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Ecommerce glossary > Customer retention

Customer retention

What is customer retention?

Customer retention refers to the ability of a company to keep current customers with their business. For subscription brands, having an effective customer retention strategy is particularly important, as the subscription business model depends on recurring revenue. Having a high customer retention rate increases customer lifetime value for your business, improving customer loyalty and customer satisfaction. Retaining your most loyal customers can also help improve average order value (AOV) for your online business.

Customer retention strategies

There are a number of strategies your brand can use to improve customer retention. Investing in analytics and collecting customer feedback in your customer retention program are both valuable tools for establishing a baseline for your business. Make sure you effectively set customer expectations for your products and services through your messaging and imagery. Tracking key metrics over time—customer lifetime value, customer churn, customer acquisition costs, etc.—can help you identify trends in customer behavior and business performance and assess the effectiveness of your retention strategies. Another business strategy for retaining existing customers is to offer a customer loyalty program. 

Subscription businesses can increase customer retention when they empower customers to manage their own subscriptions. For example, making it easy for subscribers to skip or reschedule a delivery, or swap or add on a new product or service to an order, without having to engage your customer support team creates a more seamless experience for the subscriber and lessens the chance that they will churn out of your business.