The Ultimate Guide to Customer Retention and How To Increase It


Do you have a retention strategy that turns new customers into brand advocates? If not, you’ll want to. If you think about customer retention and its benefits, you’ll realize that building up your customer retention rate has way more benefits than just focusing on acquisition alone. When you acquire a new customer, it means a new visitor has made a purchase at your store. 

Although it’s great to have strategies in place to bring new visitors to your online store who make a purchase, imagine how much more revenue you could earn if you had a way to bring each of those first-time customers back to make a repeat purchase later. The path to customer retention starts from visitor and ends at brand advocate, just like in the chart below.

Customer retention journey-1

As the store owner, it’s your goal to have strategies in place to help guide visitors toward each stage of the customer retention journey. Whether it’s through a top-notch personalized Messenger marketing strategy or an amazing social media community, you’ll want to make sure you provide value in different ways to push customers toward the next stage. We’ll look at the best strategies to turn visitors into brand advocates right here.

The customer retention definition is as follows: “Customer retention refers to the ability of a company or product to retain its customers over some specified period. High customer retention means customers of the product or business tend to return to, continue to buy or in some other way not defect to another product or business.” So, in other words, it’s the ability of your business to get a first-time customer to keep coming back and purchase your products over and over; these customers are loyal to your brand and won’t shop for similar products elsewhere.

Aside from the obvious fact that retained customers boost revenue, the other reason focusing on customer retention is important is because the probability of selling to an existing customer is 60% – 70%, whereas the probability of selling to a brand new visitor is only 5% – 20%. Ultimately, customer retention strategies are more cost-effective and have a higher ROI than acquisition strategies do. 

Are you curious about what your customer retention rate is right now? You can easily calculate it. Choose a specific period of time, such as the month of May: for that month, take the total number of customers at the end of the month and minus it by the total number of customers you acquired throughout that month. Then, divide that number by the total number of customers you had at the beginning of that time period. Voila! You’ve got your current customer retention rate. 

CRR formula

When calculating your customer retention rate, keep in mind that the average rate is just below 20%. If your rate is significantly higher, then you must have good strategies in place to keep your customers coming back, so keep up the good work! If your number is around 20%, don’t fret because there are a few retention marketing strategies you can start doing to increase your customer retention rate. 

You may have heard that existing customers will spend more money at your store. In fact, what you’ve heard is true! Existing customers are likely to spend 31% more than new website visitors. When you release a new product, your loyal customers are 50% more likely to purchase it than new customers are. Because of this, you’ll spend 5x less on customer retention than on finding new leads to make a purchase. 


There are many benefits to having retained customers, but that doesn’t mean you should forget about customer acquisition entirely. The point is to continue focusing on acquisition strategies while also finding ways to retain every new customer you find. With this, you’ll have a great inbound flow of new customers to increase revenue, but you’ll also have a ton of previous customers in your back pocket that are ready to make a second, third, or fourth purchase. Finding strategies to help you increase both acquisition and retention is the key to ecommerce success. 

Now that you know what customer retention is, how to calculate yours, and why it’s important, let’s look at the strategies you could be using to increase your customer retention rate. There are many things you can do to increase your customer retention, but we’ll share five ways you can increase it now, starting with building personalized relationships. 

1. Personalize your omnichannel experience to become memorable

Let’s talk about customer data and personalization for a second. Do you have ways to collect key customer information so you know exactly how to reach each customer? Knowing exactly who your customers are, what they shop for, and their interests will help you personalize every marketing channel. Whether it’s through email, Messenger, or SMS, you’ll have a better opportunity to sell your products when you can match customers exactly with their interests or needs. 

In fact, 79% of consumers said they are only interested in engaging with offers that have been personalized based off their previous interactions and purchases with a brand. This is why it’s important to watch your customers’ interactions with your store. For example, the fitness apparel brand, DOYOUEVEN sent an ad to a prospect about their new Scrunch series after the visitor had previously put leggings in their cart.  


Facebook Messenger is a great way to personalize the experience for customers since you can reach out to the customer by their name, follow up with messages based on website actions (like abandoned cart and browse abandonment messages), and create back-and-forth conversations that make the discussion more engaging for the user. This helps brands like DOYOUEVEN see a ROAS of over 600%! To become memorable and stand out against your competitors, personalized omnichannel experiences are extremely important as an ecommerce brand. 

Want to see how you can collect key customer data for personalized Messenger and SMS marketing? Book a demo with Octane AI to see how our suite of tools can help your brand boost customer retention.

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2. Offer great customer service to ensure positive experiences

A positive customer service experience is important to every customer–trust us. You may not have considered it before, but customer service actually has a direct impact on retention and revenue. For example, 52% of consumers say they have made an additional purchase from a company after a positive customer service experience. This is because customer service has the ability to make your brand more memorable to visitors and customers: when you show customers that you’re available and willing to help them, they’ll appreciate and respect you more. 

Using Messenger chatbots is one way to start bettering your customer service because of the chatbot’s ability to respond right away. For example, you can write the word “Shipping” or any similar variation of the word (like “Shipping Policy”), Mavi Jeans has a custom AI Messenger bot that automatically responds to these types of customer inquiries. 

Mavi Jeans Shipping example

Chatbots are one way to increase your customers’ satisfaction with your service experience because of their quick responses, and you can include them on-site so customers can ask these questions directly from your store. Whether you use Messenger, email, or another method to handle customer inquiries, ensure you always put the customer’s feelings first so they build respect and trust with your brand, making them more likely to return in the future. 

3. Ask for feedback and reviews to show customers their opinion matters

Have you ever purchased something and received a follow-up message asking to fill out a survey about the purchase experience or the product? Even if you don’t fill it out, it’s nice to know that the brand is interested in hearing your opinion. What’s even better is if that brand actually applies feedback to better their business. One way to gather feedback is to add a review option on every product page, which Polysleep does at the bottom of every product page. You can also follow-up with customers who’ve recently purchased through email and ask them to write a review or share feedback.

Polysleep review example

Asking for feedback and reviews can be scary, and you may worry that people will say negative things. But keep in mind that 77% of consumers favor brands if they seek out and apply customer feedback. Think of feedback and reviews as an opportunity for you to better your business, whether you receive positive or negative feedback. Take the responses and do your best to make improvements. Customers will notice this and appreciate your efforts to listen to their opinions. This helps increase retention because you’ll show customers that you appreciate their feedback, are listening to their opinions, and are actually doing something to offer a better experience or product. 

4. Offer a loyalty or rewards program to incentivize repeat purchases

A good loyalty or rewards program is part of the foundation that helps brands increase their customer retention. Helping guide customers toward the path to becoming brand advocates, loyalty programs are great at bringing customers back to earn rewards for simple actions like making repeat purchases, following you on social media, engaging with your social media posts, writing product reviews, referring you to friends, and more. By incentivizing customers for these actions, you’re giving them a reason to return to your store and purchase again. Check out how Ella + Mila offers rewards, for example. 

Ella + Mila Loyalty program

Aside from earning points by purchasing products, Ella + Mila shares a variety of ways that customers can start earning. Every 100 points gives customers $1 off, and liking their social pages gives loyalty members 100 points each. Simply by liking the brand on Facebook, Ella + Mila’s loyalty members can already redeem dollars off their next purchase. Considering 54% of consumers say that they would likely make more purchases with a brand that offers a loyalty program, it’s a great tool to drive more leads and retain each customer for future purchases. 

5. Extend relationships off your website with social media

Your customers live on social media. They spend so much time perusing between Instagram, Facebook, Twitter, TikTok, and other popular apps, waiting to engage with topics that interest them. If a customer already knows your brand and they’ve had a positive experience, they’ll look for ways to engage with your off of your website and on social media. 

It’s true that 53% of American customers will post positive comments about companies on their social media, and this is something you’ve likely seen in the “tagged” section on Instagram where customers will pose with products they’ve purchased and tag the brand they bought it from. For example, Live Love Gameday has over 150,000 followers on Instagram, and many customers post pics wearing their clothes and tagging them every week.

Live Love Gameday Instagram example

Not only is this an awesome way to amplify user-generated content (because more visitors discover your brand from the advocates that are sharing your products online), but giving your customers a community where they can follow you, engage with you, share content with you, and even talk to you helps increase customer retention because you’re extending the relationship beyond your store website and on a channel that customers are familiar with. 

Now that you’re no longer asking, “What is retention?”, you can start working on ways to turn every customer into a brand advocate. These advocates will share your products with their friends and family, and they’ll be ready to support you when you launch new items. Increasing customer retention will amplify your store’s revenue. Why wait? The future of your business starts now. 

The 250+ Page Playbook on Facebook Messenger & SMS Marketing for Ecommerce

Fast-growing DTC brands implementing this playbook have connected with 18x more customers, doubled their 7-day ROAS, recovered 5x more abandoned cart revenue & increased AOV 25%.


This article originally appeared in the OctaneAI blog and has been published here with permission.

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