What is Customer Retention? 5 Strategies to Keep the Right Customers

There’s no better feeling than putting in the work to attract new customers and having it pay off. And there’s no greater disappointment than having them disappear just a few months later, all while your competitors are keeping their customers engaged.

The secret to customer retention lies in the ability to keep existing customers coming back. While acquiring new customers is exciting, long-term success often depends on how well you maintain those relationships. A strong retention strategy and a customer engagement platform can boost revenue while also building brand loyalty and creating a more stable business. Our research shows that 80% of customers say the experience a customer provides is just as important as its products or services.

Here, you’ll learn how to measure customer retention and the strategies that can help you keep your customers engaged for the long haul.

• What is customer retention?
• Why is customer retention important?
• Benefits of customer retention
• Challenges of customer retention
• How to measure and calculate customer retention
• Impactful customer retention metrics
• 10 strategies for improving customer retention
• Examples of successful customer retention
• Learn how Service Cloud can help improve your customer retention
• Keep the right customers coming back
• Customer retention FAQs

Customer retention is all about keeping existing customers engaged and coming back for more. Instead of just focusing on attracting new customers, retention strategies emphasize building strong relationships that foster loyalty and long-term revenue.

It’s not just about preventing customers from leaving — it’s about consistently creating customer service experiences that make them want to stay. That means consistently delivering value through excellent customer service and ensuring every interaction builds trust.

Customer service software like Service Cloud can help you boost customer retention by offering a seamless and efficient customer service experience. With powerful tools for case management, knowledge management, and omnichannel support, it ensures that customer issues get resolved quickly and efficiently. This not only boosts customer satisfaction but also builds trust. Plus, by using data and analytics to track customer service metrics, Service Cloud personalizes interactions, making customers feel valued and understood. The result? Stronger relationships, reduced churn, and greater long-term loyalty.

Winning over new customers is exciting, but keeping them is what really makes the difference between success and failure. This is partially because customer retention is more cost-effective than acquisition and leads to higher profitability.

Retention is a key part of business growth as it maximizes the value of each customer relationship. Returning customers tend to spend more over time because they engage with your brand more frequently. They often refer others and leave positive feedback on sites like G2, where you can check out the thousands of positive reviews for Salesforce Service Cloud and Salesforce Field Service. Customer retention allows you to rely less on costly acquisition efforts and more on nurturing existing customers.

In addition to revenue boosts, strong retention can create a better customer experience overall. When customers feel valued and supported, they are more likely to stay engaged and become advocates for your brand. This positive experience is how you can turn one-time buyers into loyal ambassadors.

Your customer retention strategy should create a foundation for sustainable growth and more efficient marketing. Here are a few of the ways prioritizing retention can transform your business.

Retained customers drive consistent revenue and have a higher lifetime value (LTV) than new customers. Since they are already familiar with your brand, they are more likely to make repeat purchases and be more receptive to upselling and cross-selling, helping you to drive revenue. Plus, retention reduces acquisition costs, making each business interaction more profitable.

Customers who feel valued and engaged are more likely to stick with your brand. Loyalty programs and personalized experiences help deepen connections, which may lead to increased referrals and word-of-mouth marketing. A strong emotional connection can turn customers into lifelong advocates.

A high retention rate provides predictable revenue and reduces the pressure to constantly acquire new customers. Businesses with strong retention lead to better customer service by fostering a deeper understanding of customer needs and preferences, which enhances the quality of service and builds long-term loyalty.

Keeping customers engaged over the long term isn’t always easy. Even with great products and service, you can still face obstacles that can make retention a challenge. Understanding these common hurdles can help you refine your approach and build stronger customer relationships.

Automation may simplify customer engagement, but too much can feel impersonal. Customers want efficiency, but they also expect genuine, human interactions — especially when they need support. Striking the right balance between automated customer service processes and personalized touchpoints is key to maintaining trust and loyalty.

AI agents built in Agentforce can help you meet the challenge of customer service by providing fast, personalized support at scale. They can manage both simple but time consuming queries and automatically escalate to service reps when needed, all while adhering to your business's guidelines.

Keeping customers interested long after their initial purchase means you need to provide continuous value. Many businesses focus on the sales journey but neglect the post-purchase experience. Without ongoing, personalized communication and incentives, customers may lose interest and trust, and turn to your competitors.

Customers are bombarded with dozens of choices, which can make it harder to stand out. If your brand doesn’t consistently provide a unique value proposition, customers may be drawn away by competitors offering better deals, more convenience, or a stronger emotional connection.

Successful retention takes careful planning and adaptability. Part of building your strategy should be customer feedback management. This helps you refine your strategies, tailor your communications, and stay ahead of changing customer expectations. Without continuous improvement, even the best retention efforts can fall short.

Tracking customer retention is essential if you want to understand how well your business keeps customers engaged. By measuring retention rates, you can gauge the effectiveness of your strategies — and identify areas for improvement.

Customer retention rate shows the percentage of customers a business retains over a given period. You can calculate it using the following formula:

(Number of customers at the end of the period − New customers acquired during the period) ÷ Number of customers at the start of the period × 100

For example, if a business starts the quarter with 1,000 customers, gains 200 new customers, and ends with 1,150 customers, the calculation would be:

(1,150 − 200) ÷ 1,000 × 100 = 95%

A high retention rate indicates both quality customer service and strong customer loyalty, while a low rate suggests you may need to improve your engagement strategies. You can combine customer retention rate with other metrics (such as churn rate or purchase frequency) to gain more nuanced insights into your retention success.

Measuring customer retention goes beyond tracking a single number. By analyzing key metrics, you can identify trends and refine your retention strategies for better retention rates.

Churn rate measures the percentage of customers who stop doing business with you over a specific period. A high churn rate signals potential issues with customer satisfaction and engagement.

Formula:

(Number of customers lost during the period ÷ Total customers at the start of the period) × 100

For example, if you started the month with 1,000 customers and lost 50, your churn rate would be: (50 ÷ 1,000) × 100 = 5% churn rate

Customer lifetime value (CLV) estimates the total revenue you can expect from a customer throughout their entire relationship with the company. Higher CLV means customers are staying longer and spending more over time.

Formula:

(Average purchase value × Purchase frequency) × Customer lifespan

If a customer typically spends $50 per order, buys five times a year, and stays with your company for three years, the CLV would be: (50 × 5) × 3 = $750 CLV

This metric shows how often customers return to make purchases within a given period. A higher purchase frequency indicates stronger engagement and retention.

Formula:

Total number of purchases ÷ Number of unique customers

For example, if you had 1,200 purchases made by 400 customers in a month, your purchase frequency would be: 1,200 ÷ 400 = 3 purchases per customer

Average order value (AOV) helps you understand spending patterns and optimize pricing or promotions to maximize revenue from retained customers.

Formula:

Total revenue ÷ Number of orders

If your store generated $50,000 in revenue from 2,500 orders, the AOV would be: 50,000 ÷ 2,500 = $20 per order

Improving customer retention is essential for building a loyal customer base and driving long-term success. Here are five effective strategies:

Ensure your team has the skills and tools to provide exceptional customer service and improve customer retention. Trailhead, Salesforce’s free online learning platform, is a great resource for them to learn valuable soft skills like active listening and conflict resolution, as well as how to effectively use Service Cloud and Agentforce. They can also learn best practices for customer retention from fellow customer service and field service professionals on the Serviceblazer Community on Slack .

Tailor your interactions to meet the unique needs and preferences of each customer. Personalization can make customers feel seen, valued, and understood. Service Cloud can manage customer feedback and analyze data, providing insights to allow both reps and AI agents to deliver personalized recommendations and solutions.

Provide 24/7 help to address customer issues at any time. This ensures that customers feel supported and can get assistance when they need it, even at 2:00 a.m. on a major holiday. AI agents built in Agentforce can handle both common and complex queries around the clock, automatically routing issues they can't resolve to service reps to address during regular business hours, ensuring continuous support.

Offer a variety of customer service channels to cater to different customer preferences, such as self-service portals, WhatsApp, and voice. Service Cloud integrates seamlessly with multiple channels, allowing customers to choose how they want to interact. AI agents can handle initial queries across all channels, providing consistent and efficient support, and escalating to reps when necessary.

Anticipate and tackle potential issues before they turn into big problems. Proactive customer service can help prevent dissatisfaction and reduce churn. Service Cloud's analytics can spot patterns and potential issues, giving your team the insights they need to reach out to customers with solutions or preventive advice. Service Assistant, an assistive AI agent, can set your reps up for customer service success by using embedded AI to create a structured, step-by-step resolution plan based on the case context, customer engagement history, and your knowledge base articles. This takes a lot of the mental load off your service reps, helping them resolve issues more confidently.

Effective customer retention strategies are built on consistently great customer experiences. Here are a few hypothetical examples of how different types of businesses keep customers engaged and loyal.

A customer recently purchased new exercise equipment for their home gym. A few days later, a customer service rep reached out to check if everything was working well and offered a quick guide on how to use the equipment’s advanced features. This personal touch made the customer feel valued and ensured they were getting the most out of their fitness equipment, making them more open to upselling. They decided to purchase a service-level agreement for their exercise equipment.

A customer was experiencing occasional glitches with their smart home security device. Before the customer had a chance to contact support, the manufacturer’s service team used analytics in their customer service software to identify the pattern and proactively reach out. An AI customer service agent provided a step-by-step solution and scheduled a follow-up to ensure the issue is resolved. This proactive approach showed the customer that the company was attentive and dedicated to their satisfaction. The customer was so pleased with their experience that they referred the company to five neighbors, all of whom were in the market for new home security solutions.

A long-time user of a streaming service had been logging in less frequently. The company noticed this drop in engagement and decided to reach out. They offered a personalized discount on a new season of a popular show and invited the customer to an exclusive virtual event. This gesture re-engaged the customer and made them feel appreciated, strengthening their loyalty. As a result, the customer decided to renew their subscription for another year.

In a customer review, a user provides feedback about a feature they wish was available in a software product. The company listens and implements this feature in the next release. An AI agent automatically reaches out to the customer to inform them of the change and thank them for their input. This shows the customer that the Voice of the Customer matters and can lead to increased satisfaction and loyalty.

Service Cloud can boost customer retention by offering a seamless and efficient support experience. With its advanced features, like omnichannel contact center support, customers can reach out through their preferred channels — whether it's chat, email, a self-service site, phone, and more. This ensures that their issues are addressed promptly and effectively. The omnichannel approach not only improves response times but also makes customers feel heard and valued, which is key to building long-term loyalty.

On top of that, Service Cloud's case management, analytics, and automation tools help streamline the support process, reducing the time and effort needed to resolve issues. By automating routine tasks and providing both reps and AI agents built in Agentforce with comprehensive customer histories and knowledge bases, Service Cloud enables support teams to offer more personalized and proactive assistance. This means not only fixing problems quickly but also anticipating and addressing potential issues before they become major concerns, which further enhances customer satisfaction and retention.

When you prioritize meaningful relationships and deliver ongoing value, you create a loyal customer base that drives sustainable growth for your business. Tracking key metrics like customer satisfaction scores, customer lifetime value, churn rate, and purchase frequency ensures that you’re making data-driven decisions to keep customers engaged for the long haul.

The best part is that retained customers don’t just buy more — they become advocates for your brand, bringing in new customers through word-of-mouth. A well-executed retention strategy turns satisfied buyers into long-term supporters.