How to build customer loyalty?

September 28, 2022
Well done, if you are at this stage it means that you have converted your prospects into customers. Now it's all about keeping them!

Well done, if you are at this stage it means that you have converted your prospects into customers. Now it's all about keeping them!

Why do you want to do this? Simply because 80% of your future profits, according to a study conducted by Gartner, come from customers that the company already has (figure to be put in perspective according to your industry and activity).

Incredible, isn't it? Yet too many companies still neglect this fundamental aspect and do not pay attention to retention and attrition rates.



Are you able to keep your customers, to make sure that once they have bought a product or a service from you, they come back to you? Are you able to turn your customers into repeat customers? Are you able, therefore, to retain them?

This is what the retention rate tells you. It is expressed over a given period and tells you the proportion of customers you keep from one period to the next. It is calculated as follows:  

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So if, for example, your company has 1,000 customers at the beginning of the period, and at the end of the period you have 1,050 customers, and you have signed 150 new customers during the same period, the calculation is as follows

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Here you have a 90% retention rate.

As this rate is calculated over a given period, you must renew it regularly in order to have a constant overview of your company's situation on the subject.

This indicator allows you to focus not only onacquiring new customers, because the loss of customers already acquired has a considerable cost. If you lose more customers than you gain in the same period, it would be very disadvantageous for the health of your business. However, if you only focus on acquiring new customers, you may be overlooking some fundamental data. It is also from this rate that you can forecast the following periods, improve your customer service, or anticipate problems before they occur.


The retention rate is the mirror indicator of the attrition rate, also known as the churn rate. It allows you to evaluate the volume of customers you lose over a defined period. Thanks to it, you can see the effectiveness of your loyalty strategies and actions. It takes into account the non-repurchase of products or services, the unsubscribing to the service or even to your newsletters.

Since it is the mirror rate of the retention rate, you can get it in the following two ways:

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In the above example, the churn rate is 10%.

Like the retention rate, it is recommended to calculate these two performance indicators at a higher frequency than the usual KPIs. Indeed, most of them are calculated on a yearly basis, whereas the rates we are concerned with today are more efficient and relevant if they are calculated quarterly or even, in the most usual case, monthly. This frequency of calculation will allow you to draw much more interesting and precise conclusions. It will also allow you to adapt more quickly to the situation if a major loss occurs.

It is nevertheless necessary to put these rates in the light of other indicators such as the cost of customer retention, the risk of abandonment and the value of the customer. Indeed, each company is different and depending on what it sells, the retention and attrition rates are to be evaluated differently.

For example, if you sell products, the attrition rate will be based on whether your customers renew their purchases frequently, infrequently or not at all. If you sell subscriptions or packages, your rates will be based on the cancellation or non-renewal of these.

The cost of customer retention refers to the effort and amount invested to keep a customer with your company. To estimate it you will need to divide the total amount of retention efforts by the number of customers retained.  

Abandonment risk is not a rate but an analysis of the pain points and reasons your customers have for not interacting with your business and value proposition.

Finally, customer value will give you an idea of which customers to focus on. Your cash flow may not allow you to establish a marketing plan for all your customers, but you should not ignore customer retention either. Segmentation is necessary to prioritize your efforts.

The attrition rate alone does not provide any valuable information. Context is key to drawing conclusions and implementing corrective actions. The average attrition rate varies greatly from one industry to another. In some sectors, an attrition rate of more than 5% is alarming, while in others, a rate around 20% is correct. It is therefore important to analyze your company's attrition rate in light of the context.

For example, you can have a high attrition rate but with consumers with an average basket well below your objectives and keep loyal customers with an average basket that compensates for the customers you lose and who are not your core target.

It is also possible that the attrition rate is relative, not total. The relative attrition rate is the bifurcation of one of your customers to another product or service of your company. This rate is not necessarily negative because the customer may migrate to an offer that is more advantageous to you. The total attrition rate, on the other hand, corresponds to the loss of a customer who loses interest in your company or decides to go to one of your competitors to meet his needs.  

It is therefore important to analyze attrition and retention rates when they are contextualized. Nevertheless, according to a Bain & Company study, increasing retention rates by 5% (and therefore reducing churn rates by the same amount) increases company profits by 25% to 95%, which is not negligible.



Churn refers to something you have no control over. Customers, once they leave, are no longer your customers. It's too late. It's what we call a "lagging indicator", you can't do anything about it.

It is easier to retain a customer who is about to leave you than to recover a customer who has already been lost.  

Therefore, it is necessary to focus on indicators where the company can act and have an impact: the "leading indicators". They allow you to see if a customer is about to abandon your services. They are the engagement rate of your customers and your alignment with the competition's prices.

The first refers to customer behavior, how often they use and interact with your company's content. You can find indicators such as the decreasing number of items purchased, the decreasing time spent on your site or other sales channels, or even the ratings they give you that get worse over time. Email open rate, click-through rate and the number of re-visits to your site are KPIs to track to see how disengaged your customers are.

The second is an indicator to be followed very regularly because customers will always look for the best compromise and the most competitive price for the same product or service. Competitive intelligence is essential to allow you, among other things, to align your prices with those of the competition. This will prevent your customers, even loyal ones, from leaving and going elsewhere.


In order to set up an effective loyalty strategy, you need to ask yourself certain questions, such as "what are the pain points my customers are experiencing?", or "what are the reasons why customers are losing interest in our products/services? You need to determine the source of this loss of customers. It can also be interesting to know what could make the customer stay through questionnaires and surveys when he shows his desire to leave.  

There are many reasons why a customer may decide not to call on you anymore. It can be a concern about the complexity of the product or service, an interest that has waned over time, dissatisfaction with your offer or with the customer journey, or a more attractive offer from a competitor.

There is a strong link between customer satisfaction and customer retention. 89% of customers go to the competition after a bad customer experience with your company. They are 70% more likely to leave the company if the service is bad, but if they find the service to be exceptional, they are 10 to 15 times more likely to be your repeat and loyal customers.

There may be other factors that explain your customers' desire to leave you, such as a drop in the quality of what you offer, a new market entrant that overshadows you or simply a change in your customers' consumption habits.


So what are the actions and good practices to develop in order to retain your customers?

First of all, it is necessary to establish and maintain good relationships with your customers. Your strategy must be customer centric. This way, you will have a better knowledge of your customers and will be able to build a trusting and long-lasting relationship.

As shown above, a customer who is satisfied with both the product/service and the customer experience is much more loyal to the company.

How can you ensure their satisfaction? You can set up questionnaires to collect information about their buying experience, what they liked or didn't like, or what they want from you. Their feedback will tell you a lot about their pain points. You can also pay close attention to what is being said about your company and products on social networks. Your customers' opinions, mentions, likes and comments may even help you develop your value proposition. Listen to your customers and offer them your help if the opportunity arises. This way, you will be as close as possible to their expectations, which will significantly reduce your churn rate.

Beyond customer satisfaction related to the purchase process or after-sales service, it is important to facilitate the experience of your users. A fun, simple, clear and design interface will encourage customers to trust you more than another company, and 94% of them do.

Making life easier for your customers can also be about educating them on how to use your value proposition. Show them how to use your products or services to make them easy to use and to show them the added value of what you offer. You can do this through tutorials, explanatory content, case studies, white papers etc.

In order to meet everyone's needs and preferences, it may also be wise to opt for a multi-channel strategy and allow your customers to contact you through different channels, i.e. phone, email, chatbot or other.

Also, show your customers that they are important to you and that having them as a customer is important to you. You can do this by being generous with rewards, gifts, discounts, promotions and special offers. You can also prioritize your customers over your prospects and respond to tickets from paying customers rather than those who get a free trial. It is estimated that 40% to 60% of users who sign up for a trial period do not renew their subscription and use it only once.

When it comes to maintaining your relationship with the customer, you can multiply the content and communication around these topics via emails and newsletters. Tell them about your new features or services, or when an article is published.

Finally, the use of marketing automation will allow you to send the right message at the right time in response to scenarios. For example, if you observe that a customer is no longer active, you can generate reminders. If your customer expresses dissatisfaction by any means, an apology email will be sent and possibly a gift or compensation if the dissatisfaction is justified and legitimate. Finally, if a customer is approaching the expiration date of his subscription and he is one of the customers you consider to be at risk, propose a special offer. All types of scenarios exist and different responses are possible. Marketing automation will give you the opportunity to be reactive and proactive. Be proactive and don't be afraid to anticipate, to answer questions before they are even asked. This will show your efficiency.

Building customer loyalty is not a subject to be treated lightly. The profitability of this aspect exceeds that of acquiring new customers. It costs on average 7 times more to acquire a customer than to retain him and the average basket of an existing customer is 2 times higher than that of a new customer, according to a McKinsey study on e-commerce sites. We can therefore highlight the importance of customer retention.

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