7 Proven Strategies to Increase Customer Retention in 2024

Did you know that it costs 5 to 25 times more to acquire a new customer than to retain an existing one? Many businesses often spend more time and resources acquiring new customers and pay less attention to existing customer retention. This practice may let them succeed in acquiring new ones, but the old customers will leave silently.

It is a waste of money and time when you cannot hold on to existing customers. To further highlight the importance of customer retention, check out the below statistics:

1. A 5% increase in customer retention can increase profit by more than 25%.
2. 82% of companies acknowledge that acquisition is more costly than retention.
3. 65% of business mostly comes through repeat customers.

Therefore, it is important to implement solid customer retention strategies to retain existing customers and increase their contribution to business growth. This guide will talk in detail about 7 best strategies that are proven to uplift customer retention. So, let's get started!

1. What is Customer Retention?
2. Why is Customer Retention Important?
3. 5 Factors that Influence Customer Retention
4. 7 Strategies to Increase Customer Retention
5. Wrapping Up

What is Customer Retention?

Customer retention is a practice of developing and maintaining positive relationships with existing customers to foster loyalty, encourage repeat business, and prevent customers from leaving competitors. Simply put, customer retention is related to holding customers for the long term and continuously getting more purchases from them.

Customer retention strategies are often related to effective customer service, personalized experiences, loyalty programs, and more. The target is mostly to focus on customer engagement and satisfaction, which can lead to lasting connections and a higher retention rate.

Why is Customer Retention Important?

Customer retention brings many benefits for businesses. As mentioned above, it is less costly to retain an existing customer than to acquire a new one. What else does customer retention bring to the table are as follows:

1. Maximize the customer lifetime value (spending potential)
2. Increase revenue and profitability
3. Free word-of-mouth marketing
4. Drive business growth and long-term sustainability
5. Cost-effective than acquiring a new customer

In short, customer retention is equally important as acquiring new customers. At first, it is important to acquire new customers, but then the focus should be on retaining existing customers and also working on new customers.

5 Factors that Influence Customer Retention

Before discussing customer retention strategies, it is important to know the factors influencing customer retention.

Customer demands and expectations have increased over the past few years due to the digital boom. So, there are now multiple factors that influence customer retention, as follows:

1. Customer Experience (CX): Businesses offering great customer experience are more likely to have a higher customer retention rate. Some of the ways to offer great customer experience include personalized marketing, responsive customer support, seamless purchasing process, and more.
2. Product/Service Quality: Customers will keep ordering from your brand if you offer them high-quality products/services that meet their expectations.
3. Accessibility: A business that is easy to access and engage with can have higher customer retention. This implies that it offers customers the convenience they are looking for, such as multiple payment options, fast communication, seamless processes, etc.
4. Trust and Transparency: Customers stay loyal to brands that ensure trust and transparency in business activities, such as honest marketing, clear communication, reliable delivery, etc.
5. Adaptability: A business that continuously innovates and adapts to changing marketing conditions and customer demands can have more loyal customers who keep spending more.

Overall, customer retention is influenced by many factors. That's why it requires a strategic approach to retain customers for the long term.

7 Strategies to Increase Customer Retention

The competitive era has made customer retention a central component of business growth and sustainability. Therefore, it is important that every business strategically deploys customer retention strategies to have positive and long-term relationships with customers.

Here are seven proven strategies to increase customer retention in 2024:

1. Begin a Loyalty Program

Loyalty program is a special program for loyal customers that offers exclusive benefits and rewards. It is a great program to increase customer retention, as 75% of customers favor a brand having a loyalty program.

There are different types of loyalty programs you can offer to customers, such as:

1. Early Access: You can offer early access to new products, features, or services to loyal customers. This also becomes a source to get early customer feedback.
2. Premium Customer Support: You can offer premium customer support to loyal customers, which involves prioritized handling of their queries.
3. Referral Program: You can introduce a referral program in which existing customers are rewarded for referring and bringing in more customers.

In short, there are many ways to introduce loyalty programs. So you can choose the ones that best align with your business model.

2. Improve Customer Support

3 out of 5 consumers have the opinion that good customer service is essential to have loyalty to the brand. Customer support or service can play a make-or-break role for any business.

You have to offer the best customer support compared to your competitors. It should be responsive and informative to customers. One of the best ways to improve customer support in 2024 is by implementing an AI chatbot. To better understand, let's consider the VOC AI chatbot as an example.

VOC AI Chatbot is a customer support chatbot that can handle up to 95% of customer queries. It is trainable with your company data and can handle customer queries as a virtual agent. It can provide troubleshooting steps, process orders, offer product recommendations, and other similar tasks. You can integrate it on the website, WhatsApp, Shopify, Amazon, and other communication channels.

This way, customers can get 24/7 responsive customer support without delays. Furthermore, it can also divert queries to human agents at the request of customers.

Read more: AI Customer Service | 7 Best Tools for 2024

3. Make Refunds and Returns Easy

One of the customers' frustrations with brands is complicated refunds and returns. The process is overly complicated, and some brands don't even offer the refund/return support they guarantee.

Make yourself the opposite here. Try to offer an easy process for refunds and returns. Although it looks like the customer won't return after this, that's not always happening. When customers have a seamless refund/return experience, they will trust your brand for future purchases. Besides that, they will also offer free word-of-mouth marketing to others for your supportive refund policy. So, it will eventually increase sales in the long run.

4. Listen to Customers

Customer retention requires customers to be happy. And that's possible by meeting their changing needs consistently. For that, listening to customers is very important.

For example, if your customers continuously ask for a card-based payment option, you can integrate that into your payment method. Similarly, if customers frequently request faster delivery options, you can consider partnering with a reliable courier service to meet this demand.

In short, you should listen to customers and then optimize your processes actively. You can listen to customers through social media interactions, surveys, or customer reviews.

5. Create a Customer Profile

Create a customer profile that lists all the long-term and existing customers. The profile can have parameters like age, gender, lifestyle, income, and other useful details you can get from customers. Once done, look deeply into the elements that are common in those retained customers. Try to figure out what makes them a repeat customer rather than one-time purchasers. Based on that, you can optimize your marketing tactics and offer more personalized experiences.

6. Modernized Onboarding Experience

Onboarding experience also has an influence on customer retention. 76% of customers are more likely to continue using a product or service if they feel welcomed by an onboarding experience.

There are many ways to offer customers a modernized onboarding experience, such as:

1. Intuitive guide to customers on how to use the product/service for the first time with contextual walkthroughs.
2. Interactive product tours
3. Regular context-sensitive pop-ups
4. Easy and simple instructions on using new features

In simple words, it makes customers feel valued from the very first day and keeps the rhythm going throughout the customer journey.

7. Integrate Buy Now, Pay Later Strategy

The Buy Now, Pay Later (BNLP) strategy is becoming increasingly popular among customers. In fact, a survey showed that 76% of customers are more into shopping from brands offering payment plans. It is because BNLP offers a more cost-friendly way for customers to make purchases. Therefore, try to integrate the BNLP strategy and see its impacts.

Wrapping Up

There is no denial about the importance of customer retention in 2024. It is the key to unlocking customer loyalty, more sales, and business sustainability. Therefore, it's time to uplift your game of customer retention. Follow the above strategies, measure their outcomes, and adjust them as required to enhance customer retention and loyalty.