5 Reasons Your Business Why Should Invest in Customer Retention

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    “Don’t make a sale, make a customer.” 

    This is one popular business quote that every successful entrepreneur will agree with. 

    In this internet era, customers are spoilt with countless options. A simple online search will help them find an alternate product or service. In other words, if you are running a business, losing your customer to competition takes less than a minute.  

    That makes customer retention extremely crucial to the long-term growth and sustainability of the business. Whether you are a small-scale business that deals with customers in person or an online business that counts on virtual interactions, customer interaction is crucial in all aspects. 

    What is Customer Retention?

    In one simple line, customer retention means retaining your existing customers from churning. Customer retention rate is the metric used to measure how successful a business is in retaining its existing customers from the beginning of a period until its conclusion.  
    A positive and higher customer retention rate is a good sign of business growth, great customer service, and also customer loyalty.  

    If you think new customer acquisition is a better strategy than customer retention, think again. There are also several benefits to customer retention that no business can turn a blind eye to.  

    Here are 5 reasons why your business should invest in customer retention now than later:

    5 reasons why your business should invest in customer retention:

    1. Saves costs

    Studies ¹ suggest that it costs 5 times as much to acquire a new customer than to retain an existing one. In fact, 60% to 80% of customers tend to go back to the same company to do business that initially satisfied them. 

    The primary benefit of customer retention is that it saves costs incurred for marketing, customer onboarding, maintenance, and even after-sales support. Let’s take a closer look at how it works. 


    Every new customer needs an onboarding journey that will acquaint them with the product or your service process. That calls for trained and experienced resources and their valuable time. Hiring and maintaining onboarding specialists will be an expensive affair if the customer acquisition rate is higher than customer retention. 

    Since retained customers do not need much in terms of transacting with the business, it helps reduce the reliance on onboarding specialists. Even if they are in need of support, it would be minimal in nature and can be taken care of with an intelligent live chat tool. In fact, such a live chat tool can also act as a substitute for new prospects landing on the website or existing customers looking for instant support.  

    It needs a strategic approach, long-term planning, defining a social media workflow, SEO content strategy, and dedicated resources to make it work. If the business has to acquire new customers on a regular basis, that is, if their customer retention is poor, the marketing department will have to work extensively. From using an SEO checklist to a local SEO guide for best results to working on a completely new social media campaign, opportunities are endless here. There are many free best ai tools that can help, such as an AI ad maker that can streamline the creation of compelling and targeted advertisements, enhancing the overall effectiveness of your marketing efforts. And to overcome this difficulty and to improve audience retention, the business should focus on using business plan templates that resolve issues of customer engagement. As a result, it will also incur more expenses, which will reduce its ROI. On the flip side, when the customer retention rate is higher, it keeps marketing costs at bay. The marketing department can continue with its existing nurturing campaigns that will ensure the upkeep of existing customers.  


    Despite the best efforts taken for onboarding new customers, they tend to run into difficulties when they use the product or service in their everyday life. During such instances, it is the responsibility of a customer-centric business to provide adequate after-sales support. And that incurs additional costs.  

    Can such costs be avoided, or best reduced? Customer retention can ensure that customers remain loyal to the business and become super-users. That reduces the need to provide support to them. This results in indirect cost savings. 

    2. Boosts brand image

    Have you heard of H.O.G? It is the short form for the ‘Harley Owners Group.’ It is a close-knit group of Harley Davidson motorcycle owners. One that is considered to be the most elite and prestigious, and is often referred to as ‘the granddaddy of all community-building efforts‘. 

    Once a Harley owner becomes a part of HOG, they become a part of all community activities, including member-only rides, events, factory tours, and similar exclusive activities. Similar to HOG, there are also separate fan clubs for Apple devices, Android, music bands, and so on. 
    Now, there is a reason why user or customer-based communities like these are popular. They are created by loyal customers. In a way, it is free marketing that customers are doing for the brand.
    If a business is good at retaining its existing customers and successful at creating a community feeling within them, it automatically boosts brand image. The benefits of a positive brand image need no further explanation. Also using a reliable logo maker can significantly enhance brand recognition and credibility from the get-go. Visual content plays a pivotal role in enhancing brand recognition and customer engagement. Tools like AI image extenders have revolutionized the way businesses create and share visual content. By using advanced algorithms, AI Image Extender can enhance the quality of images, making them more appealing and professional. Additionally, videos are becoming increasingly important in visual content marketing. Using a versatile video maker tool can simplify the creation of engaging videos, helping brands reach wider audiences and enhance customer engagement. Incorporating visually stunning graphics and logos through such tools not only improves brand aesthetics but also captivates the audience’s attention, fostering a stronger connection between the brand and its community.

    3. Assured future income

    Do you know of the two recent business models that have taken the world by storm? They are SaaS and subscription-based business models. Both of these business models work in a similar fashion. The customer pays or subscribes to the services for a definite period of time with an advance payment. Most often, this period is one year. This ensures that the business has assured income for one year.  

    When the subscription period nears expiry, the business can pitch for renewal, thus ensuring that the customer continues to be associated with the business. In other words, both SaaS and subscription business models rely on customer retention for survival.  The strategic use of a SaaS link-building agency becomes crucial in the context, as it can enhance the overall customer experience, offering valuable resources that contribute to long term engagement and loyalty.

    The global SaaS market share is in the range of $134.44 billion. It is expected to grow by an impressive 13%. Now, if such a market is counting on customer retention to grow, every business should rely on it as well.  

    SubscriptionFlow is the part of the ever-growing subscription of best SaaS billing software market that is currently valued at approximately $1B and growing at a CAGR of 13.19%. SubscriptionFlow helps its users increase their revenue, decrease customer churn, increase customer retention and allow them space to grow and expand substantially.”

    To put it in another way, customer retention assures a future source of income for the business. That kind of assurance spares the business from worrying about immediate revenue. It can start planning for the future where more customer-friendly features and services can be rolled out.  

    4. Keeps competition at bay

    Loyal customers become habitual in terms of using and choosing only one brand. They do not consider other brands because they have finally found a choice that works fine for them. They remain in the habitual loop of preferring one topic as the default choice above every other alternative. In this way, customer retention ensures the competition is kept at bay. 

    Also, loyal customers are great sources of learning for the business. They would explicit interest in suggesting improvements that would make the product or service better than what it already is.  

    If a business is to spend on research and development to find such insights, it will take very long before any substantial findings can be unearthed. Also, it may not be as clear and authoritative as the suggestions given by the customer who is the first-hand user.  

    As a result, it creates a unique competitive advantage. If the effort required to fend off competition can be reduced, it spares the business so much time and effort that can be dedicated to improving existing business offerings.  

    5. Gives word-of-mouth-marketing

    Traditionally, word-of-mouth marketing spreads from one person to another through personal interactions. In today’s digital world, it takes the form of virtual communities, social media posts, consumer generated content, and so on.  

    A single recommendation can act as the final nudge that will make a prospect sitting on the fence take the final decision. The benefit of customer retention is that it turns loyal customers into mouthpieces for the business. These customers are willing to share with their near and dear ones why they think a specific brand or product is a good choice. 

    No amount of marketing can replace that voluntary word-of-mouth marketing. You can have the best Instagram feed aesthetic and perfect social media management, but word-of-mouth still remains powerful.”In fact, studies by Nielsen² have found that 92% of people trust recommendations from friends and family over any other type of advertising. However, with the right Instagram post planner, such as Hootsuite or Hootsuite alternatives, you can enhance your content strategy and leverage word-of-mouth even further, ultimately attracting more Instagram followers. However, understanding the nuances of the Instagram algorithm and adapting your content accordingly is crucial for maximizing reach and engagement, ensuring your posts are seen by a wider audience of potential followers. Additionally, you can use social media analytics software to optimize your posts for engagement, which can significantly boost your visibility and increase your chances of gaining more Instagram likes.


    “Trust, encouraged by social media, significantly affects intention to buy. Therefore, trust has a significant role in eCommerce by directly influencing intention to buy and indirectly influencing perceived usefulness.” 

    M. Nick Hajili , Internataional Journal of Market Research ³

    All of this indicates that customer retention, which causes word-of-mouth marketing is essential for a business.  

    Customer retention: Why it is the best bet for your business 

    “Loyal customers, they don’t just come back, they don’t simply recommend you, they insist that their friends do business with you.” .

    Chip R Bell – author of several books on marketing

    You can grow your loyal customer base only if you retain your existing customers. Once you create a solid loyal customer base, it would be very difficult for your competitors to take them away. That makes running a business so easy.  

    Customer retention is crucial not just for the short-term but also for the long-term growth and sustainability of the business. It brings to the table several benefits that otherwise would cost a fortune to gain.  

    And that is why your business should invest in customer retention.



    Srushti Shah
    Srushti Shah
    Srushti Shah is an ambitious, passionate and out of the box thinking woman having vast exposure in Digital Marketing. She is working as a Digital Marketer and Content writer at Acquire. Her key focus is to serve her clients with the latest innovation in her field leading to fast and effective results.

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