The Importance Of Customer Retention

customer retention
Picture of Max Tomaszewski

Max Tomaszewski

Marketing Coordinator

The cost of acquiring a new customer is higher than ever before. Therefore, implementing a robust customer retention strategy is likely to be so important for your business. Customer Acquisition Cost (CAC) is calculated by dividing the amount you spend on marketing and sales by the number of customers you have acquired because of that marketing campaign. Average CAC figures vary by industry. But according to Shopify, the average CAC for a small E-commerce business with less than four employees is £46.90 per new customer. This sum means that, as well as acquiring new customers, retaining the customers you already have is equally important. But how can you do this? And how much will it cost?

The Cost of ACQUIRING a Customer 

When it comes to CAC, the lower the amount you spend the better. The lower your CAC is, the more your marketing strategies are working. Across all e-commerce channels (irrespective of the size of the business) you can likely expect to spend at least £35 per new acquisition. It is also important to remember that these acquisitions often cost much more than just money. Man-hours are lost to marketing, promotion, and advertising. These things can often be labour intensive and external companies and support may be needed. For small businesses, the time implication of this can be just as significant as the financial implication. 

There are many different routes you can take to acquire new customers. You could opt for advertising your brand in paid media (both online and offline). Advertising in this way is a great way to grow brand awareness. Organic search online is a desirable route, as the cost of achieving this is often lower. And paid leads are also popular, as although these cost more, they are generally more likely to lead to conversions.  

The Cost of RETAINING a Customer 

By contrast, customer retention strategies can be much more cost effective. It is estimated that customer retention can cost between two and five times less than customer acquisition. For this reason, having a good customer retention strategy could save your business significantly. Some proven strategies include:

  • Implementing a customer feedback loop that will allow you to fully understand what your customers think about your brand. This will enable you to make changes and improvements based directly on what your customers want. Customer surveys and product reviews are a great way to get this feedback.
  • Proactively communicate with your customers. Social media is a great way to remind existing customers of your presence and new products in an unobtrusive way. Sending emails and mail outs is a more direct way to communicate with your customers. Regular newsletters and offer mails are simple and cost effective to send but can have a big impact on your customers.
  • Increase your outreach. Customers like to be appreciated. Increasing your outreach to them will increase their feelings of wellbeing, and loyalty, to your brand. Don’t bombard your customers with emails. But think of value-adding ways you could reach out to them. Thank you emails, loyalty schemes, and membership benefit emails are all great examples of this.
  • Offer unique services. It’s not always easy, but offering services that are unique, and of a higher standard or quality to your competitors, is a tried-and-tested way to retain your customers. There is no trick to achieving this. Simply develop your product, and ensure it’s one you can be proud of. 

Why Do Customers Stay Loyal? 

There are two main factors that determine why customers stay loyal to a brand. These are the two distinct concepts of customer loyalty and brand loyalty. Customer loyalty can be established by ensuring that your prices are low enough that your customers keep coming back. You can do this by offering a loyalty card programme, loyalty points scheme, or discounts for customers that return to your store. Rewarding your customers directly every time they shop with you is a great way to command their loyalty.  

Brand loyalty is harder to achieve, but much more coveted. This has nothing to do with whether your customers are getting a discount, and everything to do with how they perceive your brand. Consumers that are loyal to a brand do so because they believe that what the brand is offering adds value. You can target brand loyalty by ensuring that your services and products are of the highest possible standards. You will achieve this when customers return to you based on prior experiences with your brand, your reputation, or on high-level promotional activities. Pricing and value have little to do with brand loyalty. If you can attain brand loyalty then your customers may well try other products from your brand. They will do so even if those products have a slightly higher price point.   

Business IT Support Services Can Help

Customer retention and customer loyalty are essential to business success. You can boost customer retention and loyalty by using both online and offline communication techniques. There are also tools that you can utilise to make your customer retention plan easier. Telephone systems, such as those offered by Yo Telecom can help. They offer call tracking, missed call management, and computer telephone integrations. All ideal if you communicate with your clients or customers by phone. If you want to land in your customer’s inboxes regularly then email calendars and scheduling tools can make that easier than ever. And if you think that introducing a loyalty card or loyalty point programme will increase your customer retention then there are also tools that can do that work for you. 


Customer and brand loyalty are both critical for creating long-term sustainable and successful businesses. E-commerce businesses rely on customer retention with a CAC of £45, however, all businesses ultimately rely on customer satisfaction and retention, regardless if you’re E-commerce or not. If you don’t know your CAC, you may not know how much growth you’re leaving on the table with each customer that passes through your doors (or through their online store). 

Check out Yo Telecom for solutions to enable you to not miss critical touch-points with customers.

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