7 Great Customer Retention Strategies to Increase Your Profits by At Least 25% - BuildFire
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7 Great Customer Retention Strategies to Increase Your Profits by At Least 25%

In most businesses, customer retention is a big deal.

But in my experience, it’s usually a much bigger deal than it’s given credit for.

Most people are only concerned about retaining customers so their marketing for customers isn’t such an uphill battle, but keeping regular customers on board does big things to your overall profits, too.

In fact, according to a Harvard Business School article by Frederick F. Reichheld and Phil Schefter, “Increasing customer retention rates by 5% increases profits by 25% to 95%.”

So forget about the fact that keeping regular customers means you need significantly less time and money for marketing just to keep your business afloat.

Keeping regular customers also makes you way more profitable.

But this post isn’t going to be 5,000 words of me convincing you how important customer retention strategies are.

You’re reading this article, so you’re already more or less aware of. Maybe even more so now since I pointed out that statistic.

Instead, this post is going to be about the actual strategies you can use to nearly guarantee your customers will stay on board with you… so you can stop spending so much on marketing and keep your profits up.

And it’s going to be really heavy on the practical side of things.

Because when I did a Google search on the subject to see what kind of advice was already out there, I found of inspiration, but not a lot of tactics.

I’m not hating on inspirational posts in business. In fact, I think they’re 100% necessary. But I want to use this post to help fill a gap that I saw in the SERPs.

Because I don’t know about you, but the generic advice like “be there for your customers” and “stellar customer service” and “go above and beyond” all sound good to me, but I’m more interested in the actual items I can put on my to-do list to make them happen.


1. Retention Metrics > Vanity Metrics

I know it’s obvious to say it, but putting more stock in retention metrics than vanity metrics will benefit your business’s bottom line a thousand times over.

Better yet, don’t even track vanity metrics. Your Twitter followers and Facebook fans might be fun to think about, but profitability is not a popularity contest.

Retention metrics include things like churn rate, purchase amounts, and increasing or decreasing customer lifetime value.

Vanity metrics are things like Twitter followers, the size of your email list, Facebook likes, and podcast downloads.

All of these things are indicators of success, but they’re not the numbers that tell the real story.

A lot of Twitter followers could just mean that you’re hiring someone to spend all day retweeting sensationalist news. It’ll get you more followers, but it won’t do anything to grow your business, keep your customers happy with you, or keep them buying.

But your churn rate, on the other hand, tells you exactly how good of a job you’re doing with keeping your existing customers happy. If someone stops buying from you, you know you’ve done something wrong.

If your churn rate is getting lower, you’re doing a great job. If it’s getting higher, something’s broken and you better work like hell to fix it.

And by focusing on your churn rate instead of your Twitter following, you can more easily identify the subtle and not-so-subtle causes that affect your churn rate… especially when your brain space isn’t cluttered with thoughts of how to get more retweets.

Plus, the metrics you pay attention to are the ones that drive your decision-making.

If you spend half of your monthly marketing meeting talking about vanity metrics and half talking about retention metrics, your takeaways and action steps will be split between the two.

But if you spend the entire meeting talking about retention metrics, the insights and strategies you uncover on how to continually improve those will be hyper-focused on strategies to improve what most affects your bottom line.

For example, if your two main goals are to grow your Twitter following and cross-sell your new service to happy customers, you’ll walk out of the meeting with two separate to-do lists to focus on: one on ramping up the sensationalist side of your brand, and the other on putting together an email campaign to demonstrate the value of your new service.

But imagine if you could cross the worry over Twitter off your list completely and only had to focus on the email campaign?

You’d do a much better job on it, wouldn’t you?

Plus, you’d probably get way better results on the email campaign than if you had to split your attention between the two.

So the to-do item here is this: remove vanity metrics from your to-do list. And, if needed, add retention metrics.


2. Constantly Compare & Contrast Their Before & After

If the product or service you sell is improvement-focused, this is a major strategy that’ll continuously remind your customers of where they’d be without you.

For example, if you’re a career coach, you could do an intake meeting with each new client to find out what position they have, what their salary is, their job happiness, and what their ultimate goals are.

As they work with you, you can send them monthly email reports to show them all the things they’ve accomplished towards achieving their ultimate goals, and what kind of improvements they’ve made.

For example, if a client you coach is starting to reconsider whether or not your services are worth the investment, imagine your monthly progress report coming in the next day showing them that you’ve helped them get a promotion and increase their salary by 40% in the last five months.

They’ll remember your value and be more inclined to keep working with you, won’t they?

Or if you have a software business that helps people improve the efficiency of their PPC ads, you could have your software capture their ROI data when they first signed up. Each month following, you could send an email showing the work that’s been done, how their ROI has increased, and the dollar amount it’s meant for their bottom line.

The contrast between the cost of your software and the bottom line dollar amount will really show your worth and remind your customers the value of your service, keeping them on board for the long haul.


3. Welcome Complaints

According to Marketing Wizdom, 96% of customers don’t complain.

Which is nice because your customer service department doesn’t have as much to deal with, but it becomes a serious problem when customers start churning without telling you why.

“Whilst they may not tell you what’s wrong,” warns Marketing Wizdom, “they will certainly tell plenty of others.”

“A system for unearthing complaints can therefore be the lifeblood of your business, because customers who complain are giving you a gift,” they say, “they’re still talking to you, they’re giving you another opportunity to return them to a state of satisfaction and delight them. And the manner in which you respond gives you another chance to show what you’re made of and create even greater customer loyalty.”

Think about your own experience for a second… it’s pretty common for companies to ask you why you’ve left once you already made the decision to go, isn’t it?

It just happened to me the other day when I unsubscribed from an email list…. They asked my why I was leaving.

But before, when I was just another number on their list, they never asked me about my satisfaction with the content or if I felt the email newsletter was fulfilling its purpose.

In other words, they didn’t care about me not churning until I’d already churned… which was a bit of a mistake on their end.

And when it comes to actual buying, it’s also not very common for companies to proactively collect complaints from you before something goes majorly wrong, you’re at your wits’ end, and you decide to stop buying from them.

So when you openly receive and proactively ask for complaints, you can uncover every single little frustration your customers are having with what you’re selling.

Yes, it’s more to deal with, but showing an effort to fix even the tiniest annoyances your customers deal with will go a long way in improving their experience, making them feel noticed and important, and boosting their loyalty towards you.

And according to some data collected by Help Scout, you’ll want to proactively ask for complaints for a number of different reasons:

  • 78% of people have decided not to purchase because of a bad experience
  • Only 4% of your unhappy customers will bother to complain on their own
  • For every complaining customer, there’s 26 others keeping their mouths shut
  • 91% of unhappy customers will never buy from you again… but if you resolve a complaint, 70% will buy from you again

An easy way to do this?

Customer satisfaction surveys.

They’re easy to put together, simple to send out, and most softwares that offer the functionality will aggregate the data for you into easily actionable tidbits.

customer survey

Here’s an example of a customer satisfaction survey collecting data on how satisfied a customer base is and the reasons behind it. (Source: Smashing Forms)


4. Regular Feedback Surveys

Along with welcoming complaints via customer satisfaction surveys asking how satisfied or dissatisfied your customers are, make sure you also ask for feedback.

You can see the company in the image above does it by asking what people like and dislike about the service, but you can dig a little deeper. Find out what people really think of your product and how well it works into their day-to-day.

If you find out, for example, that your customers don’t use your mobile app as much as you thought they would, you can use these surveys to find out why.

It could just be that they’re not phone people, or it could be something a little more critical… like the app’s UX is confusing in comparison to the desktop UX they’ve become so accustomed to.

The key with the surveys though, is to make sure you’re asking the right questions so you’re getting the right answers.

Questions like “Are you happy with our product?” or “Would you recommend us to a friend?” will tell you whether your customers love you or hate you, but they won’t uncover the subtler nuances in their level of satisfaction that you can actually act on.

So get practical.

Ask questions like:

  • Do you use [product feature] for [function it was designed for]?
  • Why or why not?
  • If you could change one thing about our product, what would it be?
  • On average, how many hours do you spend using our product per week?
  • Are there any little frustrations you run into on our dashboard that you wish were better?
  • What kind of additional (free) training material would you like to see from us?

Make sure they’re not all yes or no questions. Use the rating system, and ask for explanations.

In fact, encourage as much explanation as possible. This is where you’ll get the most valuable, specific insight to act on.

And beyond just asking for complaints so you can collect data on how to make sure your customers aren’t dissatisfied, these feedback surveys give you information you can use to absolutely thrill the heck out of your customers… keeping them around forever.

improve services question

Here’s a short survey that asks for feedback on what needs to be improved in the software to increase customer satisfaction. (Source: ActiveTrail)


5. SHOW How You’ve Responded to Their Feedback Specifically

Collecting survey feedback and acting on it is one of the best ways to understand your customers and keep them on board.

But you can take this strategy to another level of loyalty building by going out of your way to tell your customers how you’ve implemented their feedback.

And no, I don’t just mean an automatic message after they finish your survey that says, “Thank you for completing our survey. Your thoughts and opinions are valuable to us. We will use input from customers like you for our future product updates.”

I mean if you add a feature, go back through your data to find out the specific customers who made that feature request.

Then email them a personalized message thanking them for their input, telling them that a few others said something similar, and showing them (with images!) the updates you’ve made and how they can start using them.

Don’t depend on a system upgrade or an announcement sent out to your entire email list to take care of this for you.

Make it personal.

And make sure you ask them at the end of that email if they’ve got any other great ideas.

This kind of attention will show them that they’re much more than just a number to you, and that you actually care about their success.

Help Desk software company Groove’s CEO made it a mission to talk to as many of his customers as possible to ask for their feedback on the product.

He started the process with this email:

asking for feedback


And needless to say, tons of people took him up on his offer.

But a few others who didn’t schedule the call to tell him their grievances in person, did send back emails like this:

email wince



Do you see how easy this makes it for the CEO—or any member of Groove’s customer service team—to reply with a personalized response when the suggested updates are made?


6. Onboarding, Onboarding, Onboarding

“It’s estimated that 40-60% of software users will open an app once, and never log in again,” said Len Markidan on Groove.

Which is a pretty serious churn rate, if you ask me.

“How much of that churn is due to poor onboarding depends on your specific product,” advises Len, “but there isn’t a business out there that can’t score a few more retention points by optimizing their onboarding.”

If you have a software product, you can take a customer through the on boarding the first time they log in.


The first time I started my iPhone, it took me through 46 different tips to help me make the most of my new phone’s capabilities… some things that I would have never even thought of. It really helped me make the most of the device much more quickly than if I’d just been taken to the home screen and left to figure it all out on my own.

But if your product or service isn’t software based, you still need to have some sort of onboarding to set customer expectations and given them information on what to expect.


7. Make Getting in Touch Easy & Obvious (And Respond ASAP)

There’s nothing more annoying than trying to find a company’s contact information while you’re pulling your hair out trying to solve a problem with whatever it is you bought from them.

There’s no phone number to call, there’s no chat box, and the best you can find is an email address that might get a response in three days… if you’re lucky.

Sure, putting up barriers to communication with you means you don’t have to invest as much in customer service, but it also means your customers are cursing you under their breath every time they can’t figure something out.

So simply put, make it easy to get in touch with you.

Make it easy, and make it obvious.

Put a pop-up chat box on your website.

Publish your customer service number loudly and proudly.

If you sell software, put those things within the software UX itself, too.

And respond.

Respond ASAP.

Do not leave your customers waiting for an answer.

Make sure you’ve always got someone there—at least during normal business hours—to take care of all the inquiries that come in within a matter of minutes, not hours.

And make sure you’ve got enough people to handle it, too.

There’s nothing worse than being on hold and wasting your time for 45 minutes while you wait on other customers.

And yes, this is enough to make or break someone’s decision to be a customer with you.

Last year, I switched my hosting company for exactly this reason.

The one I was previously with always took a minimum of 20 minutes before they ever answered me… and it usually ended up being more like 45 minutes.

The company I’m with now is at the same price point, but I can’t remember one instance where I’ve ever waited more than five minutes for a response when I called in or used their chat feature.

And that’s incredible customer service.

I’m not a tech genius, so any time there’s a problem, I need someone to hold my hand, and explain the situation to me. I do not want someone to just try to rush me off with a mediocre solution so they can get to the next customer who’s also been waiting for 30 minutes.

And because this new company offers that—because they’re so easy to get in touch with and get a valuable response from—they’ve won my business.

And now that I’m a customer, I’m sure my LTV with them will be worth thousands of dollars.


Start Where You’re Feeling the Pain

A lot of times in business, we’re often told to start with the easiest stuff first: to tackle the low-hanging fruit before we move on to bigger and better challenges.

But with customer retention, I’d encourage you to skip over that frame of mind for a different one.

Instead of tackling the strategy that’s easiest to implement first, tackle the strategy that’ll immediately address how and where you lose most of your customers.

If people aren’t renewing their subscriptions, implement email sequences that show them the improvements they’ve made while they’ve been working with you.

If they just kind of drop off without any reason, get going with some feedback surveys to find out what most of your customers wish was different, and then work like hell to implement those changes.

If a common complaint of churning customers is that they just felt like a number to your company, start scheduling individual customer support calls.

These won’t be the easiest, lowest-hanging pieces of fruit to take care of, but they will have the most impact on your bottom line… which I think is the ultimate goal of customer retention in the first place, no?

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Ian Blair

BuildFire Co-Founder. I'm a digital marketer by trade and an entrepreneur at heart. I'm here to help businesses go mobile and build apps more efficiently than before.

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