Neil Patel

I hope you enjoy reading this blog post. If you want my team to just do your marketing for you, click here.

How to Increase Your Profits by 25% By Improving Customer Retention


If you’re struggling to increase your profits, the problem might be that you’re focused on the wrong area.

There are only three ways to increase your profits:

  • Increase the number of customers.
  • Increase the number of sales you make to each customer.
  • Increase the value of each sale.

If you’re only focused on increasing the number of customers, you can only see one-third of the methods for boosting profits!

To maximize your profits, you need to dedicate your time to increasing the value of each subscriber.

To do that, you need to focus on customer retention.

In this article, I’ll explain exactly what customer retention is, how you can measure it, and how it impacts your bottom line.

Then I’ll give details for specific strategies you can use to skyrocket your customer retention rates and maximize the revenue and profit you earn from each customer.

Let’s jump in!

Why customer retention matters for profit

It seems like a simple question, but understanding the core premise behind customer retention is critical to understanding its impact on your business.

Customer retention is the number of customers you acquire who stay with you long-term.

This may depend on what the figures look like for your individual business.

A magazine with a subscription model won’t consider twelve months an impressive feat, while a developer would be elated with a customer making in-app purchases for a full year.

Whatever your definition is, it’s a fact that the longer a customer buys from you, the better off you are.

According to Invesp, your investment is well served by focusing on existing customers, since it costs five times as much to acquire a new customer.

Customer Acquisition Vs Retention Infographic Marketing Blog Sailthru

With that in mind, you need to focus your efforts on appealing to new customers.

With the baggage and risk that comes from a new visitor deciding whether or not to do business with you, it’s understandable that acquiring a new customer is difficult and costly.

You need to overcome barriers, ensure trust, and encourage them to take out their wallets (digitally, at least) and actually pay you money.

This is a difficult process, and existing customers almost always spend more, and spend more often, than new customers.

This is particularly relevant for ecommerce stores. According to data from Monetate, customers with a history of multiple purchases have a revenue per session of over 6x that of a new shopper.

Monetate E Commerce KPIs by Shopper Loyalty Segment July2017 1

But despite the huge benefits of improving customer retention, marketers are struggling to make this a reality in their businesses.

According to The CMO Survey, performance of customer retention has fallen recently, with customer acquisition faring better recently.

DukeCMOSurvey Customer Metrics Performance Feb2016

So, what’s the answer? While it’s important to give attention to acquiring new customers, you need to ensure you’re directing efforts toward skyrocketing your customer retention rates.

Here’s how to do that.

Build your brand

There’s a reason people tend to be loyal to big brands. Of course, those brands have additional money and resources that small businesses don’t.

This is best represented by data published by Influitive, which shows that the larger a company is, the more satisfied they are with their marketing to existing customers.

Infographic The State of Customer Marketing in 2017 Influitive

But the effect isn’t purely financial.

The truth is that larger brands have a certain sway over how we perceive them. They create a feeling of loyalty, name recognition, and build a mentality that we need to stay with them.

Here’s how you can get the effects of a big brand without the big spending that’s usually associated with this retention strategy.

Have a cause to support.

Some of the biggest companies, especially those that started in the last few decades, have used their messaging as a voice for a bigger cause.

Companies like TOMS have built a huge brand name from this kind of giving, and you can do the same.

In a 2012 survey, 72% of respondents said they would recommend a brand that supports a social cause over one that doesn’t. So a good cause is definitely a good thing to have.

Eyeglass company Warby Parker does a great job subtly mentioning their bigger cause on their homepage.

Online Eyeglasses Sunglasses Rx Glasses Warby Parker

Rather than one-time fixes or campaigns, look to incorporate a larger idea into your overall messaging.

Use social proof.

To keep your customer retention rates high, you need to show that users are in a large community of people happy about your product.

By doing this, you can discourage customers from leaving your company and ending the purchase cycle.

Social proof is one of the best and most popular ways to do this. According to the 2017 State of Customer Marketing report, 62% of companies use testimonials for customer marketing.

Top 8 B2B Customer Marketing Trends to Watch Out For in 2017 HD png 900 11255 3

To do this effectively, describe the dedication of customers in your testimonials.

Use phrases like “long-time,” “loyal,” or even “customer since” to promote the idea that customers of your brand stay for a long time.

Resemble your customers.

To keep your customers around for the long term, you need to become part of who they are.

This means you need to intimately understand the language they use, the imagery that appeals to them, and the identity they have for themselves.

One of the brands most famous for creating an identity around its customers is Harley-Davidson.

By using the language of customers (“brass knuckle,” “Fat Bob”) and imagery (industrial, powerful), Harley-Davidson has created an identity that keeps customers loyal for decades.

Harley Davidson USA

To incorporate this into your marketing efforts, look to use common language to encourage customer retention. Use this in all your communication and sales.

Create a “before and after” scenario.

Most marketers know that in order to acquire a new customer, you need to woo him or her with the features your product or service has to offer.

What many marketers forget is that the process continues long after your customer has purchased from you.

While you know the exact problems your product solves, your customer could easily forget now that the pain is relieved.

To maintain your current customers, it’s a good idea to remind them on occasion how your product continues to make their lives better.

You’ll want to market your product using a method the fitness industry has gotten down to a science: the “before and after” scenario.

Show a problem in clear detail, and demonstrate how your product solves this problem for current customers.

Basecamp does a great job of showing the “before” of hectic project management on their homepage.

Basecamp Project Management Team Communication Software

This is a reminder to Basecamp customers of the problems the software helps them deal with.

Create a customer community.

One of the primary reasons customers keep buying from your business is that they feel supported and encouraged.

This sense of belonging creates a powerful motivator for customers to stay with you.

In fact, 37% of companies surveyed have online communities set up as part of their customer marketing efforts.

Top 8 B2B Customer Marketing Trends to Watch Out For in 2017 HD png 900 11255 1

This can be as simple as a private Facebook Group, which AdEspresso uses to draw its users closer together and provide an additional reason to remain as a customer.

Join our private Facebook Group stephen g roe gmail com Gmail

While these small community benefits may not cost much, the effect they create is enough to keep customers around longer and improve your customer retention rate.

Make your sales process enjoyable

Every business has a sales cycle.

The more difficult this cycle is, the more it will hurt your retention rate. To keep customers returning and buying your product, you want to make the process painless and simple.

The holy grail is making the process of acquiring your product so special, it’s an event in and of itself.

Apple has done this effectively with their products. They put such effort into the actions around their products, like packaging and sales, that people literally film the process.

A search on YouTube for “iPhone unboxing” reveals over 12 million results!

iphone unboxing YouTube

While you probably won’t create this kind of viral user experience, you can make each sale more inviting, drive repeat sales, and retain customers.

Use words that encourage purchases.

The first thing that sells your product isn’t the product itself. Before a customer buys a new product, you need to sell it well with the words you use.

The simplest way to do this is to include purchase-friendly language throughout the sales process.

Grammarly does this well on their homepage. They include the phrase “it’s free” twice and list their 4.5-star rating in the Chrome Store.

Free Grammar Checker Grammarly

While simple, this kind of wording makes the process more appealing and indicates the ease with which a customer can make a purchase, whether it’s his or her first purchase or not.

Reduce friction and pain points.

Every sales process comes with friction and pain points. These are places where your potential repeat customer wants to turn back.

While you should work to improve the entire sales funnel, these areas should be your first priority to improve your customer retention rate. It’s at these points that you lose buyers.

Totango has a great illustration that shows the first few spots of friction a customer encounters. These are areas where you can impress the customer and drive repeat sales.

Microsoft Word Mapping the Customer Journey docx

By looking to the first value the customer receives and making sure that value doesn’t taper off with time, you’re guaranteed to have more customers stay with you for the long-term.

Automate to ensure consistent quality.

Of course, we’re all human.

This means that sometimes, we make mistakes. Mistakes are natural, but when they involve customers, this becomes a problem that drives others away from what you have to offer.

Worse, I’ve found that customers who leave because of bad service are unlikely to ever do business with you again.

To solve this problem, you should create an automated system that allows for consistent, excellent customer service along the entire route of customer retention.

This automated system by Autopilot gives a visual representation of what this might look like.

pasted image 0 1 1

As the customer moves through the process, he or she is gradually guided through a meaningful sales funnel that encourages repeat purchases and customer retention.

Choose the right platform.

Even if your sales process is perfect, it will fall flat if you’re using the wrong channel.

To reach your customers for the long-term and keep them with you, make sure you’re communicating through a channel they use frequently.

According to Invesp, the most effective digital marketing channels for customer retention are email, social media, content, and referrals.

Customer Acquisition Vs Retention Costs Infographic

To get the most benefit from your sales cycle, make sure you’re using the channels that your customers visit most frequently and that work with your brand image and messaging.

According to data published by Zendesk, 69% of survey respondents read positive customer service reviews online.

The Impact of Customer Service The Good the Bad and the Ugly 2

If you haven’t looked carefully at which channels are driving repeat purchases from existing customers, it’s time to do a careful inspection and find out!

Impress current customers with your product support

The way you market your product matters most for acquiring new customers.

But if you’re looking to slash churn rates and keep customers around for longer, you need to look at the product support itself.

Ultimately, this is the most important factor determining future purchases.

One of the reasons Amazon has been so effective has been their extreme focus on the user experience and positive impression users have with their products and services.

If you can impress your current customers with the way you support them after their purchases, they’ll keep coming back for more.

Under-promise and over-deliver.

The secret to impressing your customers is for them to see that the value you offer is greater than what they were expecting.

Ultimately, the actual value of your product pales in comparison to the perceived value of your product.

Even an average product will impress customers if they were expecting something smaller or less refined.

To boost customer retention rates, you should undersell the product you’re offering. While selling is critical, you should make the product experience even better than they imagined.

A great way to do this is with world-class support. According to Zendesk, 62% of retailers say they have customer experience programs in place.

Companies focus on customer retention infographic 1

It’s time to borrow a technique from the physical retail world and apply it to your digital marketing!

Be proud of the product and keep customers updated.

One of the most important steps in the customer success process is keeping customers excited about the product you have to offer.

Your excitement for what you sell should transfer to customers, and the easiest way to achieve this is by telling them!

When email marketing software ConvertKit rolled out a new visual automation tool, they told all their existing customers about the new feature.

We re leveling up email marketing with our new automation tool stephen g roe gmail com Gmail

This kind of announcement makes customers excited about the product again and keeps them purchasing from you.

Make your support work well.

Even if customers love your product, the support you provide with that product can make or break their relationship with your business.

Don’t be afraid to invest money in providing high-quality customer service. It’s one of the most effective strategies you can implement for customer retention.

According to data published by Invesp, 89% of companies see customer experience as a key factor in driving retention rates.

Customer Acquisition Vs Retention Costs Infographic 1

Maintain a high level of customer experience with quality support after a customer has purchased your product, and watch your retention rate skyrocket.

Focus on quality over speed.

When handling customer support issues, you may think that speed is paramount, but the truth might surprise you.

According to research published by Fast Company, most people actually prefer that customer support representatives spend more time with them.

Of course, you shouldn’t make your service deliberately slow.

But by making a conscious effort to spend time with customers and encourage interaction, you’ll increase customer satisfaction.

In fact, customer satisfaction is an integral part of the strategy of 37% of B2B companies surveyed in a 2017 report.

Top 8 B2B Customer Marketing Trends to Watch Out For in 2017 HD png 900 11255 2

When improving customer service, focus on quality, not speed.

Get to know your customers.

To create ways to best serve your customers and encourage them to stay with your company and spend more, you need to understand them deeply.

With the recent advances in tracking technology and user identification through website cookies, you have no excuse for not knowing your customers better.

According to Signal, customer identity should become a portable asset.

Digital Marketing in 2017 Trends and Predictions Signal 2

When an existing customer signs up for a new product or makes a purchase, you need to include this interaction in how you communicate with him or her in the future.

By building a history with each customer, you can increase the amount of time he or she stays with your brand.

Personalize your communication.

One of the best ways to use this customer identity information is through personalization.

According to WBR Digital and Emarsys, the top channel through which small and medium retail businesses retain customers is email marketing, with 80% using this channel.

WBRDigitalEmarsys Retail SMBs Top Digital Channels Jul2016

Email is the perfect way to personalize the communication you have with your customers. But it goes beyond simply using their first name in the greeting.

To effectively talk to your customers, create a set of different messages depending on how your customer interacts with your service and products.

Build relationships with customer service

The ultimate goal of your business’s customer service is to build relationships.

This is critical for retention because, according to Zendesk, customers are more likely to share bad experiences than good ones.

Relationships allow for simple fixes before bad news spreads.

Since many of your customers are in the same target market, one bad experience can quickly spread via social media and online reviews, causing more customers to leave.

The Impact of Customer Service The Good the Bad and the Ugly

To prevent this, there are a few proven techniques to strengthen relationships with customers and make them raving fans who are excited about doing business with you.

Surprise with reciprocity.

Reciprocity is doing something for your customers, which in turn leads to them wanting to help you out as well.

This is the key to making customers fall in love with your brand, and it can be a massively helpful factor in encouraging customers to stay with your company.

According to data published by Influitive, 93% of marketers say customer marketing is expected to grow in importance over the next year.

Infographic The State of Customer Marketing in 2017 Influitive 2

Because of statistics like that, you need to continue to give value to your customers before asking for anything from them.

This creates a sense of imbalance that leaves them eager to “repay” the favor by staying with your business.

Make customer service personal.

Creating a personal customer service experience is critical, according to Signal. It’s a must-have for success according to 73% of global marketers, but only 37% say they do it effectively.

Digital Marketing in 2017 Trends and Predictions Signal 1

So, how can you buck the trend and connect with customers on a personal level?

There are a few ways. One of the simplest is to ensure each of your customer service representatives has the customer name when they initiate contact.

Also, be sure to have the customer file on hand to ensure the experience is seamlessly tied with other interactions you’ve had with customers in the past.

This is a great way to make sure that customers feel valued throughout the process and do business with your company longer.

Consider a referral program.

While you may have considered a referral program to bring in new customers, you probably haven’t considered one to improve the relationship you have with existing customers.

But you might be missing out on a huge opportunity. Customers who love your brand are happy to spread the word and would be more than pleased to be recognized for their efforts.

Besides, according to Business2Community, you can acquire a number of new customers at the same time with the strategy.

Top 8 B2B Customer Marketing Trends to Watch Out For in 2017 HD png 900 11255

Since 92% of customers trust referrals from people they know, this is a win-win for your current customers and your customer acquisition strategy.

Meet their needs every time.

When it comes time to help your customers with a problem, you need to make sure you’re meeting their exact needs every time they contact you.

According to Zendesk, 24% of customers seek out vendors for two or more years after positive experiences, while 39% avoid vendors for two or more years after bad experiences.

The Impact of Customer Service The Good the Bad and the Ugly 1

To keep customers with your brand, you need to make sure each experience they have is positive.

Even one experience where customer service isn’t able to meet their needs could result in a customer leaving and not returning for another two years or more.

Take proactive service.

As important as customer service is, it’s limited to a reactive philosophy that involves solving a problem once it occurs.

To make stellar progress with your retention rate, however, you should use a different strategy: preemptive and proactive retention.

These methods allow you to recognize when a customer is more likely to leave your company or experience bad service.

Instead of letting it be, you move in to fix the problem before it becomes a large issue. The classic example of this is a text from the airline about a delayed flight.

Instead of letting customers grow angry about the change, they take preemptive action to prevent frustration.

According to Pega, this type of action is much more cost effective and reduces churn risk by its very nature.

Driving Effective Customer Retention Infographic pdf

To use this strategy, look for areas that frequently frustrate your customers, and then work out ways to inform them of the problems before they decide to stop buying from you.

This, perhaps more than any other strategy, can skyrocket your retention rate without much additional work on your part.

You won’t save or spend more time, you’ll just focus efforts on solving the problems before they occur instead of afterward.

Develop KPIs around your customer service.

If you’re struggling to keep customers because of poor experiences, the problem might be with how you’re measuring the effectiveness of your customer service team.

According to data by Signal, 90% of Forbes Global 500 executives believe that improving customer experience will be a key battleground in marketing.

Digital Marketing in 2017 Trends and Predictions Signal

To make sure your employees are reaching out to customers effectively, start changing the way you indicate their progress and success at the company.

By using customer feedback, instead of other factors like speed of reply or number of tickets handled, you can ensure that employees look out to retain customers.

Bring back the “lost sheep.”

Sometimes, there are customers who are ready to leave but haven’t made the final move. I call them “lost sheep.”

They’re more confused than angry, and outreach can bring them back to the flock.

This is one of the last times you can effectively reach in and help those customers since they are much more difficult to reach once they’ve finally left your customer roster.

To do this, reach out when customers haven’t made a purchase or engaged with your brand in a while.

Digital course company Thinkific sends a great email to unresponsive customers after a few months.

They start with the subject line “What could we have done better?” and close the email by asking what they could fix to make things better.

What could we have done better stephen g roe gmail com Gmail

This is a great way to help the customers who are wandering and need additional support, before they stop doing business with your company for good.

Be the expert

If you’re involved in content marketing, it’s a good idea to use this to your advantage with your customer retention rates.

But even if you’re not in content marketing, you can be the expert of your own product and demonstrate clear value to your existing customers through other means.

Here’s how you can use your expertise to keep customers happy and engaged.

Provide detailed content that appeals to customer interests.

If you’re publishing content on a regular basis, make sure it appeals to customer interests.

Primarily, you need to be focused on what the customers care about, not what you find intriguing as the marketer working on the project.

Talk to customers and learn the struggles and needs they face on a daily basis. Then, incorporate those into your marketing strategies.

The SalesLoft blog does a great job of making customer problems front and center.

SalesLoft Blog

They include content relevant to all types of sales, and they don’t only focus on pitches for their product.

If this is a strategy you’re going to use seriously, you want to get started as soon as possible.

It will take a little while for your content marketing to start attracting customers, so you should get a head start.

Show how to use the product and get better.

Content marketing isn’t the only way to improve your relationships with customers. You can also provide detailed analysis of exactly how to use your product.

This is especially helpful if your product has a free version used by a large demographic that is interested in learning more about the special features you have to offer.

This is the case with project management software Trello, which includes a variety of articles about how to implement their system.

How Agile Teams Can Automate Trello To Reduce Manual Overload

This isn’t content marketing in the most traditional sense since they’re focused exclusively on their own product.

But by creating a more positive user experience, the Trello team continues to build their influence as the leaders of their own product.

Unfortunately, this is a role many companies have left open to others by not having detailed and useful documentation.

Track the data on your influence.

Finally, you need to track how well your influence is working to drive sales from current customers.

This can be easy to do if you have the right kind of tools to track how well your sales funnel is working.

By tracking, you can get a bird’s-eye view of how well your marketing efforts are working with current customers.

Research by Influitive showed that the group least likely to be satisfied with customer marketing are those marketers who don’t track the results.

Infographic The State of Customer Marketing in 2017 Influitive 1

To see massive improvement, start tracking how well your campaigns are working.

Build programs to boost retention rates

It’s no secret in the marketing world that retention rates are important for companies.

But most customers don’t carefully consider the impact of their decisions on your bottom line. Instead, they need to be encouraged to stay with the company.

By showing how important your most valuable customers are, you can increase your retention rates and improve the number of customers who choose to stay with you.

According to Zendesk, 52% of respondents have seen an increase in their repeat customer sales by focusing on customer experience.

Companies focus on customer retention infographic

One of the best ways to get customers started with this is through a retention program that rewards customers who stay and purchase often.

Get people started.

The key to having customers stay with you is getting them invested in the first place.

Once someone signs up for your products or completes a small task, you may still struggle to get them to complete a subsequent purchase.

To make sure this process becomes a habit, you need to invite new customers to take action on your products as soon as possible.

Ridesharing company Lyft does this with an email sequence sent soon after a customer takes his or her first ride.

The email opens with “Welcome to Lyft” along with a friendly greeting.

Welcome to Lyft stephen g roe gmail com Gmail 1

But most importantly, it ends in a call to action, encouraging new customers to “Take a Ride” and sign up for a ride with their service.

Welcome to Lyft stephen g roe gmail com Gmail

This ensures that new customers start using the system and become familiar with it. This is the first step in an effective customer retention program.

Make a VIP membership.

Many companies are finding huge success with VIP memberships.

This is a way to reward your high-value customers, while also getting them to pay more for the privilege of being your high-value customers!

According to Outsell, a 5% increase in customer retention can lead to increased profits of 25-95%, so it’s critical to get this right.

Customer retention infographic 2 21 17 v2 png 800 2000

The classic example of a VIP service is Amazon Prime.

This service results in better customers for Amazon, and it makes their retention rate skyrocket. Since the service was created, Amazon has promoted it aggressively.

It’s no wonder Amazon advertises the service multiple times on every page of their website.

Amazon Prime

By creating a premium service like this, you can create a new class of customers who are engaged with your product and buy frequently.

Give a positive label to customers.

But a VIP service doesn’t have to cost money for the customer.

You can also make a free program that consists largely of a label. With this system, you provide value for the customer merely by naming him or her a positive term.

A great example of this is Buffer, which calls its paid subscriptions plan “Awesome.” Customers feel special with this added name, even though it costs Buffer nothing!

Social Media Management Platform Buffer 1

According to Signal, 57% of U.S. digital marketers expect to increase spending on loyalty programs.

Digital Marketing in 2017 Trends and Predictions Signal 3

Using a free term to describe your most loyal customers is a great way to increase your retention rates without spending a large sum of money keeping these customers around.


Your biggest tool to boosting profits is your customer retention.

It has a direct impact on how much you make from each new customer acquisition, and it’s a number you can’t afford to ignore.

To increase your customer retention rates, you should build a strong brand that encourages a sense of community.

By using social proof, speaking the language of your customers, and supporting a bigger cause, you can keep customers committed to you for years to come.

If you work to make the sales process frictionless, impressive, and friendly, you can make the buying experience something customers want to repeat over and over again.

Finally, by becoming the expert in your customers’ eyes and building a community that rewards your most loyal customers, you can drive massive profits.

No matter the size of your business, you need to make your customers stick around for the long haul to see the greatest gains.

What strategies will you use to improve customer retention and increase your profits?

Consulting with Neil Patel

See How My Agency Can Drive More Traffic to Your Website

  • SEO - unlock more SEO traffic. See real results.
  • Content Marketing - our team creates epic content that will get shared, get links, and attract traffic.
  • Paid Media - effective paid strategies with clear ROI.

Book a Call

Are You Using Google Ads? Try Our FREE Ads Grader!

Stop wasting money and unlock the hidden potential of your advertising.

  • Discover the power of intentional advertising.
  • Reach your ideal target audience.
  • Maximize ad spend efficiency.
Ads Grader


Neil Patel