What is customer retention

The term customer retention refers to all the strategies implemented by a company to retain its customers in order to stay close to the brand and remember it for future purchases.

This retention strategy is carried out using incentives to encourage customers to try new products or to make a repeat purchase.

The main goal of customer retention is to create micro-influencers capable of spreading word-of-mouth among people, also called ambassadors.

To achieve this goal, the company uses marketing techniques and tools, as well as marketing and promotion strategies that allow establishing relationships with its customers.

Benefits of Customer Retention

Acquiring new customers is very important, but for a business to be successful, it must also be able to "keep" them.

Implementing a customer retention strategy is very important because:

• It has lower costs compared to acquiring a new customer: the costs of customer acquisition can be high and time-consuming, while the cost to maintain a customer can be lower and yield more profit in the long term;
• It increases sales and profits: Over time, customers learn to know their suppliers, if the relationship between customer and supplier is satisfactory, the customer will be more inclined to rely on them also for purchasing other products or services;
• Increase in brand loyalty: thanks to the ambassador activities of the most loyal customers;
• A satisfied customer can generate word-of-mouth: influencing the choices of other customers;
• Engaging with already loyal customers is easier: An acquired customer already knows the brand and the company's products, so there's no need to start from scratch to promote. Those who have had a positive experience with your company will continue to buy because they believe in you and what you offer, establishing a true relationship of trust between seller and customer.

Customer Retention Strategies: how to keep your clients

The pinnacle of loyalty is indeed a solid relationship between company and client, but achieving customer loyalty is not easy.

For customer loyalty and retention, there are some strategies to follow:

• Never stop selling: once a customer is converted, it's important not to abandon them. Instead, they should be given even more attention by offering promotions on the products sold;
• Don't ignore your customers: customers can interact with the brand through all company channels. When messages are opened, they should not be ignored but responded to as soon as possible;
• Re-engage customers who have drifted away: it's worthwhile to spend a little extra time to reach out to those customers you haven't heard from in a while in order to remind them of your company's existence and inquire about the reasons that caused them to drift away;
• Contact your customers occasionally: scheduling calls, emails, letters, invitations to events, special offers so that customers feel informed and valued;
• Accepting Criticism: Customers who leave your company often complain, voicing their criticisms and grievances. It is these very complaints that provide an opportunity for the business to improve.

To "retain" customers, a company must focus on improving the shopping experience, so as to stand out from the competition and be positively remembered by customers. 

Difference between Retention and Loyalty

There is a difference between retention and loyalty, sometimes they are used interchangeably, but there are subtle nuances.

Loyalty is customer fidelity, which means the development of a consistent relationship between the enterprise and its clients, through fulfilling their needs, wishes, and expectations.

Retention, on the other hand, is a consequence of loyalty and that is the maintenance of the relationship between customer and company.

The habitual purchase of a product or brand can create a foundation for establishing a trust relationship, even before loyalty is achieved.

In some cases, however, it is worth considering that the repurchase of the product or service might depend on the lack of alternatives rather than the customer's choice.