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Small Business Survival: 12 Best Customer Retention Strategies

customer retention strategy for small business

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    Often, businesses and freelancers wonder: Is there anything more important than getting new customers? The answer is a definite yes. The paramount importance lies in retaining existing customers. This underscores the crucial need for the implementation of effective customer retention strategies no matter how big or small your business is. 

    Certainly, the attraction of acquiring a new customer is undeniable. It’s always exciting to know that they’ve chosen your business for a reason, which boosts your confidence. However, you must go beyond that and focus on expanding your customer base.

    Nevertheless, the most effective customer retention strategies are crafted with the aim of ensuring that customers return. Ultimately, having repeat shoppers is a vital element for the success of any business be it online, offline, or both.

    This leads to a significantly higher ROI (return on investment), and it’s also far more cost-effective to maintain existing customers than to acquire new ones. When discussing ROI, influencer marketing is a noteworthy aspect to consider.

    How can you keep customers coming back? What exactly is a customer retention strategy? How can you develop customer retention strategies for your small business that ensure your current client base remains content, involved, and returns for more?

    These are excellent questions that merit solutions. Keep reading this space to learn more about it!

    Defying Customer Retention

    Customer retention can be defined as a brand’s capacity to maintain customer subscriptions or continued patronage of its products and services. It also serves as a barrier to customers switching to rival competitors.

    It’s the smooth and effective practice of delivering exceptional customer experiences to both new and existing customers, thereby transforming them into repeat purchasers. By doing so, you enhance the lifetime value of your customers and create such satisfaction that they become brand advocates, spreading the word about your business and enticing others to become your customers.

    Customers are inclined towards brands that appreciate them, understand their options, and uphold distinct core values. They always love to connect with such businesses, treating them like friends. To become customer-focused, building personal relationships with customers should be a brand’s top priority.

    Vital Metrics: How to Calculate Customer Retention Rate

    The Customer Retention Rate (CRR) provides insight into the following query: Out of the new customers your business acquires, what proportion of them remain loyal to your brand? 

    To compute the customer retention rate, you need to divide the count of new customers by the number of customers you had at the start of the period.

    The formula would appear as follows:

    Customer Retention Rate = (Total Customers at the End of the Period – New Customers Acquired) / Customers at the Beginning of the Period X 100

    For example, imagine you began the first quarter with 2,000 customers. Approximately 1,100 of your current customers came back to make a purchase, and you acquired 500 new customers during this period.

    So, as per the formula, your customer retention rate will be

    1600-1100÷ 2000X100= 25%

    So, our projected customer retention rate is 25%. You can utilize this straightforward formula to determine your business’s customer retention rate.

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    Why Retaining Your Customers is so Important?

    If you glance around your room, you’ll probably spot a product made by a prominent brand, a business that leads its industry. It’s improbable that they achieved such a position by primarily depending on one-off sales to occasional customers. After all, repeat customers tend to spend 67% more over time compared to first-time buyers.

    Customers who are retained effectively demonstrate an extraordinary level of meeting or surpassing their expectations. The significance of customer retention lies in its role as the cornerstone for continuous revenue growth, while also allowing you to enhance brand visibility and industry influence. These principles are vital for developing customer retention strategies that sustain your company’s presence.


    12 Best Customer Retention Strategies for Small Business

    Businesses frequently require between five to twenty times the resources to acquire a new customer compared to retaining an existing one. Surprisingly, customer retention is sometimes overlooked in favor of strategies aimed exclusively at attracting new buyers. But relying solely on one-time customers won’t sustain a company’s growth. How to retain customers? Considering this, here are 12 fundamental customer retention strategies to bear in mind when outlining your business plan.

    1. Deliver Tailored Customer Service

    I can bet that excellent customer service stands out as one of the most critical customer retention strategies to implement. There’s just a special quality to exceptional customer service.

    Fostering a stronger personal connection with the customer, nurturing loyalty, and ensuring the customer feels exceptionally well-cared for are among the primary results. Here are some customer service strategies to consider:

    Pro Tips:

    • Commitment to ensuring customer satisfaction
    • Swift response time
    • taking responsibility for mistakes instead of placing blame
    • Exceeding your regular responsibilities
    • Consistency and punctuality in delivery
    • Keeping promises and delivering on them
    • Incorporating a favorable return policy whenever possible

    Superb customer service cultivates loyal customers and stands as one of the paramount customer retention tactics to employ.


    2. Employ Personalization to Maximize Customer Engagement

    Leveraging is another effective customer retention strategy for your small business that can be implemented to secure a larger number of long-term customers. While the term “leverage” might initially sound negative, in this context, it is not.

    Incorporating personalization techniques to harness the potential of your customers involves practices such as identifying your target audience, understanding their preferences, and engaging with them through their preferred communication channels. This approach can also encourage your customers to share positive stories about your brand.

    Indeed, these preferred channels include various social media platforms. When used effectively, social media outreach can become an immensely powerful tool.

    Pro Tips:

    • Collect and assess customer data pertaining to their behavior, preferences, and demographic details.
    • Segment your customer base into more compact groups, utilizing shared attributes like age, location, purchase history, or interests.
    • Develop tailored product suggestions, content, and promotions grounded in a customer’s previous actions and inclinations.
    • Formulate individualized email marketing initiatives.
    • Personalize product pages to exhibit reviews, visuals, and data that align most closely with the visitor’s areas of interest.
    • Send automated messages, including reminders about abandoned shopping carts, guided by user actions.


    3. Reward Loyalty

    Another highly evident approach to retaining customers is acknowledging and incentivizing loyal patrons, often accomplished through the implementation of a loyalty program. Incentives may include special discounts, deals, presents, exclusive gatherings, early previews, and various other perks.

    You have the flexibility to introduce creative and unique loyalty programs and offer incentives as you see fit. Ultimately, your goal is to ensure that your repeat customers consistently experience VIP treatment during their visits. Make them aware of their importance and reinforce this through your actions, giving them a compelling reason to keep coming back.

    Pro Tips:

    • Divide your customer base into segments to uncover their preferences, spending patterns, and demographic details. Customize your loyalty program to suit the distinct needs of these customer groups.
    • Ensure that your loyalty program remains straightforward and easily comprehensible, steering clear of intricate regulations and constraints.
    • Provide rewards that hold substantial value and are genuinely enticing to your clientele. Consider a mix of price reductions, complimentary items, exclusive access, and tailored offers.
    • Tailor rewards and incentives according to individual customer preferences and their historical purchase behavior.
    • Create a mobile application or integrate your loyalty program with an existing mobile app for the convenient tracking of rewards and offers.
    • Maintain regular communication with your customers, keeping them updated on their progress, available rewards, and upcoming promotions through email, SMS, or in-app alerts.
    • Promote customer feedback within the context of the loyalty program, using this input to consistently enhance and fine-tune your offerings.


    4. Leverage Real-Time Engagement Tools

    A straightforward method to enhance the customer experience, consequently boosting your customer retention rate, involves providing instant responses to customer inquiries, and requests. A substantial delay in response time stands as a leading cause of customer dissatisfaction. Integrating live chat can serve as one of the most potent customer retention tactics. As per Invesp, around 73% of customers find live chat the most satisfactory form of communication with a company.

    Numerous live chat platforms are accessible in the market, so how do you choose the right one? When selecting the most suitable option, it’s crucial to consider whether it aligns with your business goals and meets your company’s specific requirements.

    I’d like to suggest REVE Chat, an omni-channel customer engagement platform. It enables you to provide immediate assistance to your customers on your website, mobile apps, and various social media platforms such as Facebook, Viber, Instagram, Telegram, and WhatsApp.

    Additionally, this platform offers REVE Chatbot, a customer engagement solution powered by AI. It not only streamlines your business operations, including customer service but also extends 24/7 customer support, even beyond your standard working hours.

    Interested in giving it a shot? REVE Chat provides a 14-day FREE TRIAL for you to explore all its distinctive features. Don’t hesitate, SIGN UP today!

    What to look for while choosing the best live chat software for you?

    • Seek ways to customize the chat widget to align with your website’s design and branding.
    • Verify its adaptability across multiple platforms, encompassing desktop, mobile, and diverse operating systems.
    • Confirm its ability to integrate smoothly with your current CRM, eCommerce systems, and other vital business tools.
    • Evaluate its potential for chatbot functionality, automating repetitive tasks, and delivering round-the-clock support.
    • Look for features that enable you to monitor chat metrics and customer interactions.
    • Data security and privacy regulations are also important considerations, particularly if your business handles sensitive customer information.

    Quote 1

    5. Implement Post-Purchase Follow-Ups

    Following a purchase, send a post-sale email or message to convey appreciation and inquire about the customer’s satisfaction. This demonstrates your concern for their experience and can proactively address any possible concerns before they become more significant.

    Follow-up messages also present an opportunity to suggest additional products or offer guidance on maximizing the value of the product or service. For instance, in the case of a company that provides business-to-business mobile marketing services, they should inform their customers about various apps that can enhance their experience. 

    These recommendations typically do not require extra purchases but serve to educate the customers on optimizing the benefits of its services.

    Pro Tips:

    • Dispatch follow-up messages promptly after the purchase to engage the customer while their experience is recent.
    • Pose open-ended questions that invite thorough feedback. For instance, ask, “What aspects of your purchase did you find most appealing?”
    • Furnish a channel for customers to express any difficulties they may have encountered.
    • Incorporate a distinct call to action (CTA) within your follow-up, whether it involves giving a review, sharing on other channels, or exploring complementary products.
    • provide contact information or a customer support link to ensure easy accessibility for questions or concerns.


    6. Utilize Feedback and Surveys

    Regularly seek customer feedback and leverage it for the enhancement of your products and services. Customer surveys offer important insights into your strengths and areas that require refinement. Demonstrate your appreciation for their input and implement changes guided by their feedback.

    Although yes-or-no and scale or rate questions have their merits, do not underestimate the significance of open-ended questions that demand more comprehensive responses. 

    I’ve discovered some helpful questions like: 

    • “What is a single feature you believe would significantly enhance our service for you?”
    • “Throughout your interactions with our customer support, did you encounter any processes, terminology, or recommendations that you found confusing?”
    •  If so, could you specify what they were?” 

    This is especially pertinent when dealing with a technology-related product.


    7. Initiate a Customer Education Program

    A customer education program signifies a lasting commitment to your customer community.

    As part of this endeavor, your company develops a range of customer self-help resources, including a knowledge base and a community forum. These tools empower customers to find solutions to service-related issues independently, reducing the need to contact your support team for assistance. Moreover, this program can encompass more than just your products and services.

    Pro Tips:

    • Precisely articulate the goals of your educational program.
    • Examine your customer base to understand their levels of expertise, requirements, and challenges.
    • Offer hands-on learning opportunities through interactive training sessions, workshops, or webinars, allowing customers to pose questions.
    • Promote customer-generated content, inspiring them to craft and disseminate tutorials, case studies, or success stories associated with your offerings.
    • Gather input from customers to gain a deeper understanding of their educational requirements and perpetually enhance your program.
    • Leverage social media platforms to distribute educational content, convey updates, and engage with your customer community.


    8. Reconnect with Departed Customers

    If some customers haven’t been active, think about ways to bring them back with special offers or incentives. They might just need a little push to get involved again. Consider extending a unique discount or promotional code as an incentive to return. Keep in mind that some individuals may not have disengaged due to dissatisfaction; their absence could be attributed to distractions or a busy schedule. At times, all it takes is a gentle nudge to re-establish their connection with your business.

    All of these ideas for small business customer retention strategies share a common goal: Building long-lasting connections with your clientele. To increase the value customers bring over time, prioritize trust and consistently deliver value. Retaining customers is a continuous effort that demands a sincere dedication to comprehending and fulfilling their requirements.

    Pro Tips:

    • Utilize your customer database to pinpoint and categorize customers who haven’t interacted with your business recently.
    • Try to comprehend the reasons behind these customers’ departures.
    • Create tailored messages for reconnection that directly tackle their unique needs or issues.
    • Extend exclusive offers, or promotions as incentives for their return.
    • If there have been enhancements or modifications since their departure, communicate the same. 


    9. Opt for Referral Programs

    When you explore successful businesses, both large and small, on the internet, you’ll often find they have implemented some form of customer referral program. These programs can be continuous or occasional, but both serve as robust customer retention marketing strategies.

    Referral programs naturally vary between businesses, but they all follow a common principle: rewarding existing customers when they contribute to bringing in new ones. 

    Some of the well-liked referral program ideas include:

    • Cashback
    • Deals and discounts
    • Point systems and incentives
    • Two-for-one deals
    • Awards
    • Free samples
    • Free upgrades
    • Gift cards
    • Exclusive access


    10. Harness the Power of Social Proof

    In today’s business world, having a good reputation and positive feedback is crucial. More than 91% of people read online reviews, and a whopping 84% trust them.

    Utilize customer testimonials and data to draw in new customers. This becomes even more important for customer retention. Persuade current customers to stay with you or upgrade their services by effectively harnessing the power of social proof.

    Loyal customers who provide positive reviews can be a valuable asset. You can showcase their success stories on your website and social media platforms to boost your business’s growth and customer retention.

    Here are some smart hacks for you!

    • Motivate your happy customers to share their feedback on platforms such as Google, Yelp, or your site.
    • Emphasize client endorsements on your website, marketing materials, and product pages.
    • Inspire them to generate content, including images, videos, and social media posts related to your offerings.
    • If your user base is big enough, prominently exhibit your number of users, subscribers, or customers.
    • Acknowledge any awards, certifications, or industry acknowledgments your company has earned.


    11. Offer Unexpected Delights to Your Customers

    Surprises can be a valuable tool for retaining customers and leaving them happy and amazed. The key is to shock them by doing something unexpected, like sending a birthday card (or email) or offering a coupon or gift card for special occasions.

    It doesn’t have to be extravagant or costly; the goal is to create a memorable experience and demonstrate your presence and genuine care for your customers. Integrating unexpected elements into your customer retention strategy can be a powerful way to foster a customer base that becomes progressively more loyal over time. 

    In today’s business landscape, customer retention strategies hold greater significance than ever before. With numerous competitors, the big influence of social media, and extensive customer outreach, you have to walk the extra mile to retain your customers.

    Pro Tips:

    • Acknowledge customers’ birthdays by offering a unique discount, a small gift, or a heartfelt message.
    • Give loyal customers an exclusive sneak peek at upcoming products or services before the official launch.
    • Express your gratitude by sending handwritten cards or letters on special occasions.
    • Provide early access to sales, promotions, or new collections.
    • Delight customers with unexpected free product upgrades or enhancements, even without their request.
    • Include complimentary samples of new products with new orders.


    12. Express Your Gratitude 

    In conclusion, express your gratitude to your customers for choosing your business. The crucial aspect of customer appreciation lies in providing your loyal customers with exclusive offerings not available elsewhere and ensuring they receive access to something unique from your brand that others don’t.

    Consider initiating a membership program, which extends beyond mere reward points. Here you can offer members exclusive privileges, such as insider points and discounts on outdoor programs and events. Additionally, membership grants access to highly sought-after garage sales, where participants can purchase returned gear at significantly discounted prices.

    Here are some great ideas for you!

    • Expressing gratitude through written notes
    • Events dedicated to showing customer appreciation
    • Tailored offers designed for individual customers
    • Celebrating birthdays and significant milestones
    • Highlighting customer success stories
    • Unexpected enhancements or upgrades
    • Treating loyal customers as special VIPs


    Customer Retention Strategies: Examples

    Establishing and nurturing a devoted customer base stands at the core of every successful brand. In a market growing ever more competitive, companies need to extend their efforts beyond just customer acquisition and direct their attention toward preserving their existing client base. 

    Here I have given 3 great examples that show how businesses can not only maintain their current customers but also cultivate enduring partnerships that fuel continual expansion. We’ll explore some of the innovative approaches, from customized experiences to celebrating loyalty, in encouraging customers to return for more.



    The clothing and shoe eCommerce platform Zappos has gained a strong reputation for its exceptional customer service, which includes demonstrating care by expressing gratitude and sending thoughtful gifts to customers.

    Indeed, Zappos keeps a company-wide count of the gifts and surprises sent to customers in the prior month to ensure that the entire team is collectively contributing to express their sincere appreciation to customers.

    Saying “thank you” is a simple but powerful way to keep customers coming back and turning some faceless simple websites into beloved brands.



    Classy Curlies

    Classy Curlies excels at building trust by taking an unusual approach that many business owners might find puzzling. They teach their customers how to achieve the company’s mission independently.

     On their website, users can discover DIY kits and step-by-step tutorials for maintaining their hair and skin using common household or grocery store items. Notably, Classy Curlies also offers specialized DIY kits for sale.

     Classy Curlies has earned customers’ trust and maintained their loyalty by prioritizing customer needs and providing these solutions at no charge. Whether they choose to explore the newest DIY kit or become a devoted reader of the DIY blog, it’s highly likely that new customers will discover something at Classy Curlies that will entice them to return for more. 




    During the 2012 Summer Olympics, Coca-Cola ran a 70-day campaign that included the “Coca-Cola Beat Generator” app, merging music, sports, and the Coca-Cola brand.

    They presented it during their Olympic roadshow, incorporating samples and sounds from the games. Users could then download the MP3 recording and share it on social media. The outcome? A total of 16,500 visits to the web version and a remarkable 1.78 million impressions on Facebook.


    Despite being a beverage company, Coca-Cola successfully harnessed the excitement surrounding the event by delivering exceptional customer experiences that extended far beyond the moment of purchase.


    Kickstart Your Customer Retention Journey that Actually Works!

    When it comes to retaining your customers, getting it right is very important. For a small business, establishing all these customer retention strategies may seem a bit scary, but trust me it is not impossible.

    Dedicate the effort to develop a personal connection with your customers. Actively listen and respond to their feedback. Demonstrate respect and express gratitude for their ongoing loyalty. Irrespective of your business size, these are the things you must follow if you actually want to retain them and run the business successfully. 

     It’s true that turning these ideas into action is harder than talking about them. But if you work on creating customer retention plans with care, even as a small business, you can stay the top choice for your customers.

     So, all the BEST!

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    Suvashree Bhattacharya

    Suvashree Bhattacharya is a researcher, blogger, and author in the domain of customer experience, omnichannel communication, and conversational AI. Serving as a content marketing strategist at REVE Chat, she develops contextual and interesting content for customers from different industries and segments like customer service, customer satisfaction, engagement, messaging platforms, etc. Passionate about writing and designing, she pours her heart out in writeups that are detailed, interesting, engaging, and more importantly cater to the requirements of the targeted audience. Her interests include reading, painting, and traveling.

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