Book a Meeting
Referral & Loyalty Program for All Types of Businesses
Book a Meeting

Share this article

Table of Contents

Customer retention is extremely important for any kind of business, so creating a comprehensive retention marketing strategy will get you the biggest bang for your marketing buck.

In this post, we'll walk you through everything you need to know to set up your own customer retention marketing strategy, including 16 tactics that you can implement today. 

We'll also outline exactly how your business can benefit from a customer retention strategy, how to measure customer retention, and who on your marketing teams is responsible.

Here’s everything you need to know about retention marketing.


What Is Retention Marketing?

Retention marketing is a strategic approach aimed at keeping existing customers engaged and growing loyalty to your brand over time. It focuses on nurturing customer relationships through personalized communication, loyalty programs, and exclusive offers. This method is cost-effective as it emphasizes retaining current customers rather than acquiring new ones. 

Increasing customer retention rates by just 5% can increase profits by 25% to 95%. Additionally, the likelihood of selling to an existing customer is 60-70%, compared to 5-20% for a new prospect. By prioritizing retention, businesses can enhance customer lifetime value and foster brand advocacy, leveraging the fact that loyal customers are more likely to refer others, further reducing the cost of customer acquisition.


What Are The Benefits Of Retention Marketing? 

By focusing on keeping existing customers engaged, businesses can enjoy a more stable and predictable revenue stream. Below are some key benefits of retention marketing:

  • Higher Customer Lifetime Value (LTV): Customers who repeatedly purchase from your store are likely to spend more over time. By increasing the frequency and value of their purchases, retention marketing boosts the overall LTV, which is a crucial metric for long-term growth.
  • Higher Average Order Value (AOV): Loyal customers often feel more comfortable and confident in spending more per transaction. Retention strategies can encourage this behavior by offering personalized recommendations and exclusive deals.
  • Lower Marketing Costs: Compared to acquisition efforts, it is generally more cost-effective to retain customers than to acquire new customers. Customer retention marketing leverages existing relationships, requiring less spend on advertising and outreach to convince customers to make a purchase.
  • Enhanced Brand Loyalty: Regular customers tend to develop a stronger emotional connection with your brand and remain loyal as a result.
  • Increased Referral Rates: Satisfied customers are more likely to refer friends and family, expanding your customer base organically and cost-effectively.


How Various Types Of Businesses Benefit From Retention Marketing

Retention marketing's effectiveness varies across different business models, each reaping unique benefits by fostering customer loyalty and increasing revenue. Here's how various types of businesses benefit from retention marketing strategies:

  • Low AOV, High Frequency (Hair Care, Beauty, Wellness Products): Health and beauty businesses benefit from increased repeat purchases and stronger brand loyalty. Regular engagement through targeted campaigns helps maintain a steady revenue stream and enhances customer lifetime value.
  • High AOV, Low Frequency (Luxury Goods, Furniture): Retention marketing helps in building long-term customer relationships, encouraging repeat business, and cross-selling related products. After a major purchase, engaging customers with after-sales services and exclusive offers increases the likelihood of additional purchases.
  • Subscription-Based (Streaming Services, Meal Kits): For these businesses, retention marketing is key to reducing churn and maintaining a consistent revenue flow. Personalized experiences and regular updates keep subscribers engaged and less likely to cancel.
  • Service-Oriented (Salons, Fitness Centers): Retention strategies in these sectors lead to increased appointment bookings and membership renewals. Loyalty incentives, exclusive perks, and listening to customer feedback about what kinds of offerings to provide keep customers coming back.
  • Technology and Software (SaaS Products): In this sector, regular updates and responsive customer support help maintain a stable customer base and reduce churn. Creating and maintaining a SaaS product that enhances the customer’s business, rather than interferes with it, is essential to retaining customers.
  • E-Learning Platforms: Retention marketing benefits these platforms by increasing course completion rates and encouraging ongoing engagement. Personalized course recommendations and interactive features keep learners invested in the platform.
  • Hospitality and Travel (Hotels, Airlines): In these industries, retention marketing enhances customer loyalty through exclusive deals and personalized travel recommendations. This leads to repeat bookings and a higher likelihood of customers choosing the same brand for future travel needs.


The Difference Between Customer Retention And Acquisition 

Customer retention and acquisition are two fundamental strategies in marketing, each focusing on different stages of the customer lifecycle. Customer acquisition is about attracting new customers, involving strategies like advertising, promotions, and initial offers to draw in prospects and convert them into first-time buyers. In contrast, customer retention focuses on keeping existing customers engaged and loyal, using tactics like personalized communication, loyalty programs, and customer feedback to encourage repeat purchases and long-term relationships. 

While acquisition is essential for growing the customer base, customer retention is key to maintaining a stable revenue stream and enhancing the overall value derived from each customer, often at a lower cost than acquisition.


How To Calculate Customer Retention

Calculating customer retention typically involves a specific formula that measures the percentage of customers a company retains over a given period. The formula is:

Customer Retention Rate (CRR) = (Number of customers at start of period - Number of customers at end of period / Number of new customers acquired during period)×100

customer retention rate

This formula provides a clear picture of how effective a business is at retaining customers. In addition to the Customer Retention Rate, other related metrics also offer valuable insights about your retention marketing strategy:

  • Repeat Customer Rate (RCR): The percentage of customers who have made more than one purchase. Calculated by dividing the number of repeat customers by the total number of customers.
  • Purchase Frequency: Measures how often customers make purchases within a specific period. Calculated by dividing the total number of orders by the total number of unique customers.
  • Average Order Value (AOV): The average amount spent per order. Calculated by dividing total revenue by the number of orders.
  • Customer Value: Reflects the overall value a customer brings, calculated by multiplying AOV by purchase frequency.

These metrics, combined with the Customer Retention Rate, provide a comprehensive view of a business's success in maintaining a loyal customer base.


Top 16 Retention Marketing Strategies And Tactics

Effective retention marketing strategies and tactics help maintain customer engagement and loyalty. Here's a detailed look at some top customer retention strategies, how to implement them, and why they work:

1. Email And SMS Nurture Tracks

Email nurture tracks are automated email sequences designed to engage customers at various stages of their journey with your brand. These emails can range from welcome messages and product recommendations to feedback requests and re-engagement campaigns. 

These emails should be automated and sent out regularly over a finite period of time, anywhere from five to eight messages in a sequence is good. Otherwise, without engagement, you can tank your open rate.

To implement this, start by segmenting your email list based on customer behavior, such as purchase history, browsing behavior, and engagement level. Tailor the content of each email to address the customer's specific needs and interests at each stage. 

mz wallace welcome emails series loyalty rewards (1)

For instance, new customers coming in might receive a welcome series, while long-time customers might get personalized recommendations or loyalty rewards emails. The same concept applies to your SMS list.

Attentive image

Friendbuy integrates with Klaviyo and Attentive, making it easy to send personalized messages and loyalty incentives to customers. In fact, woom bikes, a brand that sells children’s bikes, was able to increase its new email and SMS subscriber list by 40% through Friendbuy integrations. This led to a 58% increase in month-over-month revenue and a 21% higher average order value (AOV), thanks to the nurture tracks in place for its growing subscriber base.

woom 2

This strategy works because it maintains consistent, relevant communication with customers. By providing them with valuable content at the right time, you increase the likelihood of repeat purchases and strengthen their connection to your brand.

2. Retargeting Campaigns

Retargeting campaigns are a form of online advertising that targets individuals who have previously interacted with your website or brand but did not complete a purchase. These campaigns use cookies or pixel tracking to identify past visitors and display targeted ads to them on various platforms. 


To effectively implement retargeting campaigns, you should create ads that are specifically tailored to the interests and previous interactions of these potential customers. For example, showing products they viewed or added to their cart can remind them of what they left behind. 

Retargeting is effective because it keeps your brand and products in the mind of potential customers, increasing the chances that they will return to complete a purchase. This strategy is particularly powerful because it targets individuals who have already shown interest in your products, making them more likely to convert compared to new prospects.

3. Loyalty Programs

Loyalty programs incentivize repeat purchases by offering loyalty rewards, discounts, or exclusive benefits to frequent customers. To implement a successful loyalty program, identify rewards that genuinely appeal to your customer base, such as points redeemable for products, members-only discounts, or early access to new releases. 

Loyalty programs can also provide valuable data on customer preferences and buying behaviors, which can be used to further tailor marketing efforts.

Setting up a rewards program can be significantly enhanced with the support of platforms like Friendbuy. For instance, Friendbuy has been instrumental in the success of OLLY's loyalty program. OLLY, a wellness brand, partnered with Friendbuy to create a loyalty program that rewards customer actions that align with OLLY’s business goals.

olly loyalty program landing page - how it works

Using the integration with Attentive enabled OLLY to send SMS messages to customers after earning events, reminding them of their rewards and encouraging them to continue to engage with the brand.

4. Referral Programs

Referral programs tap into your existing customer base to acquire new customers by offering incentives for referrals. Implementing an effective referral program involves providing a clear and attractive incentive for both the referrer and the referee, such as discounts, store credits, or exclusive products. This strategy works because people trust recommendations from friends or family more than traditional advertising. 

Referral programs not only help in acquiring new customers but also reinforce the loyalty of existing customers, as they feel rewarded for promoting a brand they like. Let’s take a few examples of referral programs that have successfully increased customer retention:

Company: Thinx

Thinx, a company specializing in period underwear, wanted to be able to provide a robust referral program to its customers, but was limited by other referral program software that couldn’t keep up with the demands of the customers and the business.

thinx standard reward structure

By integrating with Friendbuy's Shopify Plus, Thinx was able to have more control over its referral program at a granular level. One of the customizations Friendbuy provided was the ability for customers to choose how much of their rewards applied to each order. Thinx’s referral program doubled in size once these changes were made.

Results: Thinx grew its referral revenue by 114% and got cost per acquisition (CPA) down to less than $1. Read more about Thinx's success.

Company: SPANX

SPANX, a shapewear company, originally found success through traditional word-of-mouth marketing. Think: Oprah Winfrey and prominent retailers. The company wanted to explore word-of-mouth marketing in the digital landscape, too.

spanx website ribbon

Partnering with Friendbuy, SPANX was able to create customized product sharing referral campaigns that promoted high-growth product categories. SPANX also took advantage of Friendbuy’s A/B testing capabilities, further amplifying its reach and ability to connect with its customers.

Results: SPANX achieved a remarkable 15% conversion rate and 8% higher average order value (AOV) from referred customers. Explore SPANX's strategy.

Learn how SPANX uses Friendbuy to achieve a 15% conversion rate from referred customers.

Company: Tonal

Tonal, an innovative fitness company, exploded in popularity in recent years, despite its scrappy marketing team. To capitalize on the growing popularity of its products, Tonal partnered with Friendbuy to launch a robust and scalable referral program.

tonal referral program (1)

Results: Tonal increased its online revenue by 7% using Friendbuy’s loyalty program software. Learn more about Tonal's approach.

See how Tonal drives up to 7% of online revenue with a Friendbuy-powered referral program

5. Periodic/Seasonal Discounts

Offering periodic or seasonal discounts can re-engage dormant customers and encourage repeat purchases. These discounts can be tied to holidays, seasons, or even customer anniversaries with your brand. The key to success with  holiday marketing campaigns is timing and personalization. Discounts should be offered at times when customers are most likely to make a purchase, and they should be personalized based on the customer's previous purchasing behavior. This approach works because it creates a sense of urgency and exclusivity, prompting customers to make a purchase they might have been considering.

6. Sweepstakes and Contests

Sweepstakes and contests can create excitement and engagement among your customer base. To implement these effectively, ensure that the contest is easy to enter but also aligns with your brand values and appeals to your target audience.


For example, a photo contest on social media can increase engagement and brand visibility. These tactics work because they encourage interaction with your brand, and the excitement of winning can create positive associations with your brand.

7. Dedicated and Prompt Customer Support

Providing dedicated and prompt customer support is crucial for retaining customers, especially in resolving issues and answering queries. This can be achieved through various channels like phone support, live chat, or social media. Quick and effective resolution of problems not only improves customer satisfaction but also builds trust and loyalty. This approach works because excellent customer service can turn a potentially negative experience into a positive one, increasing the likelihood of repeat business.

8. Educational Materials

Offering educational materials such as how-to guides, tutorials, or webinars adds value to your products or services and helps in building a relationship with your customers. These materials should be informative, relevant, and tailored to your audience's interests and needs. This marketing strategy works because it positions your brand as a helpful and knowledgeable authority in your field, fostering trust and loyalty among your customers.

9. Highly Personalized Content and Customer Experiences

Creating highly personalized content and customer experiences begins with using data analytics to understand customer preferences and tailor your marketing efforts accordingly. This could mean personalized product recommendations, customized email content, or targeted promotions. Personalization enhances the customer experience, making them feel unique and valued, which is key in fostering loyalty and encouraging repeat purchases.

10. A/B Test Offers and Workflows

A/B testing offers and workflows allows you to optimize your retention strategies by understanding what resonates best with your audience. This involves testing different versions of your marketing materials to see which performs better in terms of engagement and conversion rates. A/B testing is effective because it is based on actual customer responses, allowing you to refine your approach for maximum impact.


11. Provide White-Glove Onboarding Services

For businesses offering complex products or services, providing white-glove onboarding services can significantly improve customer retention. This involves offering personalized guidance and support to new customers, ensuring they understand and get the most out of their purchase. This approach works because it helps in building a strong foundation for the customer relationship, reducing frustration and increasing satisfaction.

12. Focus on Customers Likely to Churn

Focusing on customers who are likely to churn involves identifying signs of dissatisfaction or disengagement and proactively addressing these issues. This can be done through predictive analytics and targeted interventions like special offers or personalized communication. This strategy is effective because it allows you to retain customers who might otherwise leave, reducing customer churn, and maintaining a stable customer base.

13. User Community Engagement

Creating and nurturing a user community around your brand can significantly enhance customer loyalty. This can be achieved through online forums, social media groups, or in-person meetups. Engaging with your community by providing a platform for discussion, sharing updates, and gathering feedback makes customers feel more connected to your brand. This strategy works because it fosters a sense of belonging and community among customers, encouraging brand advocacy and repeat purchases.

14. Announcing Product Updates and Improvements

Consistently updating and improving your products based on customer feedback and market trends can keep your offerings fresh and relevant. Communicating these updates to your customers shows that you are committed to providing value and responding to their needs. This approach is effective because it demonstrates that you value customer feedback and are dedicated to continuous improvement, which can increase customer satisfaction and loyalty.

15. Exclusive Access or Early Releases

Offering your most loyal customers some exclusive access to new products or early releases can make them feel valued and special. This could be in the form of a members-only area on your website, early access to sales, or the opportunity to purchase new products before they are released to the general public. This strategy works because it rewards loyalty and can create excitement and anticipation among your customer base.

16. Gamification

Incorporating game-like elements into your customer experience can increase engagement and loyalty. This could include challenges, leaderboards, or rewards for certain actions. Gamification makes interacting with your brand more enjoyable and can encourage repeat purchases and engagement.


Who On A Team Is Supposed To Manage Retention Marketing Efforts?

In smaller teams, these responsibilities might be distributed among various roles, while larger organizations may have dedicated positions. Key roles involved in retention marketing include:

  • Marketing Manager: Often oversees the overall retention strategies, coordinating with other teams to implement campaigns and analyze their effectiveness.
  • Customer Success Managers: Play a vital role in retention by ensuring customer satisfaction and feedback are addressed, directly contributing to strategies that improve customer experience.
  • Data Analysts: Responsible for analyzing customer data and providing insights that inform retention strategies, such as identifying trends in customer behavior or segmenting the customer base.
  • Content Creators and Social Media Managers: Develop engaging content and manage social media interactions to keep the brand engaging and relevant to existing customers.
  • Email Marketing Specialist: Focuses on creating and optimizing email nurture tracks and other email-based retention efforts.
  • E-commerce Manager: In smaller teams, this role might encompass overseeing retention strategies, particularly in aligning them with broader e-commerce goals and operations.
  • Customer Support Team: Although not directly responsible for retention marketing, their interactions with customers provide valuable insights and opportunities to enhance customer loyalty.

In larger companies, a dedicated retention marketer or a specialized retention team might be established, focusing exclusively on developing and fine-tuning customer retention marketing strategies. Regardless of the structure, effective retention marketing requires collaboration across these roles to ensure a cohesive and customer-centric approach.



Retention marketing is a powerful strategy for ecommerce businesses aiming to build lasting relationships with their customers. Through tactics like email nurture tracks, a customer loyalty program, programs, and referral systems, companies can significantly increase customer loyalty, lifetime value, and overall profitability. Implementing these strategies effectively requires a deep understanding of your customers and the ability to deliver personalized, engaging experiences.

Friendbuy specializes in helping businesses achieve these goals. With our expertise in creating dynamic loyalty and referral programs, we can assist you in designing a retention strategy that resonates with your customer base and drives tangible results. Whether you're looking to enhance customer engagement, increase repeat purchases, or gather valuable customer insights, Friendbuy has the tools and expertise to help you succeed.

Don't miss the opportunity to transform your customer retention strategy. Contact Friendbuy today to discuss how we can support your business in building stronger, more profitable customer relationships through effective loyalty and referral programs.