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Resource Type: Blogs


Six Customer Retention Strategies That Drive Loyalty

A customer retention strategy is designed to cultivate loyalty and contribute to sustained business growth. Find out how you can use it to create a loyal customer base that drives success in this article.

August 14, 2023

4 min read

Anastasia Hamurari

Securing new consumers is essential for fostering business growth among retailers. But it comes at a greater cost than retaining existing customers. Depending on the industry, brands would typically spend 5%-25% more on gaining a new customer than retaining an old one.

Additionally, customer retention requires fewer marketing resources. It typically involves fewer trust-building tactics since there already exists a relationship and familiarity with the brand.

Besides, existing customers have experienced the value of your product or service before, making them more likely to purchase again or upgrade to higher-tier offerings. 

This begs the question – what strategies should you use to improve customer retention? 

In this article, we’ll guide you through what customer retention entails, how to measure it, its importance, and the best-in-class customer retention strategies designed to boost customer loyalty and increase repeat business.  

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What is customer retention?

Customer retention refers to a business’s capacity to keep its customers over a period of time with the goal of repeat service or product purchases.

The more customers a company can retain, the higher its customer retention rate is.

By focusing on customer retention, a business is in a position to boost customer lifetime value and potentially improve the profitability of the existing customers.

How to measure customer retention rate?

To determine your company’s customer retention rate, complete the following steps: 

  1. Pick the time period (monthly, quarterly, annually) 
  2. Count the number of customers at the beginning and the end of the chosen period  
  3. Use the formula: ((Number of Customers at the End – Number of New Customers)/Number of Customers at the Beginning) x 100 
  4. The gold standard of a good customer retention rate varies from one industry to another. In retail, the average customer retention rate amounts to 63%.  

It also varies depending on your target audience; three-quarters (74%) of Gen Z consumers, for example, would rather shop at another retailer if an item, they want is out of stock online, increasing the chance of brand infidelity in this generation. 

Why is customer retention important?

A small 5% growth in customer retention can make your brand’s revenue soar by 25-95%. This means that just focusing on keeping your existing customers has the potential to boost your ROI.

If you need more convincing, consider this – when you retain a customer, you raise the number of word-of-mouth testimonials and improve brand loyalty. A huge 83% of Americans would buy from a company whose products or services were recommended to them by their friends or family members.

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Best customer retention strategies to build lasting loyalty

Now that you know that customer retention is a must-have rather than a nice-to-have, here are a handful of tried-and-tested customer retention strategies that have the potential to help turn your one-time customers into loyal fans:


Leverage the power of personalization 

Personal relationships are at the forefront of successful customer retention. In today’s competitive retail landscape, solely providing a service or a product doesn’t guarantee customer loyalty.

This is where understanding the pain points, needs and wants of your consumer, proves useful in ultimately improving your customer retention rate.

Crafting personalized offers becomes easy when you have all the above customer data in your arsenal. With 71% of consumers expecting businesses to provide personalized experiences and 76% of consumers becoming dissatisfied when this isn’t the case, it’s only natural to prioritize personalized messaging.

FitMyFoot did just this with its high-tech solution for buyers who’d like to customize their pair of shoes from top to bottom. The company uses the feet photos taken and uploaded by shoppers to take measurements and create made-to-order shoes that fit like a glove.  

Set up a solid loyalty program 

Speaking about making consumers feel heard and seen, a loyalty program is another tool to capitalize on when strengthening your relationship with the buyers.

Did you know that consumers with an emotional connection to a company are recorded to have a 306% higher customer lifetime value (CLV) and recommend the company they’re loyal to 71% of the time? A well-tailored loyalty program achieves that through ensuring customers are made to feel special when purchasing from you.    

A solid loyalty program doesn’t need to be elaborate or costly for your business. It can take the form of welcome points for newly registered shoppers that turn into rewards after a certain number of purchases.

THG Ingenuity has supported the relaunch of Matalan’s Matalan Me omnichannel loyalty program as part of the homeware retailer’s digital transformation program to future-proof their proposition.

Offer omnichannel customer experience 

Omnichannel isn’t just a buzzword – it's become a standard practice among retail businesses that aspire to improve reach, increase sales and boost customer satisfaction. 

When paired with customer support, this strategy can do wonders in helping your buyers seamlessly transition between the website, social media platforms, and phone channels when interacting with your brand.  

Take this – businesses with well-established omnichannel customer engagement are shown to retain as many as 89% of their consumers.

When you offer omnichannel customer support of your own, your shoppers will experience less frustration when seeking assistance from your business and, as a result, have higher levels of satisfaction and ultimately become more likely to shop with you again.    

Obtain and analyze customer feedback 

It’s impossible to improve your customer retention rate without knowing how your consumers view your company. Whether it’s frequent delivery delays or unhelpful customer service, it’s important to have customer feedback you can use to address complaints and improve customer satisfaction.

The best practice includes sorting customer feedback according to its nature, creating a resolution plan, and having the right team on hand to resolve the issues.  

Take Nordstrom, who took collecting customer feedback to the next level with its Innovation Lab app where company employees are able to see what shoppers were trying to find and purchase but couldn’t. Having access to such detailed data means the department store benefits from the feedback loop that ultimately leads to improved customer retention.    

Make social proof work for you 

A whopping 83% of consumers endorse a brand they follow on social media. Coupled with 95% of buyers checking online reviews before deciding to make a purchase, it’s evident that social proof helps drive loyalty and increase sales.

To make it work for you, employ the tactic of always having the most recent case studies and testimonials visible on your website. Don’t forget to then share them on your social media to showcase your existing customers recommending doing business with you.

By highlighting how loyal your consumers are to your retail brand, you’re convincing one-time buyers to stick around. Together with a handful of five-star reviews, there’s a good chance your competitors won’t seem as tempting to your consumers anymore.     

Employ subscriptions to strengthen the user experience 

There’s nothing quite like receiving special treatment from a company to keep a customer coming back for seconds.

Taking the form of subscriptions, this customer retention strategy ensures your shoppers have a monetary incentive to make a longer-term commitment to your retail brand while you get to enjoy a steady stream of income. It’s a win-win scenario.  

After joining forces with THG Ingenuity, food supplement and wellness brand Bimuno was able to double its subscription rates. For a brand who previously relied heavily on brick-and-mortar stores, embracing the opportunity digital transformation offers a subscription-based brand is helping to secure ongoing success.

Encouraging return visits: striking the loyalty-retention balance

The goal of a customer retention strategy is to nurture relationships with existing customers and encourage them to come back. This takes time, so choosing a viable strategy and tracking your customer retention rate is essential for sustaining long-term loyalty and warranting repeat business.

Granted, not every customer retention strategy above will be the right fit for your business. THG Ingenuity takes the guesswork out of figuring out which one will bring you the most return visits with its full suite of marketing services.

We can guide you every step of the way from developing an emotional connection with your audience to driving conversion through a loyalty scheme or omnichannel customer support.

Because customer retention starts at the very first interaction with a brand and continues through every subsequent touchpoint along the customer journey, our complete ecommerce solution can be the answer to boosting your customer retention.

Get in touch today to unlock the potential of your repeat customers and grow your brand at scale.

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