6 Retention Marketing Strategies to Build Customer Loyalty

So, you’ve successfully nurtured a lead into a paying customer. But the hard work doesn’t end after that first purchase. You need a post-purchase retention marketing strategy to keep your customers coming back again and again. 

Retaining customers is just as important to your business’s sustainability as generating and nurturing potential buyers. Why? Because selling to an existing customer is cheaper — and less time-consuming — than acquiring a new customer.

To put this into context, as much as 35% of an ecommerce store’s revenue is generated by just 5% of its customers. These top 5% are incredibly valuable loyal customers who make more frequent purchases and higher-value purchases.

Ecommerce Revenue Distribution
Ecommerce Revenue Distribution

As an added bonus, they recommend you to their friends and family and advocate for you on social media. This makes them much more profitable than one-time, infrequent customers.

But loyal customers don’t just appear. They’re cultivated through effective retention marketing strategies.

What is a Retention Marketing Strategy?

A retention marketing strategy aims to maximize customer lifetime value by encouraging existing customers to make repeat purchases. Customers are also incentivized to engage with your brand via loyalty programs, social media, and other brand content. In doing so, you can foster a community of customers who reliably purchase from (and even subtly promote) your brand.

When it comes to retention marketing, we’re talking about actively keeping customers happy, engaged, feeling valued, and ultimately returning again and again to your brand.

There are many ways to achieve this, including welcome emails, exclusive offers, rewards programs, and keeping customers informed with updates and news. You can also invest in a business phone line to enhance the effectiveness of your marketing efforts and make communicating with customers a smoother, more professional experience.

It’s also important to add value to the brand by providing interesting and useful content. You can create content on social media or on your website with links to downloadable guides, webinar platforms, blogs writing, and talks. These are all ways to offer existing consumers more and show them the value of being your customer.

Why is Customer Retention Marketing Important?

Existing customers are a captive audience of already engaged and interested buyers. That said, a captive audience is only captive if they have a reason to stay around. Customer retention marketing engages customers to maximize their lifetime value, increasing sales and profit.

What’s particularly valuable about loyal customers is that they tell their friends and family about your brand, praise you in reviews, and advocate for you on social media. Essentially, they market your brand for you. This in itself can drive significant sales an overwhelming majority of potential buyers (93%) trust friend and family recommendations more than any other type of marketing, followed by review sites.

Trust in Brand and Service Information Sources
Trust in Brand and Service Information Sources

Your established consumer base represents a valuable asset.t Retention marketing aims to keep these customers on board and dissuade them from shopping elsewhere.

How Do I Improve Customer Retention?

A good place to start is to update your marketing channels. Do you utilize the best channels for reaching your current customers? This will partly depend on your customers, factors such as the type of business and products, and the demographics of your consumer base. The following sections detail some of the channels you can use to improve your customer retention.

Email Marketing

Email is easy to set up and is great for connecting with customers in a personal way. They’re useful for sharing longer content, such as newsletters, and gaining feedback from customers. However, never forget that customers can unsubscribe from emails easily and will do so if you flood their inboxes with unwanted, overly sales-orientated material. 

Create an email marketing strategy that aims to deliver personalized, engaging content to customers. By segmenting your email list based on your customer’s purchasing history, content interests, occupation, gender, etc, you can ensure that only highly-relevant content reaches your customer’s inbox. 

email audience segmenting
email audience segmenting

SMS Marketing

Short and sweet SMS messages that are personalized and relevant to the customer are a great channel for marketing to your existing customers. 

SMS messages can often get someone’s attention far more readily than an email, especially if they’re on the move. For example, when they are sitting on a bus or train, in a waiting room for an appointment, or glancing at their phone while having lunch; an SMS is far more likely to be read when customers are pressed for time.

Another benefit to SMS is that they can be used to deliver urgent, timely messages and promotions. You can send customers urgent shipping updates or let them know that the product they were browsing is on offer for a limited time only.

Consumer's preferred channels
Consumer's preferred channels

Push Notifications

Online push notifications also deliver time-sensitive information directly to your customer’s desktop or mobile. Like SMS, you can use them to tell your customers about important product or delivery information, or about an exclusive deal. You can also use geolocation push notifications to send promotional deals based on your customer’s location.

Sample ecommerce push notification
Sample ecommerce push notification

To be effective, push notifications do need a well-chosen call to action and should be used sparingly for maximum effect and minimum intrusion for the customer.

Social Media

Social media works best when the messages and posts feel personal, individual, and interesting. Posts that read like they’ve been written by a real person and offer genuinely interesting content to followers function far better than those that read like ads or bots. 

Of course, there is a place for carefully dotting ads and surveys on your brands’ feed, but this must be done with care. Everything you post should display your brand’s personality and uniqueness. Reinforcing these hallmarks of your business can be a great way to reassure and keep those valuable existing customers.

Take a look at Sugarbear’s Instagram feed. All of their posts, even their ads, remain on brand.

Sample ecommerce Instagram profile
Sample ecommerce Instagram profile

Social media can be enormously time consuming for a marketing team however; for this reason, looking around for social media management tools to lighten the load. 

Used well, this channel for marketing has the advantage of being immediate, fresh, engaging, and highly adaptable to your brand messages. 

For your followers, your social media account can become a go-to place to check in with your company and catch up on product news. It’s a valuable tool for customer retention and building loyalty.

6 Key Retention Marketing Strategies

Now that we’ve explored why retention marketing is important and the channels you can leverage to make it work, let’s look at the key strategies for retaining customers and building brand loyalty.

Communicate post purchase

Post-purchase messages act in several ways. They reassure customers that everything went through smoothly, they remind customers (who may be making multiple purchases from various stores) who you are and what they have just purchased, and lastly, they are an opportunity to do more.

You can let customers know what else your brand can offer, remind them of an upcoming sale, or give them a discount to encourage further purchases. You can also let customers tell them how to get in touch should they experience any difficulties with deliveries; many businesses signpost their customers to their AI call center or a customer service chatbot at this stage. 

These finishing touches give customers confidence and reassurance, both of which are vital for customer retention and loyalty.

PayPal Online Protection Assurance
PayPal Online Protection Assurance

Make communication personal

Everyone likes to think they are a special and important individual. Any customer communication should be personalized wherever possible. Avoid ’Dear Customer’, and leverage technology to make sure messages carry each consumer’s name.

Messages should also reflect a customer’s buying history and habits. If messages are relevant and useful, they are far more likely to be looked at. Customers will return to your brand if you offer them more of what they want rather than irrelevant sales material.

Don’t treat every customer the same. Create VIPs and reward those who make regular purchases or who take the time to review you online. Send birthday messages if your customers have supplied the relevant information, and alert customers to information on your website that matches their buying history.

Ecommerce Personalized Recommendation
Ecommerce Personalized Recommendation

Use loyalty programs

Loyalty programs are incredibly attractive to customers and are an effective retention strategy.  In fact, a recent survey found that 60% of consumers favorably changed their interactions with a company because of a loyalty program. Customers have so many options that they need a good reason to come back to your store. This is especially true if your products or services are not intrinsically unique or if you have many competitors. 

A good loyalty program offers points or discounts for reaching a certain number of purchases or for referrals to your brand. Messages from the loyalty program should always show your company’s gratitude and how much you value your customers sticking with your brand.

These programs are a great way to make your existing customers feel valued and appreciated. They can be a big draw to a brand.

Most customers want money off their next purchase; unsurprisingly, 6 out of 10 consumers prefer discounts. Programs with offerings that are too complex or involve too much effort on the part of the customer, or worse, offer insignificant discounts relative to the price of the goods, won’t be attractive enough to retain customers or inspire loyalty.

Sample Ecommerce Loyalty Program App
Sample Ecommerce Loyalty Program App

Monitor customer data

Make sure you thoroughly drill down into customer data. Look at metrics to identify repeat purchases, demographics, peak times for purchases, and your most popular offers. All of this information can help target your retention marketing strategies.

Look at reviews and identify elements that could either be encouraging or discouraging customers to return to your brand. Focus your efforts on anything that is proving an obstacle, whether this is delivery times, lack of stock, quality, or communication.

Sample Ecommerce Feedback Request
Sample Ecommerce Feedback Request

Use gamification

Customers will engage with messages that are relevant but also fun, and adding a gamification element can definitely increase the fun factor. Whether it’s spinning a wheel, a quiz, or a lucky dip to win points or prizes, the chance to get something extra and out of the blue is very attractive.

Incentivizing engagement by adding a fun element makes your marketing messages far more likely to hit home and enhances the likelihood of customer retention.

Sample Ecommerce Gamified Deal
Sample Ecommerce Gamified Deal

Measure retention

To gauge how well your marketing tactics are performing, it’s vital to measure customer retention. 

The metric you need to keep a close eye on is your repeat customer rate (RCR). This shows how many customers return to your online store to make a repeat purchase. The higher this rate, the more likely it is that your marketing efforts are paying off.

RCR Formula
RCR Formula

More importantly, it’s wise to track how this rate increases or decreases over time. Match this figure with the dates of particular campaigns or tactics, such as newsletters, and find out what seems to be working or failing.

As well as the RCR, the frequency with which customers purchase is also worth looking at. This will show you where you could prompt customers to purchase more regularly, perhaps sending reminders and targeted offers to encourage this. Check how many orders are placed in a set period of time and compare this with the number of individual customers. 

Another key indicator is the average purchase value (AOV). From it, you can gain important insights into which price point in your range is optimal and what the average spend is for your regular customers. To find out the AOV, simply divide the amount the business took in sales during a set time frame by the number of individual customers.

AOV Formula
AOV Formula

These metrics are important as they give valuable information about who your customers are and how they behave. Understanding their buying habits is essential if you want to target your retention marketing effectively.

Impact of bad customer experience
Impact of bad customer experience

Retaining vs. gaining

We’ve talked about the benefits of retention marketing and how best to keep those valuable and hard-won customers coming back to your business. That said, choosing to focus on retention marketing or securing new customers really depends on your business.

It may suit a brand-new business more to concentrate its efforts on increasing the number of new customers than retaining the existing ones. For most established businesses, however, retention marketing should be a point of focus. 

Be careful not to forget the other side of the coin, however—a good marketing campaign should aim to conserve the consumer base already gained while seeking to entice more customers to the brand, inspiring brand loyalty along the way.

Key Takeaways for Retention Marketing Strategies

A retention marketing strategy relies on the collection and analysis of customer data. The more you know about your customers — their needs, pain points, interests, etc — the easier it will be to create personalized content that entices existing customers to come back for more.

And to do this, you have plenty of options. From an email marketing or SMS strategy to an exciting loyalty program, you can lure your customers back in and foster loyalty among the masses.

Picture of Edgar Abong

Edgar Abong

Edgar is a skilled software developer with a passion for building and evaluating software products. His expertise in software development enables him to provide in-depth evaluations of software products. He can draw out insights about features, functionality and user experience.

Table of Contents

Scroll to Top