A Complete Guide On Retention Marketing Strategies for 2024

ByAparna Seshadri


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Brands work hard to acquire new customers, pouring resources into running marketing campaigns. It is common to see customers slip away after just a few transactions. This happens because brands are more focused on serving their potential customers compared to their existing ones, which shouldn’t be the case. This is where retention marketing steps in.

Retention marketing is a powerful strategy worth embracing. It celebrates ten devoted customers and over a hundred potential customers. This guide will take you through the concept of retention marketing, why you should consider it, the strategies to use, and more.

Table of contents

What is retention marketing?

Retention marketing is a strategic marketing approach aimed at maximizing the value of existing customers by fostering long-term relationships and encouraging repeat business. For instance, subscription service can allow users to keep their subscription active or upgrade it to a more advanced plan, while an e-commerce business can encourage customers to make repeat, higher-value purchases on its website or app through targeted campaigns.

It is particularly relevant in industries where customer loyalty is crucial, and it complements customer acquisition efforts to create a well-rounded marketing strategy.

Why should you do retention marketing?

In the last five years, customer acquisition costs have risen by almost 50% for all businesses. While paid acquisition costs more than organic methods, organic costs are also escalating rapidly. Maintaining high customer retention rates can significantly reduce these expenses.

This is one of the many reasons customer retention is vital for any business. Retention marketing is a trusted growth tactic, and the following points will assert why you should consider it:

1. Retaining customers is more cost-effective than acquiring new ones

Retaining customers is generally more cost-effective than acquiring new ones. This is supported by various sources, including Forbes, which states that in SaaS, on average, it can cost four to five times more to acquire new customers versus retaining current ones.

There are several reasons why retaining customers is considered cost-effective. Acquiring new customers usually involves significant marketing and advertising expenses. The costs of retaining customers are relatively low, especially if you use email marketing, social media, and customer loyalty programs, which are cheaper than acquisition channels.

Existing customers are already familiar with your brand, products, and services. They are more likely to purchase because they have trust in your business. On the other hand, acquiring new customers involves convincing them to trust your brand, which can be more challenging and time-consuming.

To retain customers, a balanced approach is often necessary. Business growth still depends on acquiring new customers. Over time, focusing on customer retention and acquisition efforts can create a sustainable and profitable customer base.

2. Retention increases customer lifetime value (CLV)

Customer Retention and Customer Lifetime Value (CLV) are closely intertwined. Retaining customers encourages repeat purchases, increasing the frequency of transactions, a key factor in CLV calculation.

Acquiring new customers is often more expensive than retaining existing ones. By retaining customers, businesses can optimize acquisition costs, positively impacting CLV. Retained customers tend to become loyal and may even advocate for the brand, attracting new customers through positive word-of-mouth.

It's no secret that loyal customers who consistently purchase from your brand are almost always more valuable to your company than one-time buyers. You are more likely to retain current customers when you deliver exceptional service and quality results. The more satisfied they are with the relationship, the more likely they will refer your company to others.

3. Retention marketing prevents the increase of churn

Retention marketing plays a significant role in combating the risk of churn. Customer retention actively works to reduce churn rates, preventing the loss of customers. A 5% increase in customer retention, according to Harvard Business School research, can result in a substantial 25% increase in profits. Businesses can significantly reduce churn rates by actively engaging customers, providing meaningful communication, offering incentives for retention, and delivering top-notch customer support.

By preventing churn, businesses maintain a solid, reliable customer base, contributing to more accurate sales forecasting and improved revenue projection. Acquiring new customers is often costly and resource-intensive. It helps reduce the need for continuous customer acquisition efforts, saving on acquisition costs and resource. Acting on Customer feedback while facilitating seamless onboarding helps provide personalized experience.

4. Retention marketing helps boost profits

In addition to extending your relationship with your customers, retention marketing can help you increase your recurring revenue margins. The ability to convince your existing customers to stay with you is often easier than demonstrating value to a net new customer.

Also, newer customers will be in the experimental phase in the early days of their relationship with you. This makes it difficult to gauge their intent to stick around. As long as you continue generating value for your returning customers, your revenue will significantly increase.

Now that we know the importance of focusing on retention marketing, let’s talk about how you can measure the success of your retention marketing efforts.

How to use different channels for retention marketing?

Retention marketing leverages various digital channels to maintain customer loyalty. Here’s how you can effectively use some channels for retention marketing:

1. Email Marketing: Utilize personalized and targeted email campaigns to keep customers engaged and informed about exclusive offers or loyalty programs

2. Social Media: Engage with customers on platforms like Facebook, Twitter, or Instagram to foster a sense of community and provide updates on products or services.

3. Web Push Notifications: Send timely and relevant push notifications to users, reminding them of new offerings or encouraging them to revisit the website

4. Mobile Push Notifications: Extend push notifications to mobile apps for enhanced reach and interaction with users on their mobile devices

5. Retargeting Ads: Implement retargeting ads to remind customers of products they viewed but didn't purchase, encouraging them to return to the website.

6 retention marketing strategies to use

Retention marketing strategies come in various forms, ranging from intricate retargeting techniques to straightforward methods. Depending on your business context, you can pick your approach.

1. Run loyalty program

A loyalty program is a powerful tool as it helps boost customer retention by rewarding customers for their recurrent purchases; it incentivizes them to return repeatedly.

Loyalty rewards also underscore your appreciation for a customer’s decision to do business with your brand, significantly reducing churn rates.

The most impactful retention programs include:

1. Points-Based Loyalty Programs: Customers earn points for each purchase, which can be redeemed for discounts, free products, or other rewards once they accumulate a certain number of points.

2. Tiered Loyalty Programs: Customers are placed into different tiers based on their level of engagement and spending. Each tier offers varying degrees of benefits and rewards, with higher tiers usually providing more exclusive and valuable incentives.

3. Discount or Cashback Programs: Customers receive immediate discounts or cashback on their purchases, encouraging them to continue shopping with the promise of saving money.

4.VIP program: Extend exclusive rewards to your most dedicated customers. Establish a structure where increased spending leads to superior rewards, transforming engagement with your brand into a customary practice.

2. Enable hyperpersonalisation

The effectiveness of personalization extends to enhancing customer retention strategies. Businesses can express gratitude for patronage and cultivate brand loyalty by delivering personalized products and experiences. Personalization encompasses a spectrum, from tailoring product offerings to individual needs to crafting unique customer service encounters.

Implementing personalized approaches to retain customers can be as straightforward as noting each user's birthdays or brand anniversaries and sending them a thoughtful note or incentive to commemorate the occasion.

Artificial Intelligence (AI) and algorithms are pivotal in bolstering retention marketing strategies by providing businesses with powerful tools to understand, predict, and respond to customer behaviors. AI analyzes vast datasets to predict customer behaviors, helping businesses anticipate potential churn and proactively retain customers.

Algorithms process customer data to create personalized experiences, tailoring product recommendations, content, and offers to individual preferences, thereby enhancing customer satisfaction and loyalty. AI-driven algorithms segment customers based on their behavior, enabling targeted marketing campaigns. This ensures that messages are relevant and resonate with specific customer segments

Using AI and algorithms, businesses can identify individual customer needs and preferences, predict future behaviors, and deliver personalized and timely interactions that significantly contribute to customer retention.

3. Gather & Implement Feedback

Even if your customers' responses are positive, don't be afraid to ask them about their experiences. The feedback from dissatisfied customers is crucial, as they may only return if they have their concerns addressed. Input from customers can guide improvements to enhance service quality and customer retention.

Net Promoter Score (NPS) surveys are instrumental in enhancing customer retention as they help gauge customer loyalty by categorizing respondents into promoters, passives, and detractors. This helps customer specialists understand the customer base's loyalty levels and potential retention challenges and can use NPS surveys to measure customer loyalty.

You can embed your surveys and make them interactive so they can type in or select their responses in an email.

Establishing a feedback loop ensures ongoing customer communication, making them feel valued and engaged. Closing the loop is as vital as gathering feedback. Customize thank-you messages and respond directly to customer feedback, demonstrating your responsiveness and dedication to improvement. Also, you can integrate communication platforms like Slack to enable real-time feedback visibility for your customer service team.

4. Provide hands-on support

It is critical to provide fast support to retain customers, as they want to be treated as humans and want to speak directly to a representative.

Customers often find it difficult to navigate through the AI chatbots and phone services to reach a human for support.

Exceptional customer service forms the foundation of customer retention. Providing empathetic, easily navigable, and straightforward customer service can significantly contribute to building enduring, positive relationships with consumers.

5. Send frequent reminders

In the competitive business landscape, customers are bombarded with various options and advertisements daily. To ensure customer loyalty and repeat business, it's essential for businesses to consistently remind their customers of the value they offer.

Utilize various customer retention strategies such as weekly email newsletters, social media contests, and creating valuable content like blogs, videos, podcasts, or ebooks to keep your brand at the forefront of customers' minds. You might also have to work on finding the right frequency so your customers don’t forget you and they don’t feel annoyed by too many reminders either.

Customer retention marketing vs. customer acquisition

Understanding the significance of both customer acquisition and retention marketing is crucial for business growth and revenue generation. While customer acquisition establishes the groundwork for a thriving business, customer retention sustains it.

Retention efforts provide stability and guarantee steady, predictable sales, which are vital for the sustained success of any business. In this section, we will look at how customer retention marketing and customer acquisition differ with respect to certain aspects.

Aspect Customer retention marketing Customer acquisition marketing
Focus Retaining existing customers and increasing loyalty Attracting new customers and creating brand awareness
Goal Maintain and enhance relationships with existing customers Convert potential leads into paying customers
Cost Generally lower as it targets the existing customers base Often higher as it involves marketing to a huge audience
Revenue Impact Builds long-term customer value and loyalty,leading to consistent revenue Initial boost in revenue, but may need continuous efforts for retention
Customer relationship Strong emphasis on building strong, ongoing relationships Initial interactions may develop into long-term relationships but may fade due to the lack of retention marketing
Strategy examples Loyalty programs, personalized offers, customer feedback analysis Advertising, social media campaigns, lead generation activities

How to calculate your retention rate?

The success of your retention marketing strategies can be obtained by tracking various metrics such as

1. Customer retention rate

The customer retention rate measures the proportion of customers retained by a business within a defined timeframe. It serves as a measure of the success of customer satisfaction and loyalty initiatives.

Customer retention rate = (No. Of customers at the end of the period - no. of customers acquired during the period)/(No. of customers at the start of the period)

  • A high retention rate signifies contented and loyal customers, fostering enhanced revenue streams and sustainable long-term business expansion.

  • For subscription-based enterprises, the Customer Retention Rate is a key performance indicator (KPI).

2. Repeat customer rate (RCR)

Repeat customer rate is a key metric that measures the proportion of customers who have made multiple purchases from a business within a specific period. It indicates the loyalty and satisfaction of customers, reflecting the effectiveness of a company's products, services, and customer relationship strategies.

(RCR = No. Of repeat customers / No. Of unique customers)

Repeat customers are those who have made a significant amount of purchases within a particular timeframe, while unique customers are those who visit and make purchases during a certain time.

3. Purchase Frequency

Purchase frequency, or order frequency, refers to the number of times an average customer purchases from a business within a specific period. It is a key metric used to analyze customer behavior and their engagement with a brand or product.

Purchase Frequency = Total no. of purchases / No. of orders placed

4. Average Order Value (AOV)

Average Order Value (AOV) is a metric that calculates the average amount of money a customer spends on each transaction with your business. To calculate the Average Order Value, you can use the following formula:

Average Order Value (AOV)= Total Revenue/ Number of Orders

5. Customer Value

Customer Value, also known as Customer Lifetime Value (CLV or CLTV), is a metric that represents the total revenue a business can expect to earn from a customer throughout their entire relationship with the company.

To calculate Customer Value, you can use the following formula:

Customer Value =Average Purchase Value Ă— Purchase Frequency Ă— Customer Lifespan

In this formula:

  • Average purchase value represents the average amount of money a customer spends on each transaction.

  • Purchase frequency refers to how often a customer makes a purchase within a specific period.

  • Customer lifespan indicates the average duration of the customer's relationship with the business.


Retention marketing is the backbone of sustainable business growth. By prioritizing customer satisfaction, understanding their needs, and employing targeted strategies, businesses can create a bond that extends far beyond individual transactions.

By integrating these strategies into your marketing approach, you can foster enduring relationships with your customers, turning them into brand advocates who not only keep coming back but also bring others along.

What you should do next

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Frequently Asked Questions

Retention marketing is crucial because it costs less to retain existing customers than to acquire new ones. Loyal customers are more likely to make repeat purchases and recommend the brand to others, leading to sustainable business growth.

Customer retention typically involves multiple stages aimed at nurturing and maintaining long-term relationships with customers. While the exact stages may vary based on different models and approaches, a common framework includes the following four stages:

  1. Onboarding
  2. Engagement and relationship building
  3. Retention and loyalty
  4. Advocacy and referral

The best channel for retention marketing often depends on your target audience and the nature of your business. However, several channels have proven effective for customer retention:

  1. Email marketing
  2. Social media
  3. Loyalty programs
  4. In-app messaging
  5. Customer feedback surveys

Effective retention strategies include personalized communication, loyalty programs, excellent customer service, targeted promotions, and gathering customer feedback to enhance their experience.

What should you do next?

Thanks for reading till the end. Here are 3 ways we can help you grow your business:


Get smarter with our email resources

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Do better email marketing with Mailmodo

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Talk to an email expert

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