It’s great to constantly get new customers through your virtual doors. New customers are an important measure of growth and that you’re reaching new audiences.

However, new customers don’t have as much value to you as returning customers. To be clear, you need both. Inevitably a proportion of your retained customers drop off for whatever reason so you need new customers to replace them. However, customer retention is a far more fruitful orchard in the long term than focusing customer acquisition.

An existing customer will spend on average 67% more than a new customer. They will also spend more often, and have a lifetime value ten times higher.

These are well known facts amongst businesses, but they rarely put proper customer retention practices into place.

Retaining customers can lead to  loyal customers. These customers will advocate for you, drive more website traffic, and stay with you in the long run.

And it costs you less to keep them than to chase after new customers.

How to measure customer retention rate

Everything you do in your business should always feed back to your business goals. Because of this, you should be ensuring that all your activity is measurable so you can be sure what you’re doing is working. 

You should measure your retention rate on a regular basis. We would recommend at least once a month, but you can do it as often as you’d like. As long as you can keep a continuous eye on it.

The formula below is what you should use to measure your customer retention rate (CRR). It involves customers from the start (S), from the end (E), and customers you acquired during the period you are measuring (N).

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

For example:

You have 180 customers at the start of the month. During that month you have gained 20 new customers, but you lost 13.

The number of customers at the end of the month = 187 (E)

The number at the beginning of the month = 180 (S)

The number gained during the month = 20 (N)

So, using our formula we get:

((187 – 20) / 180) x 100

(167/180) x 100

0.92 x 100

92% Retention Rate for the month.

Businesses should always aim to keep their retention rate as high as possible. But as a general rule of thumb, it should not drop below 85%.

If you’re able to differentiate new and existing customer orders you should be able to work out your average retained order value as well.

Your use of data

Your customer data and how you use it will play a massive role when it comes to your customer retention efforts.

If you don’t manage your data properly, your campaigns will fall to the wayside and won’t make an impact on your business.

Using your data to form the basis of your campaigns will increase your chances of success.


Combining and storing data in one place allows you to better understand and analyse your customer information. Including a customer data platform as part of your tech stack is certainly worth the money. That is, if you don’t already have one. 

The more data you include in your customer data platform, the richer and more personalised your campaigns can be. Including transactional, behavioural, or preferential data means you’ll develop a deeper understanding of your customers, their wants, and their needs.

Once you develop that deeper understanding of your customer you can start to identify campaigns that would be suited for them. 

When you start making decisions that are backed up by data and your understanding of it, you should start to see improvements. Especially when it comes to both campaign performance and customer retention. 

You can be confident that when you communicate with a customer you understand you will get some good returns from it on both sides. They will get the feeling that you care about and understand them. And you will have a more loyal customer base, spending more time and money with you.


64% of customers expect a personalised, tailored experience with brands. Sending generic campaigns will fall flat. While you may get lucky with some customers, you are far more likely to alienate the rest.

Segmenting your customers into different types of audiences allows you to send more relevant content to each group. Following this, you can tailor your offers based on buyer behaviour. So you can not only anticipate an uptake in engagement, but a significant increase in revenue as well.

You can identify a specific group to target with a particular message or offer using segmentation. No two customers will receive the same email or notification, depending on the level of segmentation you use.


If you want your customers to keep coming back then you need to understand how to interact with them. 

Presenting them with offers or other things they have never shown interest in will only drive them to the arms of your competitors.

Every interaction with them should be done with the view to understanding them better. This will begin to filter into your predictive analytics efforts.

Once you can start to accurately predict how customers will behave you can start to build even better campaigns for them. And maybe even send them offers they never knew they would be interested in!

Customers will be much more likely to stick with you once they realise that what you’re sending suits their preferences.

Best practices

No two companies will create the exact same customer retention campaigns. However, there are some best practices you can use to make sure they are strong and actually work.


When it comes to nurturing retained customers into loyal customers, you have to show off that you understand them. Personalising your messages for the individual receiver brings in results.

Although it will require some effort, the benefits are worth it.

It’s not always as obvious as using someone’s name in your messaging. But, showing the customer what they have shown interest in in the past. Some of your users may browse your website specifically for hats. Use that information to include in your messages to them and make them more engaging.

For example, knowing the stage a customer abandoned their basket at and what product they left in it is a powerful campaign. The level of personalisation you can bring even into just this communication is outstanding.

You can show them what item they left in their basket and where they abandoned the purchasing process. You can redirect them straight back to where they left off. Or even send them an offer, depending on where they left off.

You’ll find that when you use your data to go beyond a first name basis your customer relationship will deepen. This will lead to a happier customer that is more likely to stay with you.

Building trust

In order for your customers to want to stay with you, they need to trust you. Your challenge as a business is to create as rewarding an experience as possible for your customers. The trust will begin to follow once this is done.

Companies can find it difficult to build this trust online, given that customers are entering a website, not a physical store. But it is not an impossible task.

When it comes to shopping online, customers cannot feel or touch your items. It’s all digital which can make things a little trickier when it comes to completing a purchase. Having a really detailed product description that includes things like best use can help a huge amount. Product descriptor videos also add that extra touch of class. And while it takes a lot more effort than the usual short, SEO focussed paragraph, the value it adds is far more significant.

A massive point of frustration for customers is not having access to someone for help when things go wrong. You should work to make sure that there is someone there to contact and if not provide an immediate response, then one the next working day. Offer the human touch and it can build a lot of trust. 

Finally, ensure that the pre and post purchase experience is second to none. That means good follow up through their desired channel with shipping updates and the option to leave a product review. Outstanding customer service all the way through is essential. Listen to the customer and put them first when problems arise.

A relationship built on trust could last a lifetime.

Loyalty Programmes

When it comes to customer retention, having loyalty programmes in place is a good place to start. The reason so many businesses have them in place is simple. They work. Mostly.

Offering customers a penny back for every euro they spend is not a very good deal. Businesses tend to deploy this tactic as it’s an easy one to set up. However customers can see it for what it is and doesn’t lead to building loyalty.

It’s all about giving back to the customer and making them feel valued. The challenge for you is understanding what would make your customers feel valued. 

Money off is great but you run the risk of training your customers to only spend enough with you to get the benefits. Rather than be excited about interacting with your brand and service.

Other incentives like bonus points, member-only content, or early access to deals works a treat in engaging your audience. 

Whatever programme you ideate should help in producing a base of loyal customers.

Happiness leads to Loyalty

Overall, the secret to customer loyalty is keeping your customers happy. Overall, this comes down to providing a great service and customer experience.

Every step of the customer journey, from initial engagement to receiving their product, should be enjoyable and seamless. 

Customer loyalty doesn’t just happen overnight, you need to make sure the experience is great time and time again.

To learn more about how you can leverage your data to create customer retention strategies that work, get in touch today and a member of our team will help.

Click to download our guide to increasing eCommerce conversions and retention.

About Xtremepush

Xtremepush is the world’s leading customer data and engagement data platform. We work with various top brands across multiple industries. Schedule a personalised demo of our platform to learn more about how we can help your brand drive repeat customers and increase revenue.