Customer retention rate – 10 things you can do to increase it

A study conducted by Harvard Business School showed that 5% growth in customer retention rates increases a company’s profits by 25% to 95%.

Then, the customer retention rate is an essential metric to promote the financial health of your business.

Investing in customer acquisition is not enough to increase a company’s profitability – the company should also keep contact with consumers and monitor their needs.

We’ve developed this basic guide to help you understand what customer retention rate is, how to calculate it, and how to increase it.

What is customer retention rate?

The customer retention rate is directly related to customer loyalty. It’s the result of actions performed by companies to build a stronger relationship and prevent loss of customers.

These actions include the adoption of strategies, especially related to customer service and customer success, such as loyalty programs and engagements that make the consumer feel valued and supported by the company.

It increases the chances of customer retention, i.e., customers buying again and recommending your company to other people.

Benefits of investing in customer retention

Many companies prefer to spend money with customer acquisition because they consider this strategy as the fastest and most effective way to increase revenue. However, customer retention is often more efficient and costs are up to seven times lower.

This is because retention doesn’t require time and resources to attract, educate, and convert customers, as they are now in another phase and remain interested in your product or service, making negotiation more direct and objective.

When dealing with customers who are already engaged with your brand, it’s easier to capture their experience and collect information, which will support improvements in your business.

The main benefits of customer retention are:

  • Investment optimization;
  • Higher profitability of your business;
  • Stronger relationship with customers;
  • Generation of value and admiration among consumers;
  • Loyal customers who promote your brand voluntarily.

How to measure customer retention rate

Now that you understand what customer retention rate is and its benefits for your company, it’s time to learn how to calculate it.

Customer retention rate is calculated using the formula below:

Retention rate = ((CE-CN) / CS)) x 100


  • CE: number of customers at the end of the period;
  • CN: number of new customers acquired during the period;
  • CS: number of customers when the measured period began.

To understand how it works in practice, we provide an example below:

Imagine that you: 

  • have 200 customers at the start of the period
  • lose 20 customers
  • acquire 40 customers

At the end of the period, you’ll have 220 customers and the retention rate will be:

Retention rate = ((CE-CN) / CS)) x 100

Retention rate = ((220-40) / 200)) x 100

Retention rate = (180 / 200) x 100

Retention rate = 0.9 x 100 = 90

Therefore, the customer retention rate in the measured period is 90%, which can be considered a good rate.

See below ten things you can do to increase customer retention.

  • Get to know your customers

The first step for a good retention strategy is to learn more about the profile of your audience, including customer needs, shopping habits, and things they are looking for.

This information will help your company define actions to address consumer pain points through your products or services.

  • Be where your customers are

It’s not enough to be on all social media platforms. You should know on which channels your customers are and structure personalized actions to reach the audience that best matches your brand and is likely to consume your products and services.

  • Offer exceptional customer service

Customer service is a key factor in customer retention. Therefore, your company should offer differentiated service, focused on rapid problem solving, always acting with empathy and proactivity.

For this reason, it’s important to: 

  • Listen carefully to customer needs;
  • Be available to answer their questions and requests;
  • Create an emotional connection with customers;
  • Offer accessible contact channels, such as email, chat, WhatsApp, among others;
  • Send emails regularly with important information, relevant content, offers, and discounts.
  • Offer a personalized customer experience

Customers increasingly seek and value personalized experiences to fulfill their needs and preferences. The idea here is to develop targeted communications and exclusive offers, showing customers that you know them and care about them.

  • Invest in after-sales service

After-sales support is a crucial service to increase customer retention rates, because at this moment the company shows its real concern about consumers.

Therefore, this phase can be used to establish a lasting relationship and generate more value for the brand, identify potential issues in the buying experience, and offer other products to encourage repurchase.

  • Conduct customer satisfaction surveys

Satisfaction surveys allow you to understand customer needs and expectations in relation to your company and the products or services it offers. These surveys provide customer feedback and identify areas for improvement in the customer experience.

  • Create a loyalty program

Loyalty programs represent an important customer retention strategy. Aiming to reward repeat customers for their engagement and loyalty, it encourages consumers to buy more often and interact with the brand to earn points that can be exchanged for discounts, products or services.

  • Value your brand

Storytelling is a persuasive technique that allows you to create a presentation about the brand and its products and services, promoting businesses indirectly.

This technique combines customer success stories with the needs of the target audience, leading to strong identification with the brand, so customers can be sure your company can actually help solve their pains.

  • Track business metrics

Business metrics should be tracked to improve the results of customer retention campaigns, in particular, CAC (customer acquisition cost), LTV (lifetime value), and ROI (return on investment).

The information obtained from these indicators will identify which actions are retaining customers and attracting new consumers.

  • Use a comprehensible reliable CRM system

In an unstable and increasingly competitive economic scenario, companies must urgently invest in a business strategy to understand and anticipate consumer needs.

A good customer relationship management system is an essential tool in this process, as it helps increase your company’s customer retention rate.

Milvus is an important ally in your customer retention strategies – it collects and stores data, habits, preferences, consumption trends, and customer expectations. It also matches this information to support the development of actions and campaigns according to the profile and demands of consumers.

Another interesting feature of Milvus platform is the ticket management module, which integrates all customer communication channels, allowing excellent, fast, and efficient service.

If you want to learn more about Milvus platform, contact us for a free trial of its resources to improve customer retention rates. Talk to our team and find out how we can help improve your customer experience and satisfaction.

Related Posts

Try it out, optimize your management and relationship with your customers

Use all features without worry, test the system for 7 days free.