products, discount, and referral program are the best ways to attract new customers. The referral program is quite unique because it can make customers purchase your products while help you gain more customers.

Customer Appreciation

Many companies appreciate their customers in certain times by giving them discounted price for products they know and love. This will show how companies that they take customers’ contribution seriously.

Implement the CRM System

CRM system is a technology innovation that supports every activity and strategy for companies to manage interactions with the existing and potential customers. CRM helps companies to build a strong relationship with the customers that will eventually affect their retention rate. Through email, phone calls, and meeting, CRM system can track all deal stages and reasons for closed lost and closed won offers.


Getting new customers is a good strategy to build business however it comes with limitations. With no attempt to ensure that customers are going to back, customer acquisition will not be that useful. Companies should find a way in which customers feel that they are important and special. Therefore, companies will have a strong brand advocate to keep up the competition, grow, and be successful.

Related articles: 5 Crucial Steps to Take before Implementing CRM System


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