Content Marketing
What Is Customer Retention Rate & Why Should You Care?

What Is Customer Retention Rate & Why Should You Care?

January 21, 2022
6 min read

Your customer retention rate reveals whether your marketing and customer care efforts are bleeding dollars or fortifying your business’s long-term growth.

Customer retention isn’t only about monitoring the success of your marketing and sales tactics. When you track your retention rate, you can see whether you need to make vital changes or switch gears to reach your sales and growth objectives.

It costs as much as five times more to acquire a new customer compared to retaining an existing one. First, you need more time, money, and effort to convert and convince someone new to make a purchase or sign up for your services. However, your existing customers are also way more likely to keep your business going and growing in the future.

That’s why your likelihood of selling to an existing customer is between 60% to 70% yet your chance of selling to a new lead is only 5% to 20%.


Your current customers (aka your business’s lifeblood) are 50% more likely to try a new product. Plus, they’ll also spend 31% more on average than the typical new customer.

Quick Takeaways:

  • It’s important to calculate and track your customer retention rate (CRR) over time. You want to see where you stand and how/if things change so you can take action immediately.
  • Your CRR gives you insight into your customer service practices, marketing tactics, and sales processes along with your future sales figures and overall business growth.
  • Take steps to improve your CRR like improving personalization, building customer communities, taking complaints seriously, and leveling up your customer service.

The Magic Formula for Long-Term Business Success

There is one primary formula to measure customer retention. You want to find the number of customers you still have at the end of a period relative to the number you had when that period started.

Use this formula with the following values:

  • E= the number of customers you have at the end of the week/month/year or other duration
  • N= the number of new customers your business made a sale to or acquired in some other way during a given period
  • S= the number of customers you had at the start of the period

Your customer retention rate is:

CRR = ((E-N)/S)) X 100

The Wisdom of Customer Retention

Track the percentage of customers you keep monthly, annually, or for other durations such as week-to-week or over multiple years for a broader picture. Your customer retention rate is one of the most useful ways to determine your company’s future success.

Using this information, you can determine:

  • Your likelihood of keeping each new customer you gain.
  • How long you can retain each customer if you continue with your existing strategies.
  • How much your company may grow in the future.

This insight leaves you better prepared for future planning, better equipped to make strategic business decisions, and take advantage of opportunities that may arise.

On the other hand, you’ll also know how to recognize when a problem is likely to emerge. When your CRR drops below your benchmark or dips below industry averages, it may be due to:

  • A problem with your product or service
  • Poor customer service
  • Competitors gaining ground in market share thanks to a newfound competitive advantage such as better technology, an improved buying experience, or product improvement

With this knowledge, you’ll know when to act before disaster strikes in the form of profit loss or reputation damage.

Big Steps You Can Take to Boost Your Customer Retention Rate

Boosting your customer retention rate by as little as 5% can increase your profits anywhere from 25% to 95%. That’s nothing less than monumental.

Roll up your sleeves, here’s how to make it happen.

1. Use In-Depth Personalization to Boost Your CRR

Personalization techniques to boost your customer retention rate go beyond addressing your email contact list with their first name.

Analyze your digital experience and find ways to personalize every customer touchpoint where it seems relevant for your particular business. For example, do your landing and product pages vary depending on your website traffic’s referring source? How can you improve your offerings based on the way a user interacts with your site?

When it comes to refining your personalization strategies, things like A/B testing, customer feedback surveys, and your marketing and sales software are your brand’s greatest allies. Leverage them for all they are worth.


2. Use Positive Social Proof to Improve Customer Retention Rates

Social proof is one of marketing’s most intriguing psychological phenomena and a powerful tool for increasing customer retention rates.

Psychologist Robert Cialdini, Ph.D. popularized the theory and wrote extensively on the subject including in his book Influence: The Psychology of Persuasion. The social proof theory states that people who are unsure of the proper behavior in a situation will look to what other people are doing to find a solution.

Everything from customer testimonials, reviews, and ratings to subtle tactics like highlighting the “most popular product/service/subscription level” help settle the idea in your customers’ minds that your organization is a worthwhile brand to buy from.

3. Know Your Buyer Personas Better Than Your Best Friend

You need to understand what your ideal customer needs, what they’re looking for, and how you can solve their problems better than anyone else.

This also means:

  • What they’re comfortable spending on your product
  • Where the current products and services are falling short
  • What they need for a more efficient customer experience.
  • What brand style and personality they are most comfortable with

Where do you find this information to create spot-on buyer personas?

  • Customer quizzes, surveys, interviews, and ratings
  • Research what your market is saying on social media
  • A/B testing
  • Your own sales data

When you have a clear idea of what your ideal buyers want, you can simply tailor your products and marketing to meet these demands. The better you meet the needs of your customers, the longer they will stick around. Improving your customer retention rate is really that simple.

4. Make Every Day Customer Delight Day

Well, not necessarily every day. We all need space – even from our favorite brands. But customer delight should always be a top priority in your overall marketing strategy.

Do you consistently offer value to your customers? The occasional sale won’t cut it. We’re living in a customer-centric world where leading brands dish out plenty of relevant, worthwhile goodies.

  • Informational webinars on how to get more out of a product or service – this is especially effective for software services and tech gadgets
  • Consistent newsletters that offer advice, tips, and how-tos
  • Helpful eBooks that your customers can download for free on your website and maybe a 10% discount for them to enjoy on their next purchase as well

The more you give, as long as your delight strategies are relevant and useful, the more you’re going to get back from your loyal customers.

5. Embrace Automation to Improve Customer Retention Rates

Automation can improve processes both internally across your business and on the customer-facing end as well.

For customer retention rates, automation is especially useful for re-engagement. Instead of relying on your human sales, marketing, or customer service team, simply let AI do the work of keeping your brand on the top of minds.

Some examples include:

  • Checking in with customers who haven’t visited your website or logged into your product in several weeks or months.
  • Sharing new product updates based on what features or products certain customers already use.
  • Reminding customers of existing features they haven’t used and providing tutorials to help them make the most of your product.
  • Following up with customers who recently used your live chat for questions or troubleshooting.

Not only can these tactics keep your customers engaged but they can also provide valuable data for future marketing endeavors.

6. Build a Customer Community to Improve Retention

A brand community can help keep your existing customer base engaged and improve overall retention rates.

Use private Facebook groups, Discord servers, subreddits, or other social media channels to create a VIP section for customers. You can share things like:

  • Company updates and changes
  • Upcoming product releases
  • Exclusive discount codes
  • Referral links and programs
  • Premium content and media
  • Beta testing or early releases

Customers will appreciate being a part of an exclusive group and the special treatment will encourage loyalty.

7. Take Negative Reviews and Complaints Seriously

For every customer who goes through the trouble of writing a negative review or complaining to your customer service department, you should assume there are dozens more who feel the same way.

While it’s important to reply to negative reviews and complaints in a professional manner, you should also use them to evaluate your general business practices.

Look for patterns or just take them into consideration. You might be surprised how seemingly insignificant changes can boost your retention rates.

Don’t Neglect Your Customer Retention Rate

Your CRR is like a business insurance policy. Staying on top of your customer retention rate with retention marketing can be the most effective way to both ensure a promising future and to prevent a surprise downfall – if you take action when it changes.

After all, your metrics are only as powerful as your response to them. Insights can only tell you what’s happening – not force you to act.

Boost your CRR with relevant and useful content. Our clients enjoy 7x ROI on average from our custom content builder packages.

2 thoughts on “What Is Customer Retention Rate & Why Should You Care?

  1. Heidi Cohen


    I agree marketers are so laser focused on customer acquisition that they overlook the importance and relative lower cost and ease of getting existing customers to buy more of the same product, more related products or upsell them to a higher priced product.

    Marketing to existing customers is MUCH cheaper. You don’t have to pay for distribution including paid promotion. You have their contact information!!!

    Happy marketing,

    Heidi Cohen
    Actionable Marketing Guide

  2. Michael Brenner

    Thanks Heidi,

    It’s great to hear from you. And I totally agree. It seems like 98% of all marketing content relates to acquisition and conversion and to little focuses on retention. I appreciate your support.

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Michael Brenner

Michael Brenner is an international keynote speaker, author of "Mean People Suck" and "The Content Formula", and Founder of Marketing Insider Group. Recognized as a Top Content Marketing expert and Digital Marketing Leader, Michael leverages his experience from roles in sales and marketing for global brands like SAP and Nielsen, as well as his leadership in leading teams and driving growth for thriving startups. Today, Michael delivers empowering keynotes on marketing and leadership, and facilitates actionable workshops on content marketing strategy. Connect with Michael today.