5 Examples of Customer Retention Strategies That Actually Work

It’s easier and cheaper to retain customers than acquire new ones and using the right customer retention strategies can help with that.

But first, let’s understand why customer retention is so important.

According to the latest data by D&B Hoovers, a 5% increase in customer retention can increase profitability by 75%.

Image via D&B Hoovers

Now, if that’s not a reason to prioritize customer retention then we don’t know what is.

If you need help, this article covers five effective customer retention strategies along with examples to help you out. Let’s get started.

5 Best Customer Retention Strategies with Examples

Here are the top five most important customer retention strategies that you need to use to boost customer loyalty and encourage repeat business.

1. Go Beyond Satisfaction, Aim for Customer Delight

In this day and age, customer satisfaction is a basic expectation and a must-have. If you want to stand out from the competition, you need to go beyond that to surprise and delight your customers.

This is one of the best customer retention strategies because it aims to win over customers from their first experience with your brand.

But how can you go above and beyond to exceed customer expectations?

Here are a few examples to inspire you:

• Write a handwritten or personalized note to each customer thanking them for ordering from your brand.
• Offer a sample of another product, a discount on the next purchase, or any other offer that not only delights customers but also encourages repeat purchases.
• Provide personalized services and show your customers that you truly care about them and appreciate their business.

Remember, it doesn’t need to be something big. Small gestures of appreciation go a long way in boosting customer retention and loyalty.

Example: Ritz Carlton

Ritz Carlton is a hotel brand known for delivering exceptional customer experiences. They often surprise customers with personalized gifts or treats, as shown in the example below.

Image via X

In fact, the company is known to have a dedicated budget that employees can use to provide something extra to each customer to make their stay delightful.

Pro Tip: You don’t need to offer a free gift to each customer. Instead, find your own unique way to show your appreciation to each customer.

2. Provide Quick and Responsive Customer Support

According to the latest research, 62% of customers feel disappointed and 30% feel disrespected when a business takes a long time to respond to their queries. 35% also claim that they lost their sense of brand loyalty because of this.

Clearly, prompt customer support should be your top priority and one of the most important customer retention strategies on your list.

Here are some tips to go beyond what’s expected and deliver unmatched customer service experiences:

• When an executive is unable to provide a resolution, have a supervisor barge in on ongoing calls to provide better and quicker resolution to customer issues.
• Use AI chatbots to offer round-the-clock instant support to ensure that most small issues get resolved without human intervention.
• Provide your customers with multiple ways to reach out with their queries and problems, such as email, phone, social media, and chat support.
• Offer a seamless experience across channels by ensuring that support executives have an easy-to-access record of all past customer interactions.
• Use good CRM software with customer support features to empower your support executive to deliver better customer experiences.

Example: JetBlue

JetBlue is a prime example of a company that prioritizes customer satisfaction and delivers great customer experiences. If you check its Twitter (now X) account you’ll find that its team responds almost immediately to any tweets tagging the brand.

They offer prompt responses to both positive and negative customer feedback. Here’s an example.

Image via X

3. Build a Gamified Loyalty Program with Great Incentives

Any marketer worth their salt knows that running loyalty and referral programs is one of the best customer retention strategies.

There’s nothing better than a lucrative loyalty program to keep your customers engaged and encourage customers to make repeat purchases.

And if you add gamification elements to your rewards program, then that makes it even more fun and engaging.

Here are some ideas and examples for adding gamification to your loyalty program:

• Create levels that users can cross by earning points and offer better rewards at higher levels.
• Offer an element of luck by using spin-to-win offers, scratch cards, and other tools to offer different rewards to different loyal customers.
• Use badges and trophies to motivate customers to reach higher levels and get recognized as elite or VIP customers.
• Run seasonal games and offers, such as treasure hunts or jackpots to further boost engagement and drive customer retention.

Use good referral marketing software solutions that offer gamification features and allow you to run highly engaging programs to increase customer retention rate.

Example: Starbucks Rewards

Image via Starbucks

Make sure your loyalty program offers incentives for referrals as referral marketing is one of the best customer acquisition strategies.

4. Apologize for Your Mistakes and Correct Them Promptly

One of the most frustrating things for customers is when businesses make a mistake and do not own up to it. While providing a quick resolution to a problem is important, you also need to apologize for the inconvenience.

Why?

Because it shows that you care about your customers and their time. Offering an apology for your mistakes shows that your company can be trusted.

That’s why, one of the best customer retention strategies you can adopt is to develop a company culture where you own up to your mistakes.

Example: Niantic

Niantic is the company behind the popular game Pokemon Go. The game often faces technical issues and glitches that cause inconvenience to users and Niantic is prompt in offering an apology and compensating for the inconvenience.

Image via X

Pro Tip: Make sure you listen to complaints thoroughly before apologizing and don’t accept legal responsibility for something that’s not your fault.

5. Have an Ethical and Fair Refunds and Returns Policy

Have you ever ordered a product that you didn’t like but couldn’t return because of a confusing, unfair, or tedious returns policy?

If yes, then you know how frustrating it can be, and that one such experience is enough for you to swear off that brand forever.

According to a survey by Emplifi, 49% of consumers surveyed have left a brand they were loyal to due to poor customer experience. 18% leave after just one bad experience while 68% give two to three chances before the switch to another brand.

If a bad experience can cause people to leave a brand they were loyal to then what do you think they’ll do with a brand they’ve tried for the first time?

Don’t answer that! It’s obvious—they’ll not wait around for more bad experiences.

So how can you make your return policy fair?

Here are a few strategies you can use:

• Offer a clear and fair return window, which is as per industry standards.
• Clearly mention the exceptions to your returns/exchange policy and ineligible products or orders.
• Mention the process of getting a refund or exchanging a product, along with the various channels for the same, such as in-store or via mail.

Example: IKEA

IKEA offers a generous return window of 365 days, as opposed to the standard 30 or 60 days offered by most retailers. It’s also transparent on which products are not eligible for refunds and other important details.

Image via IKEA

While it might not be feasible for you to offer 365-day no-questions-asked returns, you can be fair and transparent and offer the best possible.

FAQs

Q1. What is customer retention?

A. Customer retention typically refers to the activities that a business performs to encourage long-term customer relationships and get repeat customers.

Q2. Why is customer retention so important?

A. It is a well-known fact that acquiring new customers is more tedious and expensive than retaining existing customers. Every business must have a customer retention strategy to get repeat business and increase customer lifetime value.

If someone has trusted your business once, you can get them to make repeat purchases by offering great customer service and customer experiences.

Unlike customer acquisition, which requires spending a lot on marketing and promotions, customer retention depends largely on great service and transparent communication.

Q3. What are the 3 Rs of customer satisfaction?

A. Referrals, retention, and related sales are the three Rs of customer satisfaction.

Q4. What are the best customer retention strategies?

A. Here are our top recommendations for effective customer retention strategies:

• Surprise and delight your loyal customers
• Offer exceptional customer service
• Build a gamified loyalty program
• Apologize for and correct your mistakes
• Have an ethical and fair returns policy

Q5. What is the one key to customer retention?

A. Active and honest communication is the key to customer retention and one of the basic customer retention strategies.

Ready to Use These Customer Retention Strategies to Build Long-Term Customer Relationships?

All the customer retention strategies mentioned above are a must if you want to build a loyal customer base. You can’t skip on any front when it comes to delivering exceptional customer experiences, which is the cornerstone of customer retention.

Use all these strategies to effectively improve customer retention and build loyalty. It goes without saying that you should ensure that each customer interaction is positive and is dealt with politely.

Do you also need help acquiring new customers? Leverage our lead generation services to get qualified leads for your business.