9 winning customer retention strategies for long-term growth

Acquiring new customers can feel exciting—that rush when you see your customer count shoot up after a marketing campaign can be addictive. But if you want to drive long-term growth, you need to look further than that initial thrill—you must focus on customer retention. That’s because your business grows more effectively when your customers stick around. 

Imagine this: you launch a targeted marketing campaign leveraging a mix of content marketing, webinars, and personalized outreach. It generates 100 new customers in the first month. Success, right? But a year later, only 10 of them renewed their subscription. You spent a lot of money to acquire those folks, but if most of them drift away, the true ROI is minuscule. If you increase customer retention, however, the cost and effort of acquisition translate into better profitability over the long haul. 

Let’s dive into customer retention: 

• What is customer retention?
• Customer retention benefits
• Customer retention metrics
• 9 customer retention strategies

What is customer retention?

At the most basic level, customer retention is anything a business does to get people to continue paying them. For subscription models like fintech, edtech, and SaaS, customer retention marketing is about keeping the subscribers you have. In more transactional business models, like healthcare and marketplace, it’s usually about getting people to make return visits and purchases. 

Regardless of your business model, the fundamental goal of customer retention marketing is to build long-term relationships. Within lifecycle marketing, retention lands pretty late in the game, after awareness and consideration have led to conversion. And unlike the early stages in the customer journey, customer retention marketing is ongoing—a continual process of investing in customer success and loyalty. 

The benefits of customer retention

Why does customer retention matter? Ultimately, you generate more profit from people you already have relationships with. You spend cash up front in the form of customer acquisition cost (CAC)—money that you theoretically make back over time through continued engagement. But you can only realize ROI with a good customer retention rate. 

Let’s consider that hypothetical campaign that garnered 100 new customers. Those acquisitions are like water poured into a bucket—if too much water leaks through a hole at the bottom, you’ll never fill the bucket. Similarly, if your business has a leaky bucket, it can’t succeed, no matter how many new customers you acquire. 

Acquisition vs. retention: costs and profits

The time it takes to recoup your initial CAC is known as its “payback period.” For example, say your CAC is $500, and you don’t drive enough revenue to break even—ending the payback period—for six months. 

The issue is that customer attention often doesn’t last long. Even if people are highly engaged initially, they’ll lose interest quickly if they don’t perceive ongoing value. When many customers leave shortly after a significant investment in acquiring them, they remain net-negative—failing to cover their acquisition costs. This scenario highlights how high acquisition costs can undermine profitability.

Acquiring a new customer costs six to seven times more than retaining an existing one, and when you improve customer retention by just 5%, profits increase by 25-95% (source). It comes down to customer lifetime value (LTV): the longer a customer sticks around, the more value they generate for your business and their own lives. Strong customer retention strategies drive higher LTV, leading to improved profitability. This is especially crucial for business models where acquisition costs are often high, and reactivating churned customers poses significant challenges.  

Customer retention metrics

To design and maintain an effective customer retention strategy, you must regularly examine two key customer retention metrics: logo retention (the number of customers retained) and net revenue retention (the revenue generated by retained customers). These give you the big picture of your brand’s customer retention success. 

The frequency of tracking customer retention metrics should align with your business cycle and audience. Define your key metrics based on your sales cycle and the natural frequency at which customers reach key milestones. Consider how often someone seeks to address the problem that your product solves and the behaviors that indicate they’re receiving value from your brand. For example, B2B customer retention may have a much longer arc in some cases than SaaS customer retention or transactional businesses. 

Customer retention rate formulas

Logo retention rate

First things first: how many of your customers are you retaining? The customer retention rate formula is pretty straightforward: 

Customer retention rate = ((E – N)/S)*100 

• E = The number of customers at the end of the period
• N = The number of new customers acquired during the period
• S = The number of customers at the start of the period

This formula accounts for both the customers you’ve gained and lost during the period, so you can see the percentage of people you’ve held onto; that’s your logo retention rate. 

Net revenue retention rate

Your customer retention rate is half of the picture; the other half is how much money you’re actually retaining. So you’ll want to look at your net revenue retention rate—the cash generated by those retained customers minus losses from downgrades and churned accounts. Here’s the formula using MRR:

Net Revenue Retention Rate = (Starting MRR – Contraction MRR – Churn MRR + Expansion MRR)/Starting MRR*100

• Expansion MRR: The amount of expansion revenue from upsells, cross-sells, and add-ons from current customers within a month
• Contraction MRR: The decrease in revenue caused by existing customers downgrading service levels within a month
• Churn MRR: How much revenue you lose due to customer cancellations in a month

SaaS customer retention is generally measured monthly, but if you have a longer or shorter business cycle, you can adjust the period being measured. When looking at B2B customer retention, for example, net revenue retention rates measured quarterly or bi-annually might provide better insight if you have longer sales, onboarding, and renewal cycles. 

9 winning customer retention strategies

Want to harness the benefits of customer retention? Try these strategies to transform your customer retention marketing campaigns and build long-lasting relationships. 

Customer retention strategy #1: Churn prevention

Strategy: Retention and churn are two sides of the same coin. So, if you want to increase customer retention, it makes sense to zero in on reducing churn. This strategy is particularly effective if you have very high churn rates or can pinpoint churn trends at specific moments in the customer journey. 

Edtech example: A music-learning app needs to ensure customers stick around for more than just one class. If the brand sees high cancellation rates after people complete their first course, they could start customer retention efforts before that common drop-off point. One tactic: trigger a campaign when someone completes the second-to-last lesson in a course, encouraging them to select their next class while their engagement is still high.

Pro tip: To identify where to focus your churn prevention efforts, build predictive models and assign customer scores so you can intervene before they churn. 

Access: The marketer’s survival guide to the churn-pocalypse

Customer retention strategy #2: Onboarding

Strategy: Like any new relationship, you must nurture engagement early on to establish a long-term connection. Your onboarding process is an essential component of your customer retention strategy—that’s when the timing and content of your messages can win or lose new customers. SaaS customer retention, for example, relies on people using their platform early and often to see value. And in B2B, customer retention usually hinges on getting entire teams up and running on your platform, which requires coordination among multiple stakeholders. A robust, personalized onboarding process lays the foundation for customer retention from the get-go and prevents early churn.

SaaS example:  A project management platform for enterprises needs multiple types of users to start enjoying their product quickly. So, they could build a personalized onboarding process for different user roles: admins, project managers, and individual contributors. The campaigns walk individuals through the actions most important to their particular role, with behavior-triggered messages to lead people to each next step. And since B2B customer retention depends on buy-in from everyone at a company, the brand triggers an email to the workspace admin whenever someone hasn’t completed an onboarding step within a week. 

Pro tip: Freemium models face an additional challenge for early customer retention. Because people aren’t spending money yet, they often don’t feel as much urgency to dive into your platform—so when the free trial ends, they may not have seen much value. Build some urgency into your onboarding messages to spur behaviors that show customers value fastest. And bolster your customer retention marketing with campaigns that re-engage people with benefits-focused messaging right after their trial expires.   

Customer retention strategy #3: Multi-channel messaging

Strategy: If you want to improve customer retention, you need to meet people where they are—their inbox, their mobile devices, and within your app. Leverage multi-channel messaging within your customer retention marketing campaigns so you connect with people at the exact time and place they’re primed for further engagement. 

Fintech example: A banking app needs to ensure their product is always at their customers’ fingertips, right when they need access to their finances. They could use four channels to address people’s needs in different contexts: emails to educate people about managing their money, SMS to alert people whenever a transaction is made, push notifications for subscription renewal reminders, and in-app messages to highlight new or important features. 

Pro tip: Leverage in-app messaging best practices, like ensuring your messages fit seamlessly into the product experience and using push notifications to bring customers back into your app. 

Customer retention strategy #4: Personalized offers and loyalty rewards

Strategy: Rewarding people for staying with your brand is a great way to build on their loyalty and increase customer retention. In a recent Customer.io poll, nearly 80% of people said personalized offers or discounts/loyalty rewards have yielded the best results for their customer retention strategies. 

Marketplace example: A rental listing app wants to encourage property managers and landlords to list as many of their vacancies as possible on their platform. In this example, let’s say the brand saw increased customer retention after a customer listed 10 properties. So they could institute a loyalty rewards program that gives people a free listing after they’ve posted 10 vacancies. Their campaign could include personalized emails reflecting the customer’s progress toward the loyalty reward, plus push notifications (which link people back into the app) when the customer gets close to the goal. 

Pro tip: Loyalty programs require careful consideration. They create stickiness, but can get very expensive. And if you change the program, you can lose people’s trust, defeating the entire purpose. They also don’t make sense for certain industries, like SaaS—but referral programs can be a valuable alternative for driving customer retention. 

Customer retention strategy #5: Customer feedback

Strategy: Making people feel heard generates trust and loyalty. Gathering and responding to feedback can increase customer retention and help you improve your product or service. There are many opportunities to solicit people’s input, from quick surveys to more detailed questionnaires to interviews with your power users. 

SaaS example: A team collaboration platform frequently releasing new features wants to ensure they’re delighting customers, not confusing them. They could implement a two-pronged customer retention strategy to see how changes impact overall satisfaction. First, they use an in-app message to send a short survey asking for feedback after someone uses the new feature for the first time. Second, they follow up with a personalized email based on a customer’s feedback—asking happy customers what other features they’d like to see in the future and offering a customer service call for those who are displeased with the new feature. 

Pro tip: Use in-app surveys to gather quick feedback while people actively use your product. This tactic can be ideal for getting input on specific features or insight into the customer experience at key moments in their journey. 

Customer retention strategy #6: Loyal customers

Strategy: When you’re developing your customer retention strategy, it can be easy to lose sight of the people who are already deeply loyal. But even long-term customers can churn if they don’t feel appreciated, so don’t take them for granted. Reach out to them with personalized messaging that celebrates their successes and reminds them of the value they derive from your brand. 

Edtech example: Say a professional development platform for businesses has several long-term clients who’ve fully integrated the service into their performance management processes. To maintain customer retention for those important accounts, the brand sends a personalized campaign for each loyal client to coincide with the start of performance review season. They use the opportunity to provide tips for effective reviews, showcase updates and new features, and ask admins to update their company profile. 

Pro tip: Your most loyal customers aren’t just a solid source of revenue—they’re also champions who can help you acquire new customers. By nurturing them and checking in to be sure they’re still big fans, you can encourage them to act as brand ambassadors to spread the word to others. 

Customer retention strategy #7: Reflecting value

Strategy: Loyalty grows when people feel your product genuinely improves their lives, so use your customer retention strategy to show people how much value they’re really getting. One way to reflect value is to quantify your product’s benefits for each individual with personalized messages. Consider what problem you solve for customers and reflect their behaviors and the results they’ve achieved.   

Healthcare example: A scheduling platform for medical practices improves customer retention when people recognize how much time and money they save compared to manually handling scheduling at the front desk. As part of their customer retention strategy, they could send a monthly summary email reflecting how many appointments were scheduled through the app, the percentage of appointments that were kept, and how much phone time they saved through online bookings.

Pro tip: Real-time personalization is crucial to this customer retention strategy. The more specific you can be about the value an individual gets from your product, the more engaging your messages will be. Draw on your customer data to personalize your campaigns with meaningful metrics. 

Customer retention strategy #8: Newsletters

Strategy: Customer retention is a perpetual process of ensuring people recognize the value of your product. So your customer retention marketing should also add value to their experience! Newsletters are a great way to keep in regular touch while offering genuinely beneficial content. In fact, newsletters are a powerful example of lifecycle marketing emails—they act as a continuous touchpoint for people at all stages of their journeys. 

Fintech example: An investing app for beginners needs to ensure people feel confident in their ability to make smart financial decisions; otherwise, they’re less likely to add to their brokerage accounts. They could launch a monthly money mastery newsletter with links to their educational content, quick tips, and market updates. They could even include an occasional poll asking people what topics they’d like to see in future newsletters—increasing customer retention by listening to feedback and gathering useful business intel to boot.  

Pro tip: The most effective newsletters are educational, not promotional. Provide content people actually want to read: education, helpful advice, industry news, interesting stats, customer success stories. If the idea of sending an email with zero promotional content (perhaps even without a CTA!) makes you nervous, A/B test newsletters with and without promotional messaging to see how the strategy lands with your audience. 

Customer retention strategy #9: Aha moments

Strategy: A fundamental part of crafting your lifecycle marketing strategy is identifying aha moments—the points at which people recognize the value of your product. That should sound familiar: it’s what customer retention is all about! By identifying aha moments, you can concentrate your customer retention marketing on nudging people toward those epiphanies. 

Marketplace example: Let’s say a job-posting platform notices that clients who list three postings within one month are more likely to renew their annual contract—that specific amount of activity and time window is the key to revealing the app’s benefits. The brand could trigger a campaign whenever someone posts two listings within 20 days, sending a personalized email showing how much time they’ve saved that month, then following up with a push notification bringing them back into the app to post another job listing.

Pro tip: There are many opportunities for aha moments across the entire customer journey. Think beyond the initial eureka—at what junctures do your product’s benefits align perfectly with your customers’ needs in an emotionally impactful way? Answering that question will help you find your aha moments.   

Customer retention = meaningful, long-term relationships

You don’t win when you acquire a customer. You win when you keep customers around. It takes a lot of money and effort to motivate people to take a leap of faith with your brand—but once they do, you have to maintain that relationship if you want it to flourish into lasting loyalty. The best thing about customer retention is that it creates long-term, mutually beneficial relationships. You get better profitability and growth, while your customers get more lifetime value from your brand: that’s truly a win-win. 

Ready to supercharge your customer retention strategy? Use these retention strategy recipes to build valuable, lasting relationships.