What is customer retention? 5 ways 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 problem? While many businesses celebrate acquisition, it’s retention that propels your revenue over the long term. Acquiring a new customer costs four to 10 times more than it does to retain an existing customer, yet only 40% of businesses are focused on retaining customers, rather than trying to attract new ones.

It (quite literally) pays to keep your customers coming back for more.

So, what’s the secret? It’s all about building relationships. Eighty-eight per cent of customers say good service makes them more likely to purchase again, as per our latest State of Service Report . The better you’re able to deliver great experiences, the more likely customers are to stick around.

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

• What is customer retention?
• Why customer retention matters (especially in 2025)
• How to measure and calculate customer retention
• Other key retention metrics (and how to measure them)
• 5 strategies for retaining the right customers
• Examples of successful customer retention
• Common customer retention challenges and how to overcome them
• Keep the right customers coming back
• How Service Cloud can help

Customer retention is a measure of your ability to keep customers engaged and buying from your business repeatedly. Rather than just focusing on attracting new customers, retention strategies emphasise building strong relationships that foster loyalty and long-term revenue.

Every business needs retention. SaaS thrives on renewals, retailers depend on repeat purchases, healthcare providers look to offer ongoing care, and financial services need to build trust to prevent customers from jumping ship. The better any business is able to retain its audience, the stronger its growth potential becomes.

This isn’t just about preventing churn, either. It’s about consistently creating customer service experiences that make customers want to stay. Achieving this means delivering personalised experiences and engaging with your audience to meet their needs proactively and turn every touchpoint into an opportunity to build trust.

Winning over new customers is exciting, but keeping them is what really makes the difference between success and failure. Here are a few customer retention benefits that show how retaining customers can have a measurable impact on your business:

• Cost efficiency - Retention reduces spend on acquiring new customers. Keeping existing customers engaged helps you make the most of the relationships you’ve already built, all while saving money you’d usually spend on marketing.
• Profitability - Customers who trust your business are more likely to spend more, buy more regularly, and be more receptive to offers, boosting their lifetime value. By some estimates, a seemingly small 5% increase can lead to a 25% profit increase.
• Customer loyalty - Customers who feel valued and engaged are more likely to stick with your brand for the long term. This equals increased referrals and word-of-mouth marketing, attracting new customers.
• Sustainable growth - A rapid customer acquisition and churn rate make it difficult to stabilise revenue. Retention breeds predictability and reduces the pressure to constantly acquire new customers to stay profitable.
• Feedback and data - Loyal customers provide more data, helping businesses build a deeper understanding of customer needs, and ultimately deliver better standards of service.
• Brand reputation - Constantly retaining and engaging customers leads to more positive feedback and more recommendations. All of this equals enhanced credibility, trustworthiness, and a stronger brand reputation.

In short, retention isn’t just about keeping customers. It’s a way of building business resilience and propelling growth for the long term.

Tracking customer retention is essential if you want to understand how well your business keeps customers engaged. Think of this as your north star metric that will help you gauge the effectiveness of your customer retention program and identify areas for improvement.

Here’s how to calculate your customer retention rate:

(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 your 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 quality customer service and strong customer loyalty, while a low rate suggests you may need to improve your engagement strategies. Combine CRR with metrics like churn rate or purchase frequency to gain more nuanced insights into your success.

Aside from CRR, there are several other crucial metrics that will help you build a more complete picture of customer satisfaction and retention. Here are 6 of the most important.

With the basics out of the way, let’s talk strategy. Here are five successful methods for building strong customer retention.

Engaging with customers en masse doesn’t cut it anymore. In 2025, customers demand personalisation.

As per our latest State of Service Report , 81% of service agents agree that customers expect a personal touch more than they used to. Businesses that can meet these expectations will be in a better position to build trust, foster loyalty, and – of course – retain more customers.

How can you achieve this? Here’s a simple step-by-step guide:

1. Start by unifying your data into a single source of truth. Solutions like Data Cloud can help you build a single profile for every customer, giving your teams a complete view of each interaction, need, preference and purchase under one roof. This will act as the foundation for audience segmentation.
2. From there, use a tool like Marketing Cloud to build dynamic audience segments that separate high-value customers, new buyers, and those most at risk of churn. This kind of segmentation is the framework for deeper personalisation and helps you hone in on the customers with the highest lifetime value or advocacy potential.
3. Then, layer in AI to analyse data and deliver recommendations on relevant products, next best interactions, and offers that will meet the needs of different segments and customer profiles. AI can do this in real time, ensuring you’re always ready to meet customers at the perfect moment.

This will put you in a position to consistently deliver exceptional experiences to your customers and retain them for longer.

• Audit customer data silos and integrate them into a single unified profile.
• Define the top three customer value segments.
• Launch three to five personalised customer journeys per segment.

Sixty-one per cent of companies believe they’re proactive, but only 33% of customers agree (State of Service Report ). This divide in perception can be a major cause of churn, with customers who feel neglected being more likely to jump ship.

Closing this gap starts with offering 24/7 support across multiple channels, like live chats, SMS, WhatsApp, and voice. This reduces friction by ensuring your customers will always be able to reach you when they need help. You can use agentic AI solutions like Agentforce to automate much of this process while still maintaining human escalation for complex cases.

However, always-on support isn’t always enough. To truly be proactive, you need to anticipate needs before they arise. Leverage predictive analytics to identify customers that are at risk of disengagement by tracking things like behaviour patterns, purchase history, and recent support interactions. You can then trigger personalised outreach or recovery gestures to re-engage before they leave.

This will give you the opportunity to act before a customer even thinks about leaving, turning potential churn into chances to build trust and loyalty.

• Leverage AI to scale out 24/7 support.
• Map three key customer ‘failure points’ (like order delays or billing issues).
• Configure internal alerts for teams when one of these failure thresholds is met.
• Train service reps to follow up with personalised offers and recovery gestures.

Exceptional service begins with motivated teams. The problem? Seventy-seven per cent of service employees report heavier, more complex workloads than before (State of Service Report ).

Customer satisfaction can become an afterthought when agents feel overwhelmed. The key here is to equip your employees with the right tools and training to work with confidence and deliver exceptional service consistently. Here are some ways to achieve this:

• Automate routine tasks: Start by streamlining tedious tasks (like case logging, gathering information, and ticket routing) that steal time while providing no direct value for customers. Solutions like Service Cloud can automate these elements to give agents more time to focus on building genuine relationships with customers.
• Invest in development: Train your teams in conflict resolution, active listening, and empathy to give them the skills they need to provide exceptional customer experiences. Trailhead can deliver personalised learning paths to help agents build confidence and master customer-focused skills.
• Break down silos: Lastly, it’s important to encourage collaboration between departments. Unify your data so employees can gather customer details and history in less time. This will let them resolve issues faster and create personalised experiences across every channel.

When employees feel supported and well-equipped to deliver personalised experiences, customers feel this, as well, supporting your retention goals.

• Automate repetitive casework.
• Launch quarterly training focused on retention.
• Encourage collaboration between departments to expedite knowledge workflows.

Today’s customers want more than the occasional discount. Eighty-two per cent of shoppers say a brand’s values need to align with their own, whether that’s sustainability, diversity, and inclusion or social impact.

This creates a huge opportunity for businesses to revolutionise the way they think about loyalty rewards. Rather than the occasional freebie or special offer, try these ideas:

• Try rewards that go beyond transactional value, such as experiences or rewards directly tied to customer values. For instance, if you’re a retailer with eco-conscious customers, you might offer free repairs to extend product life and encourage reuse.
• Add additional tiers to your loyalty program to recognise VIP customers, like those who are frequently advocating for your company. This shows your most engaged customers that their advocacy is valued, incentivising others to get involved.
• Connect your rewards to the causes your customers actually care about, like eco-initiatives or community donations. As one example, you could let customers donate a percentage of their points to local charities or community projects.

To get a baseline here, try out predictive modelling to see which rewards will drive the biggest engagement. Analysing things like historical purchases and loyalty redemption data will help you see which incentives resonate most with different audience segments.

Salesforce Loyalty Management lets you build flexible tiered programs that recognise valued customers with exclusive perks and tailored experiences rather than just basic discounts and offers. This helps you create emotional connections and turn loyalty into brand growth.

• Audit loyalty offerings – are they actually building emotional connections?
• Introduce an incentive tied to your audience’s values.
• Track loyalty metrics against customer churn reduction to measure success.

Listening and responding to feedback alone isn’t enough – it’s turning customer insights into action that builds long-term retention.

Naturally, this all starts with gathering responses. Collect insights from post-purchase surveys, NPS scores, sentiment analysis, and service interactions. From there, analyse this data to spot potential problems and opportunities. AI tools like CRM Analytics can help with this.

From there, all that’s left to do is action responses and then close the customer feedback loop. You need to make sure customers know that their voices are heard and show them that their feedback has led to a real change. This will show you value your customers, and also encourage future engagement.

Service Cloud can support your retention efforts here by helping you track feedback, coordinate improvements and then report back to customers more efficiently. This saves time while keeping the whole process structured and transparent for your customers.

• Collect customer feedback from multiple sources on a routine basis.
• Identify the top 3 recurring pain points each quarter.
• Send proactive updates to show customers how feedback led to change.

Effective customer retention strategies are built on consistently great customer experiences. Here are a few real-world examples of customer retention from businesses that are getting it right.

MECCA, Australia’s premium beauty retailer, faced the challenge of maintaining its reputation for personalised experiences in the age of online interactions.

With the help of Data Cloud, MECCA unified its in-store and online systems to connect customer data across every channel. This gave the brand the tools to deliver personalised experiences across web, email, app, chat, and beauty counters, including delivering tailored recommendations, content, and offers to every individual.

As a result, MECCA’s proportion of omni-shoppers tripled from 12% to 30% over three years, showcasing how powerful personalisation and proactive engagement can be when it comes to increasing customer retention.

GoDaddy retains its valued customers by prioritising empathetic, uniquely human support. Their care team is encouraged to act without scripts and focus on collective problem-solving and trust-building over generic solutions.

By giving their teams the freedom to act with discretion and build up customer relationships, GoDaddy has been able to strengthen trust through personalised reactions. When customers feel heard, this transforms into loyalty and retention.

Rapidly scaling dental provider Pacific Smiles came to Salesforce looking for a way to manage growing patient volumes while ensuring engagement and efficient customer service.

With Data Cloud, Pacific Smiles’ teams can now find the knowledge they need instantly, facilitating faster patient care. Using Agentforce, the group also responds to customer inquiries 24/7, reducing appointment booking times by up to 80% while freeing up time for staff to focus on delivering exceptional services. This proactive service has increased patient visits by 30.4%.

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 personalised touchpoints is key to maintaining trust and loyalty.

AI agents built in Agentforce can help you to meet the challenge of customer service by providing fast, personalised 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.

Many businesses focus on the sales journey but neglect the post-purchase experience. Without ongoing, personalised communication and incentives, customers may lose interest and trust and turn to your competitors.

Keeping customers interested long after their initial purchase means you need to provide continuous value. Scale out personalised content, targeted offers and loyalty rewards long after the sale is made to keep customers feeling connected to your brand.

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.

Again, personalisation is a driving force here. Differentiate with consistent, tailored messaging and proactive support to show customers you’re genuinely listening. This will pay dividends when customers are deciding between you and your competition.

Successful retention takes careful planning and adaptability. It isn’t a set-and-forget solution. You need to actively refine your approach over time to keep scaling.

To help with this, gather customer feedback as a core part of your customer retention strategy. This helps you refine your tactics, tailor your communications and stay ahead of changing customer expectations.

When you prioritise 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.

Service Cloud can help you boost customer retention by delivering 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 personalises interactions, making customers feel valued and understood. The result? Stronger relationships, reduced churn and greater long-term loyalty.

Service Cloud also integrates perfectly with the rest of the Salesforce ecosystem:

• Data Cloud – for unified customer profiles
• CRM Analytics – for uncovering patterns in data with AI
• Tableau – for visualising trends in easy-to-read dashboards
• Agentforce – for powering automation and predictive analytics through AI

Ready to get started? Try Service Cloud for free today to see how our platform can turn every customer interaction into an opportunity to bolster customer retention and drive growth.