How To Retain Customers – Best Practices


Aiming to maintain relationships and retain customers can sometimes be difficult.

Other times it can be extremely awkward…maybe a project or purchase didn’t quite turn out as you expected. However, creating and maintaining relationships with your customers is one of the most important factors many people take for granted and can facilitate the growth of your business.

In this blog, we address what customer retention is and some practices you can utilise to increase your customer engagement and, subsequently, lead to a higher customer retention rate.

What Is Customer Retention?

Customer retention is the principle of preserving relationships with current or previous customers. Forming a bond with your customers increases the chances of repeat business or referral business, hopefully for new exciting projects and accounts.

Maintaining relationships will lead to a higher level of participation with the brand requiring customer engagement. This can lead to future sales prospects and opportunities forming – creating a cyclical pattern of customer retention.

Why Retain Clients?

In this new day and age, a highly competitive market dictates customer satisfaction is not enough anymore to guarantee customer retention.  A study by Bain and Company stated 60-80% of customers who describe themselves as satisfied do not go back to do more business with the company that initially satisfied them. This is very commonly due to a lack or loss of connection.

Customer retention is therefore extremely important and the key to building relationships as assets rather than liabilities.

We understand the definition of retaining customers/clients and why is important, however, why is this relevant to my small business?

Retention Is Cheaper Than Acquisition

[sidenote]Retaining the customers you already have is cheaper than scouting for new ones.[/sidenote]

This is backed up by stats! According to Invesp, attracting a new customer costs five times more than to keep an existing one. Forbes reinforces this: “a long-term customer is of more value than a single-deal customer, and it’s a lot less expensive to keep a current customer than to acquire a new one”. Bain and Company state a 5% increase in customer retention can increase a company’s profitability by 75%!  That’s 75% increased profit by building relationships with customers you already have.

It’s important then to ensure relationships are maintained and retained after contract, even the successful experiences that can be taken for granted. This is important to secure future business deals with your customers or word-of-mouth recommendations.

Cheaper Marketing Investment

By utilising customer retention techniques, the monetary investment in marketing to attract new accounts can be reduced.

For one, previous customers are already familiarized with your company’s services or products so the need to invest in brand awareness is diminished.

Secondly, word of mouth and organic growth can drive new business projects without your business ever feeling the need to invest in advertising to drive new accounts in. So far, customer retention seems like a pretty good deal to me.

Loyalty Goes Far

Harvard Business School found “increasing customer retention rates by 5 increases profits by 25 to 95 per cent.”

Some businesses only focus their time and resources on the initial meeting and the initial on-boarding of the customer. However, it’s necessary to leverage the relationship and focus on forming a solid relationship throughout the whole customer journey. Do not lose sight of the relationship with the client once the business deal is finished.

A retained customer can spend much more than a new client, this is because the retained customer is accustomed to and satisfied with the services provided. On top of that, satisfied customers are loyal customers referring the services back to their families, friends and within business networking circles.

49% of U.S. consumers say friends and family are their top sources of brand awareness. People who are referred by a friend are 4x more likely to buy from a business, and one offline word of mouth impression drives sales at least 5x more than a paid impression. 92% of people trust recommendations from family and friends more than all other forms of marketing. Don’t underestimate the power of word-of-mouth advertising from loyal customers!

How To Reach Out to Past Customers

Now we know what customer retention is and the reasons why you want to put it into practice, let’s discuss how you can maintain a relationship with your clients.

Some businesses hire PR and account managers to handle the maintenance of customer relationships, but how do you reach out to customers if you don’t have the funds to afford additional staff responsible for this matter?

A simple text or an email will do.

Although it is recommended your company tests and chooses the best method of communication for your customers, keeping it simple is the key to effectively communicating with your customers and more importantly, the key to sustaining open communication.

Don’t be afraid to experiment with different communication tactics.


According to Forbes, 64% of Americans prefer getting customer support via SMS – aka texts (Harris Research, 2014). The read rate of text messages is far higher than any other medium. Text messages don’t go into junk mail and 96% of all text messages worldwide are opened and read within two minutes. Forbes states that texting or any similar form of texting (WhatsApp, Messenger…) is the ideal method of carrying out valuable relationships and maintaining customer relationships leading to customer retention. Think about it, how quickly and often do you read your texts?

Email marketing

Email marketing is another branch of communication often forgotten about. Email marketing for small businesses can have a huge impact and is a great way to connect with customers after they have purchased from you.

This extends to every type of business. For example, after someone visits your retail store or buys something from you online, you can follow up with a thank you email. In two weeks you could send them another email outlining a sale happening with images of items similar to what they purchased. These are touchpoints continuing your relationship.

However you decide to keep your customers thinking about you, reaching out to your customers and checking in with them is necessary to guarantee the success of your business.

How To Assure You’re Retaining Clients

These are some of the best practices that incentivise client retainer.

Reward the Most Profitable Customer

A discount, a free dinner, an annual event to attend, whatever freebie you think your customers will enjoy – and is within the limits of what you can do for them.

By rewarding your most profitable customer, you’re further cultivating that relationship.

Depending on your business, promote your referral business initiatives. For instance, a lot of hairdressers offer a discount to new customers referred by one of their current customers. The discount also applies to whoever referred the new customer.

A win-win encouraging people to refer more of their friends!

Personalised Follow-Up

Get in the habit of asking how your customers are doing.

Check in now and then to see how they’re doing and if they have any feedback. Not only is the customer going to feel appreciated, but the feedback can also help your business improve and grow.

Asking your customers upfront how to improve rather than waiting can help with negative feedback later on. don’t wait for negative feedback to get to you, get out of there and ask. According to Super Office, only 1 in 25 unhappy customers will complain directly to you. Considering, most clients don’t complain if something’s wrong so make sure everything’s fine by checking occasionally with your clients.

Depending on the nature of you and your client’s relationships, do not be afraid of being polite. Ask them how they are and their family. In most cases, the customer will appreciate the worry and additionally, his/her answer will give you a brand new view/perspective regarding the current situation they’re facing.

Educate Rather Than Sell: Be There For Them

[sidenote]Build the customer and not the sale.[/sidenote]

Some business owners feel threatened by the idea of teaching a client the secrets of the “how-tos” of the business. You shouldn’t feel like that, being able to teach and educate a customer can get you far.

These are some of the reasons why educating about your business might improve your business:

Get to Know Your Customers and Clients Traits

How about lunch together? Or a survey to learn more about them? Get to know your customer, what they eat, what they like to do, their preferences and other tastes can take you far to securing that next business venture together.

Once you know what they like, build upon it and remember their preferences. With their specifics in mind, it’s much easier to secure a relationship and improve your customer retention score.

Lead with Cause and Effect for Errors

Cause and effect is the basis of every business success and of any good relationship management.

This is rather difficult to do, for young entrepreneurs but it does get better with time. As a human, your emotions will react or get the best of you. However, in business, a quick, witty cause and effect strategy is more efficient in a time of crisis.

Someone in your company caused a problem? Or you made a mistake?

Fair enough, let’s get to work with the cause/effect theory in the back of our minds.

First, own up to it, acknowledge the mistake, apologise and do offer a solution to the problem and try to fix the situation.

Beware though, only reach out to apologise once you have a transparent and defined solution in your head, even if that means to outsource something or someone. Offering a solution as well as an apology will speak volumes. Offering a solution means you care about your customer’s business and you’re interested in seeing them succeed.

When saying ‘I’m sorry’,  do minimise language that removes the guilt from you or your company. Be understanding and listen to your client’s concerns.

“Never ruin an apology with an excuse.”

– Benjamin Franklin

Keep the Surprise Element

Just like in any relationship, keeping the surprise element is a must. It’s in the little things: noting down your client’s birthdays and send them a happy birthday email, sending them a handwritten note once in a while to celebrate successes.

The surprise element can go far and help revive a relationship. Even for one that seemed static or dead for quite a while, as mentioned a successful business doesn’t mean retention is successful.

Don’t Over Promise If You Know You Can’t Deliver

This is all about setting and managing expectations.

If you can’t do it, don’t say you can. It’s ok if you don’t, you’re not going to lose clients or businesses because of it, as long as you own up to it and take certain precautions.

Say you don’t offer a specific service a client would like but you know of another company who does, refer your client to that partner business. This works with tangible products and service-based companies. People like referrals and knowing they can come to you for honest feedback and suggestions.

It’s best to offer an alternative than to not be able to deliver what you’ve promised. Honesty moves mountains and it helps secure customer retention and long-lasting customer relationships.

[sidenote]Transparency is the best policy.[/sidenote]

Lying about the limitations of your business, however, might get you into trouble.

Be Nice

An easy one to say but some business owners take this for guaranteed. Be interested, engaged, passionate and reliable for your clients.

A good personality goes a long way.

Be welcoming and do not be afraid to ask numerous questions. Extend a friendly hand to your customers and help them with any aspect of their business you can.

Build Customer Retention Into Your Company Culture

Some values are good to keep in mind when establishing your company culture. Instilling values that align with customer retention from the beginning make it easier for strong customer relationships to be a pillar of your company. These values can lead to a more seamless approach to customer retention and help you have a long-term approach.

Some ideas when building a company culture that can contribute to customer-focused values include:

As we’ve reached the end, these are some suggestions regarding the best practices for customer retention. Installing the habit of customer relations and keep up communicating even post-contract can have a major impact on your business.

Give it a try! Let us know how it goes in our social.

Good luck!

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