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What is customer retention + 17 retention strategies


Aug 31, 2017
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This is a special guest post by our friends over at Gravy! 

Gravy is the industry leader in customer retention and recovery software so we asked them to talk to our Kajabi blog readers about how you can keep more of your customers around for longer! 

Take it away Gravy. 

There’s a definite difference between customer retention and customer acquisition.

However, the numbers don’t lie.

Increasing customer retention rates by as little as 5 percent can increase profits by as much as 95 percent.

Furthermore, you’ll spend five times more money acquiring a new customer than you will on retaining an existing customer.

Why, then, do businesses focus so much of their attention on customer acquisition?

If you want your online courses to become more profitable, you might want to focus your efforts on the people who have already bought from you.

Maybe they’ve purchased one of your courses in the past. Perhaps they bought another digital or physical product from you. Maybe they signed up for coaching or consulting.

Whatever the case, they’re familiar with your brand. They know what they can expect from you. More importantly, they’re worth more to your bottom line.

What Is Customer Retention? 

Customer retention is the act of selling additional products or services to the same customer over a long period of time.

It’s a form of customer loyalty that increases customer lifetime value (LTV) and ultimately boosts profits.

To learn more about Customer Lifetime Value and increasing it with a 2nd Kajabi course click here. 

Think of customer retention as relationship development.

Just as you nurture your relationships with friends, lovers, and family members, you must also nurture your relationships with customers.

Instead of coffee or a date night, you keep in touch with customers on social media, via email, and through interactive media.

As long as you keep that relationship afloat, you can count on those customers to continue buying products from you down the road.

But what is the difference between customer acquisition and retention? 

Customer acquisition refers to the process of onboarding a new customer.

In other words, you’ve never done business with this person or entity before.

Customer acquisition costs more than customer retention because there are more barriers to entry.

Here are a few: 

  • Familiarity: The consumer isn’t as familiar with your online courses or your brand, so skepticism remains higher.
  • Access: You might not have a consumer’s email address or other contact information, so there are more steps involved to gain access to that consumer.
  • Visibility: If you want to acquire a new customer, you must find ways to get your brand in front of that person. In many cases, this means paying for advertising rather than using inbound marketing to maintain an existing relationship.

What are sales and retention? 

Sales and retention refer to the process of continuing to sell to an existing customer.

For instance, if you publish a new online course, you can send out an email that lets your customers know about the new product.

Selling to an existing customer is easier and less expensive than selling to a new customer.

As mentioned, a relationship already exists.

You’ve broken down barriers, exposed your brand to this customer, and proven your ability to produce a fantastic product.

Benefits of Customer Retention 

If you’re able to increase customer retention rates, you can enjoy several benefits from your hard work:

  • Better community: You’ll develop a community of brand advocates and ambassadors who not only buy your online courses and other digital products but who also care about your success. You can even begin to develop brand evangelists!

  • Potential referrals: Loyal customers are often quick to pass on the names of businesses they love to their friends, relatives, and colleagues. If you acquire new customers through referrals, you don’t have to spend any money on those new customers.

  • More money: Obviously, customer retention increases profits. When your customers buy more of your products, you make more money. It’s as simple as that.

  • Bragging rights: Many businesses advertise their customer retention rates. It’s a form of social proof that sends a clear signal to other consumers that you’re worth their attention.

  • Feedback: Engaged customers who continue to patronize the same business over and over again often send their feedback. They let you know what they love about your business and what they’d like you to change. They might even provide you with great ideas for future content marketing approaches or even new courses.

  • Permission: Customer retention gives you a stable of existing customers who welcome your emails, messages on social media, and other marketing attempts. They’ve given you permission to market to them.

  • Health: You’ll endure less stress if you’re focused on keeping existing customers happy instead of scrambling to find new customers.

  • Sustainability: You can more easily sustain your business when you know that you can sell to customers who already like your products and approve of your methodology.

Why Should You Care About Existing Customers? 

“How can we keep our customers loyal for longer periods of time?”

That’s the question that entrepreneurs should ask themselves every morning when they wake up.

How can you turn your students into raving fans?

What steps can you take to maintain existing relationships so you don’t have to work as hard for new customers?

Some businesses don’t seem to care about existing customers.

They worry more about acquiring new customers because they assume that business boils down to a numbers game.

It does, but not in the way that you might think.

If you’re an entrepreneur, you need profits. Otherwise, you can’t sustain your business model.

As we’ve already demonstrated, customer retention is inherently more profitable than customer acquisition.

And acquiring new customers is up to 5X more expensive

Therefore, your best business strategy is to keep your existing customers from defecting to the competition.

There’s also a moral and community aspect to this question.

Your existing customers have already plunked down their hard-earned money in exchange for your products and services.

They’ve given you their time and their attention — don’t you want to reward that?

Think about it in the context of a social relationship.

Let’s say that you’ve just made a new friend, but she doesn’t call you anymore.

She’s always out looking for new friends, so she doesn’t have time for you anymore.

That would sting, right?

The same goes for your relationship with your existing customers.

If they think you don’t care about their loyalty, they’ll look for products from other entrepreneurs. 

And you don't want that.

With that said, let’s look at the three most important reasons to focus more heavily on customer retention.

1. Better Conversion Rates 

Your business’s conversion rate refers to the percentage of customers to whom you market your products who take the desired action, such as buying your courses or signing up for your email list.

Once a customer has already converted, you’re several steps closer to closing more transactions with that customer.

For instance, let’s say that you find a store you love. It has all of the products you need, and you like the prices.

Why, then, would you go to a different store? You’ve already found one that satisfies your needs and desires.

High conversion rates aren’t just a metric for analyzing your marketing strategy.

They also communicate the health of your business. Low conversion rates let you know that your marketing and advertising efforts aren’t paying off.

Since it’s easier, faster, and cheaper to retain existing customers than to bring new ones aboard, your conversion rates will skyrocket as soon as you start focusing on developing customer loyalty.

2. Lower Cost Of Marketing 

It’s much cheaper to send out an email, post on social media, or host a live webinar than to pay for advertising on social networks or search engines.

While paid social and paid search can yield profits for your business, they also eat away at your revenue.

3. Increased Profits

This is the big one: Customer retention increases your profits. If your customers remain loyal to your business, they’ll continue to buy your courses and to invest time in your online presence.

Ultimately, this means that you have more freedom as an entrepreneur and more money to invest in new endeavors.

The Value Of Retention 

Let’s look at a few more numbers.

According to a Kissmetrics infographic, the value of a lost customer in the United States is $289 on average.

That number will vary depending on your industry, but it’s significant nonetheless.

The value of a lost customer is typically based on his or her LTV.

For instance, a customer might purchase one of your courses for $150, but that doesn’t represent his LTV.

That customer might purchase three additional courses, each for the same price and spread out over 18 months.

If the relationship ends there, the customer’s LTV is $600.

But what if that customer stopped purchasing at the first course?

Instead of generating profits of $600, you’d only bring in $150 for that one product.

You can see the value of customer retention if you look at the numbers.

17 Strategies For Retaining Customers 

Now you know why you should focus on customer retention. But how do you make customers more loyal to your business?

That’s somewhat trickier.

However, here are 17 tried-and-true strategies that boost customer loyalty rates and help you increase profits.

1. Reward Your Most Profitable Customers 

Start by showing your existing customers some love. Instead of ignoring them, send them special offers that show your appreciation.

For instance, after a customer buys one of your courses, consider sending him or her a 10 percent discount off a future course.

You can add a deadline to generate urgency — for instance, the coupon code might remain active for just a few weeks — or you can leave it open-ended.

Other rewards can help improve customer retention, as well:

  • Send extra articles, videos, and recordings to existing customers based on the courses they have already bought.
  • Offer a free 15-minute phone consultation when a customer buys a subsequent course.
  • Present the customer with a bundle offer. For instance, if he or she buys two courses at the same time, you’ll knock 20 percent off the purchase price.
  • Create a VIP email list exclusively for customers who have already bought 2 or more products then send them exclusive content and offers a few times a month. 

These rewards serve three purposes:

  • Thanking the customers for their business
  • Adding value for your customers and helping them get success
  • Generating future profits for your company

2. Engage and Interact With Customers 

Treat your customers like old friends or as part of an insider’s club.

Follow everyone who buys your products on social media then reach out to them and ask how they liked the course.

Invite them to share their feedback for future courses.

Email can work just as well, but make sure to personalize your communications.

You want your customers to feel appreciated.

3. Respond to Customer Communications 

If a customer reaches out to you on social media or sends you an email, respond immediately.

This is particularly important if the customer has a question or complaint.

As an entrepreneur, customer service should rank as one of your top priorities. Let customers know that they matter.

4. Offer Customer Service “Surprises” 

You can take customer service a step further by offering “surprise” promotions when they least expect them.

For instance, you might select a random customer on your email list and reward him or her with free access to one of your courses.

This is a great way to encourage email sign-ups, especially if you let your customers know that giveaways can happen at any time.

5. Set Customer Expectations 

Everyone responds well to met and exceeded expectations.

However, if your customers don’t know what to expect from you, they might forget about your brand the moment they complete their first course or buy their first digital product.

That’s not the reaction you want.

Let customers know right away what they can expect from you.

For instance, if you offer an interactive component with your online courses, set forth the guidelines that you’ll follow for live-streaming those events or for recording them for future consumption.

6. Use Automation To Re-Engage Customers 

Many entrepreneurs avoid customer loyalty efforts because they sound like too much work.

However, marketing automations can make customer retention almost effortless.

When a customer buys one of your courses, add his or her name to a database of existing customers.

Attach that database to an email automation program that drips emails over the course of several weeks or months.

Send updates about new courses, free information that helps whet your customers’ appetites for more content, and reminders that you offer other digital products.

Once you automate the process, you never have to lift a finger to keep in touch with your existing customers.

Furthermore, as long as you personalize each email you send, you’ll know that your customers feel engaged and appreciated.

You can also set up marketing automation programs for dormant customers.

For instance, you might track customers who haven’t bought from you in a certain period of time, such as six months.

Start the automated drip campaign to get them re-engaged. It’s a great way to remind customers of the value they derived from your online course.

7. Leverage Customer Feedback Surveys 

As we mentioned above, customer feedback can prove invaluable.

It lets you know what you’re doing right and what could use some improvement. It might even provide you with valuable ideas for future courses.

Customer feedback surveys give your customers a chance to sound off.

They’ll like knowing that you value their opinions, and you’re likely to receive a high response rate if you keep the survey short and include only interesting,

8. Develop a Frequent Communication Calendar 

A calendar can help you stay on track with customer loyalty.

If you know exactly when you’ll reach out to existing customers, you won’t get so busy that you forget to keep it on your to-do list.

Marketing automation can help with this process.

Segment your lists based on when your customers buy so you know which emails you want to send to them.

Mark the dates on your calendar for when you want to start drip email campaigns.

Not only will you keep yourself accountable, but you’ll save time.

Organizing your calendar might take a few hours to set up, but it’ll save you many hours of work in the long run.

9. Over-Deliver on Your Promise 

Under-promise and over-deliver — you’ve likely heard that advice before.

It still holds true.

When you make a promise to your customers, you’re beholden to that promise.

For instance, let’s say that you’ve announced an upcoming online course that you intend to release on December 1.

If you don’t release that course until December 15, you’ll not only lose potential customers, but you’ll also take a hit to your reputation.

But what if you released that course on November 25?

Now you’ve over-delivered on your promise.

Your customers don’t have to wait until December 1 to get your course, which makes them more likely to click the “Buy” button.

Furthermore, you’ve sent the message that you care about delivering on your promises and that you’ll even make every effort to over-deliver.

That’s a powerful way to increase customer retention and to develop a rock-solid reputation.

You can also over-deliver on the content itself.

If you promise that a course will contain three videos, add four.

Let your customers know that you’ve included a bonus to reward them for their patronage.

10. Measure Customer Lifetime Value  

We talked about customer lifetime value before, but let’s dive in a little deeper.

LTV refers to the total value of your customer’s purchases.

Despite the name, it has nothing to do with how long your customer lives.

Instead, it measures the amount of profit a customer generates for your business from his or her first purchase until the last.

The average LTV tells you how much lifetime value your customers bring to your business when grouped together.

Let’s separate profit from revenue for a second.

Revenue is the total amount of money a customer brings to your business, while profit takes into account any money you spent to acquire that customer.

For instance, if you spend $32 to acquire a customer, and that customer generates $200 in revenue, the profit becomes $168 ($200 minus $32).

We also discussed earlier that it costs less to retain a customer than to acquire one.

This means that a customer’s LTV increases when you focus on customer retention because you’re not subtracting as much money in terms of acquisition.

11. Learn From Customer Complaints 

Every business experiences customer complaints from time to time.

It’s the cost of doing business.

However, your reaction to customer complaints can impact customer retention.

If a customer complains about a billing issue, for instance, you should immediately try to rectify the problem.

Additionally, you should figure out what caused the billing issue to prevent it from happening to other customers.

Do you see where this is going?

If you can learn from customer complaints, you can make the customer experience more enjoyable for others.

Along the road, you’ll retain more customers and generate more profits.

Instead of groaning when you receive a customer complaint, view it as an opportunity.

Fix the problem, let the customer know that you appreciate his or her patience, and learn from the mistake.

12. Use Live Webinars To Educate And Inspire Customers 

While a phone call with a friend can help you develop your relationship and catch up on each other’s lives, you’d probably rather meet in person.

The same goes for relationships with customers.

Live webinars let you speak directly to your customers.

You can educate them by providing useful, actionable information, or you can inspire them by sharing stories and helping them reach their goals.

Whatever the case, a live webinar doesn’t take much time, but it can provide benefits for many months (or even years) to come.

Record your webinars so your customers can watch them live or at their leisure.

13. Create a Community and Customer Advocacy Program 

If you don’t advocate for your customer, who will?

Consider creating a community forum where your customers can communicate with you and with each other.

After a few months, give a few of your most dedicated and knowledgeable contributors “moderator” status.

Let them interact with the community and report serious issues to you.

This process not only rewards contributors who help keep your business afloat, but it also helps resolve problems faster.

Moderators can respond to other customers when you’re unavailable, which gives the impression that you’re there to provide support 24/7.

Never discount the value of a community.

If your customers know that you encourage them to talk with each other and to support one another, your content will become invaluable.

Furthermore, you’ll create yet another place where you can reach out to customers personally and make them feel welcome.

14. Solicit User-Generated Content 

User-generated content has become one of the most powerful marketing strategies in the world.

People trust other customers more than they trust brands and entrepreneurs, so when your customers create content related to your brand, other people pay attention.

This can increase customer retention by building a community of loyal followers.

The more user-generated content you collect, the more social proof you have to keep customers from going elsewhere.

User-generated content could be testimonials, social media posts, articles, and videos.

For instance, let’s say that you teach a course on fitness.

Your customer might show before-and-after photographs of him or herself to demonstrate the impact your course had on his or her physique.

15. Start a Blog 

Blogging is an ideal vehicle for customer retention because it gives your customers a reason to keep coming back to your site.

You probably don’t release a new course every day or every week, so produce free content that keeps people connected to your business.

You don’t have to post to your blog every day, but make sure to keep a consistent schedule.

You want your customers to know when they can find new content on your site.

When you decide to create a new course, introduce the course with a blog series.

Use your blog to educate and inform, but also to celebrate customers who have made positive changes in their lives or who have used your courses successfully.

Your blog can serve as a customer-acquisition magnet as well as a way to retain existing customers.

Consider alternating days for different purposes.

On Mondays, for instance, you might write posts that are designed to bring in new customers.

Then, on Thursdays, you could post articles that fit with your existing customers. That way, everybody wins.

16. Make it Personal 

Personalization is the cornerstone of customer retention.

If your customers feel like cows in a herd, they won’t put much stock behind your brand.

You don’t have to send a personal email to every customer who buys a course from you.

Email automation programs let you incorporate personal details, such as names and geographic data, so each email feels like a personal missive from you to the customer.

Similarly, you can use paid advertising to retarget customers after they visit your website or engage with you on social media.

When you serve up personal advice or results for your customers, they’ll feel safe, wanted, and appreciated.

17. Choose The Right Platform 

When you want to improve your customer retention rates, you need a solid platform under your feet.

Kajabi offers built-in websites, blogs, email campaigns, and course-creation software that can help you not only launch your business, but also keep your customers happy.

Just sign up for a free trial with Kajabi, then start creating your first online course.

You can create as many courses as you want to expand your product offerings and to increase customer retention.

As long as you provide new digital products, you can keep selling to your existing customers over and over again.


From blogging and email marketing to live webinars and user-generated content, you have plenty of ways to increase your customer retention rates, foster customer loyalty, and boost your profits in the process.

Start by recognizing the value of customer retention.

Realize that it often matters more than customer acquisition, even if that mindset might sound counterintuitive.

Once you’ve reframed your focus on customer retention, help your existing customers feel special, appreciated, and wanted.

Nurture those relationships so you can continue to deliver fantastic online courses to people who love your content.

Make sure to set reasonable expectations — and to exceed them.

Never miss an opportunity to get feedback from your customers so you can continue to improve the value you offer and don’t underestimate the value of solid customer service.

Have you worked on customer retention in your business?

Have your efforts been successful?

How can others benefit from your experiences? 

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