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Best Strategies for Improving Customer Loyalty & Retention

Marketing has traditionally focused on acquiring new customers. However, those seeking to maximize their return on investment must place equal importance on customer loyalty and retention. Customer acquisition costs have been rising faster than customer lifetime value (CLV) for some time now. In fact, it costs five times as much to acquire a new customer as to retain a repeat buyer. If you want to generate long-term success, focus on your existing customers. Make customer retention the first step and then turn your buyers into brand advocates by increasing customer loyalty.

In this article, we’re going to explain the value of customer loyalty and retention, the difference between them and actionable steps you can take today to improve them both.

What is Customer Retention?

Every business wants to encourage repeat purchases, reduce customer churn rates and ensure existing customers continue to choose them over many brands. Customer retention refers to the initiatives that a business undertakes to convert new customers into loyal customers. It is a percentage that counts how many customers are retained by the end of a specific time period. 

Customers are considered “retained” when they continue purchasing within a set period. Customers who buy from a competitor or fail to buy from your business again are considered lost customers.

The ultimate objective of retaining new customers is to convert them into repeat customers and decrease their churn rate. In other words, customer retention is the art of understanding the customer journey, providing them with a positive customer experience at all touchpoints and fulfilling their expectations so they do not switch from your brand to the competitors.

Retaining customers is cost-effective and good for the business’s success in general. It reduces the costs of customer acquisition, for one thing. It helps you build deeper relationships with your customers so that you can satisfy them further (and prevent them from going elsewhere). And it supercharges revenues. According to Bain & Company, a 5% increase in retention can increase profits by 25% to 95%

To measure customer retention, you need to determine the customer retention rate (CRR).

CRR is a tactic that shows the number of customers that have repeat business with you over a given period. It’s simple: if you had ten customers, but three of them churned over a year, you would have a retention rate of 70%.

The formula for retention rate: 

Customer Retention Rate = [(number of customers at the end of the period – number of customers acquired during the period) / number of customers at the start of the period] x 100

The higher your customer retention rate, the more confident you may be that your clientele prefers your services in comparison to many brands. If you want to make it in a market where brand loyalty isn’t guaranteed, you need to employ various customer retention strategies.

What is Customer Loyalty?

Customer loyalty can be defined as having an ongoing positive relationship with an entity. Customers with strong ties to your brand will choose your service over competitors when offered similar offerings if customer loyalty levels are strong.

It is important to remember that customer loyalty does not come from a one-time purchase. Instead, it comes over time as the result of pleasant, consistent interactions. It does not necessarily mean all communications must be flawless. Even a few minor flaws in communication can maintain customer loyalty. However, too many will weaken your relationship.

Shortly, every customer who is loyal is also a customer who is retained, but every retained customer is not a loyal customer. You can keep customers with a higher price or by providing high-value bonuses, but loyal clients will remain even if your prices increase. Customer retention is about building strong relationships so your customers become loyal to you.

Easier Feedback Management. Image by FuseBase (formerly Nimbus)

Customer loyalty measures are often qualitative metrics such as user-generated content (UGC), customer feedback forms and Net Promoter Score (NPS). The most reliable way to measure customer loyalty is through customer sentiment surveys. We recommend using Net Promoter Score (NPS), the most widely used surveying system among B2B brands, to see how customers perceive their business.

NPS measures loyalty by asking customers how likely they are to recommend your brand, product or service to a friend or colleague on a scale of 0-10. Based on the customer’s response, they’re then categorized as a promoter (scoring 9-10), passive (7-8) or detractor (0-6). Promoters are your most loyal customers, while detractors are those who pose a risk of churn.

To calculate your absolute NPS, subtract the percentage of detractors from the percentage of promoters. The higher your NPS, the greater the loyalty you’ll receive from your customer base—and the better the outcome for you.

Retention Strategies to Increase Customer Loyalty

Reward loyal customers with loyalty programs

A reward system for the most loyal customers is a great way to keep them coming back. The simplest and probably the most popular loyalty programs use a point system. Customers earn loyalty points every time they buy from the brand. Then, these points, when accumulated, earn them a reward, like discounts, special client treatment and freebies.

Another type of loyalty program is a card-based system that rewards customers for loading up and spending money through the card. With loyalty programs where customers get rewarded with monetary or non-monetary gifts, people will feel compelled to keep coming back.

Other customer loyalty programs include tiered loyalty programs, refer-a-friend programs, cash back, etc.

When developing a loyalty or referral program, choose rewards that your particular audience will find interesting. You can base your customer rewards on how much money they spend, how often they make purchases or how many people they refer.

Personalize the customer experience

Consumers want companies to deliver a customer experience that is tailored to their individual needs and preferences. Personalization often makes customers feel valued, which inspires the emergence of more loyal customers. Companies can provide personalized service by documenting customer data and interactions and then using that information to cater to the consumer. Personalized service could communicate with customers through their preferred channels or access customer details to offer relevant product recommendations.

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Exceed customers’ expectations

These days, things customers expect are set at an all-time high. And the only way to retain them is to fulfill or surpass their expectations. So, carefully commit to what you can deliver to your customers. Do not promise them anything if you can’t accomplish it. Customers feel delighted when they get more than what was expected.

For instance, suppose your business policy states that the product is dispatched in 5 working days, but it is shipped in 3 days. This means you have over-delivered what was promised. In this case, your customers will feel delighted, increasing the chance of repeat sales.

Emphasize case studies during the sales process 

An important portion of the sales process should be concentrated on defining whether your brand’s products or service is the right choice—from both a customer experience angle and your own work perspective. 

Share case studies that accurately indicate how your goods or services assisted other customers and their experience working with your team. You can also show testimonials from current customers. 

It’s like researching before any crucial purchasing decision. You want to find out how it will work before you buy it. If the customer really comprehends this, they will be more willing to have appropriately set expectations. As a result, you will get more satisfied customers when they make their decision.

Use reciprocity to improve customer loyalty 

Reciprocity is a social structure that has been found to improve customer loyalty. Behaviors of kindness generate a feeling of obligation in the person who willingly wants to compensate for the kindness. 

There are two types of reciprocity: trumpeted and surprise. Both of them can be applied in your retention strategies to build customer loyalty. 

Trumpeted reciprocity refers to when the person doing something useful does so in a way that shows they are going above and beyond. It does not mean you need to write all the good things you do in a weekly report, but customers can feel that what you are doing surpasses the business relationship‘s normal scope. For instance, you can grant your customers early access to a brand-new service or product. 

Surprise reciprocity refers to a surprise present or gesture. For instance, you can offer your customers free tickets to an event without warning. 

Ask your customers for honest feedback and respond to it

Show your customers you are committed to improving their experience by regularly communicating with them. When customers provide feedback, whether it’s positive or negative, be sure to respond and use it to identify problem areas in the business. 

Use surveys, online feedback, forms of feedback, monitoring social media, live chat and other methods to collect customer feedback. Once you have the results, your team should carefully analyze all information, especially negative reviews and make adjustments to products and services. It is an extremely useful and important retention strategy because considering customer experience and making changes for the better will boost customer satisfaction and loyalty.

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How to Choose the Right Software?

Companies that implement customer loyalty and retention software have higher retention rates. They are able to keep their customers happy and encourage them to spend more money. This software will give your team all the data it needs to pinpoint what causes customer churn and correct it before it is too late.

Software for customer retention can automate certain tasks, especially when they are related to helping customers stay loyal. It can help by gathering critical insights about customer data and retention metrics (such as purchase history, sales velocity and tenure). Retention software can give you an unbiased report about your customers’ health, which is crucial. It is possible to predict customer behavior and take proactive action.

Selecting the best customer loyalty and retention software provider shouldn’t be something that you do in between meetings. You need to sit down and dig deep into the functionalities offered by different loyalty providers. You should sketch out your goals for your ideal loyalty program, the mechanisms that you would like to implement and your audience before choosing. You also need to delve into the loyalty management software features before making the right choice. Key features to look for in customer loyalty software include customer segmentation, tracking, personalization, analytics and reporting capabilities and more.

The ideal software should be able to reflect the goals of your company and integrate seamlessly with daily operations. It will help you improve customer retention and create long-lasting relationships.

FuseBase—Your Partner in Customer Retention and Loyalty

FuseBase is your partner in Customer Retention and Loyalty and the best of 12 Best MemberSpace Alternatives You Should Know About. Image by FuseBase

Are you searching for great loyalty software? FuseBase (formerly Nimbus) emerges as the ideal solution for businesses seeking comprehensive loyalty management tools. FuseBase (formerly Nimbus) offers companies an all-in-one collaboration platform designed specifically to facilitate customer-oriented businesses. It has a user-friendly interface, AI-powered productivity tools, and comprehensive support features that will simplify your work and user experience as well.

FuseBase (formerly Nimbus) will perfectly fit businesses that want to strengthen their customer retention and improve loyalty. You can invite clients to collaborate in client portals from Day 1 of your business relationships. A clear and intuitive interface will save you and your clients time on the learning curve. You can also set up a knowledge base and blocks with FAQs to make the primary client interactions easier. 

To keep your clients in the loop about project changes, you can create dashboards, add reports from Google Analytics and more. There is also in-portal analytics for tracking clients’ behavior. You can see what clients mostly view on the portal, which device they use and so on. It can give you hints on building a better strategy and flow for them, hence improving client retention. 

In addition to analytics, you can create client surveys right in the portals. Analyze them with FuseBase AI and generate tailored strategies and responses.

FuseBase (formerly Nimbus) will revolutionize how your business approaches customer retention and loyalty. By tailoring each experience exclusively to all its clients with AI-powered tools and features, FuseBase (formerly Nimbus) promises to boost both client satisfaction and retention levels each time someone visits your organization.


Having a loyal customer base is important for a long-term company’s success. By focusing on customer loyalty and retention, you can create long-lasting relationships with your customers, increase your revenue and reduce costs associated with acquiring new customers. There are many different ways to foster customer loyalty, from providing quality products and excellence in customer service to implementing a customer retention strategy. However, choosing an efficient software that will meet all your business needs should be your first step in this journey.

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