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What is customer retention?

What is customer retention?

By: Content Team
Customer retention

Customer retention: keep customers loyal

Customer retention is all about keeping consumers loyal to your company. This might seem easy; but one wrong move could end up hindering your business for good.

Every business will have a different perspective on what a good retention rate is. The actual number isn’t super important; what matters is that it’s on the rise. With an increasing retention rate, your business revenue and success will soon follow.

Let’s take a look at what customer retention actually means. We’ll also look at the importance of customer retention, how it’s calculated, and ways to keep your numbers growing at a positive pace.

Customer interaction

So, what exactly is customer retention?

Customer retention is a metric used to see how many consumers are interacting with your business over a certain time. Employers are able to use these statistics to identify where their influx of customers comes from. It also highlights areas that could do with a little improvement.

A good retention rate relies heavily on your relationship with customers. Employers should aim to create memorable experiences and meet their needs during every visit. It’s through these kinds of interactions that you’re rewarded with loyalty and investment.

It’s no wonder that so many employers implement the best customer retention examples within their business. Remember, it’s not just about gaining new customers – keeping the existing ones happy is also key.

How do you calculate Customer Retention Rate?

A Customer Retention Rate (CRR) is the percentage of consumers your business retains over a certain period.

It’s generally used to see how many new customers you’ve gained. But it’s also beneficial when looking at your ‘churn’ rate (i.e., those who buy less, cancel subscriptions, or stop interacting for good).

There’s a simple formula used to calculate your Customer Retention Rate:

  1. Add up the total number of customers at the end of a period.
  2. Subtract this by the number of new customers.
  3. Divide this by the number of customers at the start of the period.

For example, your company has 1000 customers at the beginning of the year. By the end of January, you gained 50 new customers and lost 200 existing ones.

Your Customer Retention Rate (CRR) is:


It’s hard to pinpoint what a good Customer Retention Rate is, as it’ll depend on your specific industry. But if your numbers are on the rise per year, the business is on the right track.

Why is customer retention important?

Most employers value the benefits of having good customer retention. A frequent customer on a budget is just as valuable to your business as a monthly ’big-spender’.

In the end, they both help with output, revenue, and overall business success. The other benefits of customer retention are:

We’ve looked at the definition, the maths, and the benefits. Let’s learn how to increase customer retention within your business:

Increase customer retention

How to increase customer retention within your business

It doesn’t matter what you sell or how big your business is. Without loyal customers, you’re just one person with a cool idea. That’s why customer retention is at the foundations of business longevity and success.

But where do you start and how do you encourage it within your business? We’ve covered a few staple strategies used to improve customer retention. Let’s take a look:

Focus on your existing customers

Many employers think customer retention is all about growing your consumer rate or percentage. Whilst it’s a big part, it’s also important to attend to customers you already have.

Focusing on existing customers is a lot easier than attracting new ones. That’s because you’ve already built a rapport of recognition with them. So, start by tailoring their consumer experiences in a way that’s guaranteed to keep bringing them back to your business.

Listen to their feedback and concerns

Having great customer service is key when it comes to retention. Customers contact businesses for all kinds of issues. Maybe they can’t track their delivery or want to ask about restocks. They may even want to share a positive review about a certain employee and their brilliant personal service. Make sure you listen to all feedback and concerns shared.

A phone number and email address is never a bad place to start. You can even use online surveys, chat-bots, or even social media platforms to collate feedback. Try to answer them all – remember, the more you interact, the higher the levels of customer satisfaction.

Offer personalised customer experiences

This one is especially for loyal customers who’ve been with you the longest or really helped grow the business. Offering personalised and memorable customer experiences is the driving force behind high retention rates.

A friendly interaction or great service is guaranteed to convert visits into sales. From frequent shoppers to those ‘one-item’ customers – make sure you tailor your services to meet their personal consumer needs.

Reward customers for their loyalty

A foolproof way to encourage retention can be done by rewarding customers for their loyalty. Many businesses send out birthday cards (with vouchers), let them try new products, or offer them higher discount-rates compared to new customers.

Introduce loyalty programs that suit your business and customer needs. You can use stamp-cards, points-collecting apps, or even keep consumer portfolios. In the end, recognising loyalty leads to higher interaction, satisfaction, and overall retention.

Improve your customer retention with

Rewarding loyalty and investment are key factors when it comes to customer retention. They encourage sales growth, reputational praise, and overall business morale. So, what better way to reward faithful customers than through gift cards and vouchers!

At, we offer a variety of rewards guaranteed to help your customer retentions and overall business experiences.

Whatever your customer retention management plan is, has the perfect gift card incentives for you.

Love2shop Engagement Platform

Engage, incentivise or motivate people with minimal effort using our flexible rewards management platform.
Love2shop Engagement Platform

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