Are You Making These 5 Customer Retention Mistakes? Pardon Your Poor ROI!

By  March 21st, 2017


It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffet

In plain English, customer retention means getting your customers hooked on your products/services that they feel compelled to use them often. In other words, if you can get your customers to love your product and enjoy it for the same amount of time they spend on their favorite social media platform, you have successfully retained them.

Customer Retention Rate Defined…Do The Math

Customer retention rate is a very significant KPI that can be measured using the following equation.

Customer retention rate for a certain period = ((ACE – ACN) / ECB) X 100

ACE: Total number of acquired customers by the end of the period.

ACN: Newly acquired customers during the period.

ECB: Total number of existing customers at the beginning of the period.

For instance, if you calculated customer retention rate on a quarterly basis and you started out with 1000 existing customers (ECB). Throughout this period, you acquired 200 new customers (ACN) and lost 100 customers. By the end of the period, you would end up with a total of 1100 customers (ACE).

Retention rate = (1100 – 200)/1000 X 100 = 900/1000 X 100 = 90

This means that you have 90% customer retention rate.

If, after you did the math, you weren’t so happy with your customer retention rate, the chances are high that you’re making some of the following 5 common customer retention mistakes.

I will shed light on them and offer practical tips and examples to rectify them.

Customer Retention Mistake 1: Failing to Appreciate the ROI Rewards of Effective Customer Retention

In order to cultivate a customer-retention focused mindset, you need to fully appreciate the massive ROI rewards that intelligent customer retention tactics can bring to your business. Here are some good reasons to get you into the customer retention gear.

  • Customer retention is the final and most important part of your marketing funnel. If you have nailed lead nurturing starting from cold leads all the way to paying customers but then fell short in retaining them, all your previous efforts would seem pointless! Are willing to tolerate the ROI ramifications of poor customer retention?
  • Successful customer retention results in maximizing the life time of value (LTV) of your customers. On top of that, all the beautiful terms that are music to every business ear such as customer loyalty and customer satisfaction rate would be enhanced thanks to effective retention.
  • It goes without saying that upselling and cross-selling happy customers is effortless. Happy customers are successfully retained customers.
  • In addition to the repeat business that you get from your retained customers, they also become your ideal brand evangelists.
  • You may use your successful customer retention tactics to tweak your entire marketing funnel and enhance your overall content marketing strategy. For example, you can leverage the content that your retained customers appreciate and reuse it to for lead nurturing and customer acquisition.

Customer Retention Mistake 2: Failing To Wow Your New Customers On An Emotional Level

Newly acquired customers have already shown that they appreciate your brand. They have high expectations of your products. Otherwise, they wouldn’t have opened their wallets and made a purchase at the first place.

Can you showcase your unique value proposition (UVP) soon enough and add some emotional juice to magnify customer’s trust? If not, you may risk losing them sooner than you wish.

I will give you two “wow” factors examples as a healthy dose of inspiration.

Example 1: The Facebook Wow Factor

My mother, who’s 72 years old, managed to find an old school colleague via Facebook. As you may have guessed, Facebook proactively found this old friend for her when she added her school information. It turned out that he had found other schoolmates and they created a group. Needless to say, my mother happily joined the group and spent a long time on Facebook rekindling memories with her schoolmates. Facebook managed to retain my mother by proactively offering her an irresistible emotional incentive to reconnect with old friends.

Example 2: Toms “One For One” Wow Factor

TOMS, the One for One company, built their business mission around creatively mixing entrepreneurship with philanthropy.

For every purchased pair of shoes, TOMS donate a pair to people in need.

You may find awesome pair of shoes in countless stores but when you buy TOMS shoes, you’re making the world a better place. Could you think of a more compelling emotional incentive?

No matter what type of product or service you offer, I’m sure that you can come up with creative ways to entice customers to use it frequently. Make sure that your emotion-driven wow factor is readily available once you acquire your new eager customer. Triggering emotions is a no-fail strategy. Go for it.

Customer Retention Mistake 3: Putting All Your Eggs In The Customer Acquisition Basket!

If you have a recurring scenario of losing customers right after purchasing your product, would acquiring new ones matter much? would having massive targeted traffic to your website make a difference? Would having highly converting landing pages that turn visitors into leads save your ROI? Most certainly not!

In this case, you have a serious customer retention issue that you need to rectify.

The significance of effective customer retention is that it can make (or break) your entire lead generation cycle. Pouring traffic into a leaking customer retention hall would only mean wasted time and resources.

On the other hand, if you focused on retaining your existing customers, you can turn things around. The stat. below has startled top executives. Hopefully, it would have the same effect on you.

We showed that in industry after industry, the high cost of acquiring customers renders many customer relationships unprofitable during their early years. Only in later years, when the cost of serving loyal customers falls and the volume of their purchases rises, do relationships generate big returns. The bottom line: Increasing retention rates by 5% increases profits by 25% to 95%.Bain & Company, Harvard Business School

Customer Retention Mistake 4: Dull Products, Rigid Pricing … And The List Of “Turn Offs” Goes On!

Make sure to avoid the following customer turn offs at all costs.

Welcome To The Product Stagnation Station!

The fourth component of HubSpot’s inbound marketing methodology is customer “delight.” I love this word so I will repeat it again: DELIGHT.

It goes without saying that dull products and customer delight don’t rhyme! Some businesses make product updates every blue moon because they mistakenly assume that they must provide major enhancements to impress customers.

Offering regular updates to existing products would engage customers at an early stage instead of waiting for the big release. Realistically speaking, you cannot provide a new feature everyday but what you can consistently show your customers new and exciting ways to benefit from your product.

Even better, you may involve customers in the product upgrade process. Proactively request their feedback on the current product and the additional features that would enrich their user experience.

Your existing clients have been using your product extensively so they’re most equipped to suggest new features and enhancements. When you fulfill their requests, they would feel valued and appreciated and, hence, you would gain life-long loyal customers. On top of that, customers involved in the product creation process would be willing to pay higher prices for your upgraded features.

Imagine the following scenario: A customer made a product enhancement recommendation and you met their request promptly. Then, you publically sent a “Thank you” note to the creative customer thanking them for helping you enhance the quality of your product. That’s what I call customer delight in action.

Introducing The “Rigid Pricing” Ultimate Customer Turn Off Formula

While I perfectly understand a business need to base pricing plans according to costs and revenue margins expectations, they still need to be flexible enough to accommodate your ideal customer’s pricing preferences.

If you noticed that a substantial number of customers are complaining about pricing, don’t ignore this serious warning signal. Instead, you can go for one of the following pricing adjustment solutions:

  • Add more IRESSIRTABLE features to justify the current price.
  • Offer various pricing plans to accommodate different budgets. Make sure to promise and over-deliver great product features in order to entice them to upgrade to more expensive plans.
  • Leave the door open for customers who are not using your product frequently. For example, if you offer a monthly membership-based service, you may give your customers the options to “pause” membership instead of canceling it.

My most favorite pricing technique is offering a free trial for the entire product for a two weeks or a month. When the trial period is expired, offer several pricing plans for customers to choose from.

This intelligent technique would give your prospects the chance to have a taste of all the great features that you offer for free. When they do, they’d be more likely to go for your value-packed and highly priced plans.

As an added bonus, full-featured free product trials would substantially eliminate the chances of pricing complaints in the future.

Customer Retention Mistake 5: Dear Unvalued Customer, Call Me When I’m Sober!

Customer acquisition is not an automatic “set and forget” system. If you failed to make your customers feel valued and appreciated, expect losing them on day one.

The Ramification Of Ignoring Personalization

In my latest article about 2017 B2B content Marketing controversies, my favorite predication for 2017 was the following:

“Micro-targeting and hyper personalization will go mainstream. (Smaller audiences + more relevant messaging = higher conversion rate)” (Source: Marketing Insider Group)

Applying effective personalization techniques has become an indispensible demand for magnifying customer loyalty.

According to a study conducted by Accenture, 41% of U.S. consumers advocate brands that personalize their products in order to mirror the buying preferences of their customers.

Fortunately, customer personalization is becoming highly advanced. More tools are created to help you keep track of your customer’s buying habits and direct them to relevant products.

In addition to the massive customer delight that effective personalization produces, you may think of personalization as a very intelligent upselling and cross-selling tactic.

Take a look at Amazon for example. I believe that Amazon should be crowned the king of customer personalization. Once a customer makes a purchase on Amazon, other relevant products become readily available to them.

Are You Losing The Human Touch?

Yes, I’m aware that I’m offering digital marketing tips but businesses should realize that their customers are humans after all. That’s why; adding the human touch should be integrated within your customer retention strategy. Here are some few tips and tricks to help you out:

  • In addition to automatically onboarding new customers via email, how about adding concierge onboarding to the mix? If that’s not possible, a simple act like making a phone call or having a Skype chat can give a new customer a heartfelt welcome message.
  • Conduct bi-weekly or monthly online chats with your customers
  • Encourage customers feedback and respond to them promptly

Introducing The Deaf Robot Customer Support Syndrome!

Have you ever spoken to a customer service representative that came across as a deaf robot? This intolerable unilateral idiotic type of customer support is the easiest recipe for losing customers in a heartbeat.

As much as you hate it, make sure to train your support team to LISTEN CAREFULLY to customer’s problems and concerns. After accurately identifying the problem, they need to offer honest, fast and reliable solutions. Unfulfilled promises are a very effective tactic for getting nasty reviews from disappointed customers. Oops, I meant those who regret becoming customers at the first place and want to get even. Don’t make them reach that far!

Offering superior customer support service requires ongoing tweaking and communication across the team. When a client faces a rather unusual problem that was solved creatively, such invaluable piece of information should be shared among the entire team. This way, your team would have a readily available solution when similar problems arise in the future.

Building on your successes and learning from your failures is a simple principle that can have a compounded value when these experiences are shared across your entire team.

How Do I Retain Customers As A Content Marketer?

I have dedicated an entire article to discuss customer retention best practices for content marketers. Briefly speaking, I have been successfully using the following techniques to retain clients.

  • I raise questions that help me Get the full picture of my client’s objectives during the screening process. Interestingly, I was hired by clients who loved the quality of the questions that I raised. Asking customer-focused questions even before getting hired shows my soon-to-become clients that I have genuine interest for helping them.
  • I offer superior service that mostly exceeds my clients’ expectations. Then (and only then), they would be eager to offer me more work.
  • In essence, I’m a full-time marketing consultant as I literally “shower” my clients with generous and detailed recommendations that are tailored their key objectives.
  • Recommendations is how I upsell and cross-sell clients. For example, a client initially hired me as a part-time blogger. Within few months, I became in charge of marketing and communication full-time. My client was happy with my performance as a blogger for sure but my customer–centric recommendations were the driving force behind expanding the scope of my job.

To Sum Up…

In order to master the art of customer retention, you need to nail these two critical objectives.

  1. Teach your customers to appreciate the value of your product until they fall in love with it.
  2. Spare no effort to make your customers feel welcomed, listened to, valued and appreciated.

What’s your take on customer retention? I look forward to reading your thoughts in the comments. Your valuable contribution is much appreciated. To your success!


* Adapted lead image:  Public Domain, via

About the Author: Heba Hosny

Heba Hosny is an award-winning and HubSpot certified marketing consultant, SEO copywriter and social media strategist. She’s a Canadian/Egyptian artist who strives to portray the best of both worlds (the East and the West) through her though-provokingly funny artwork. Her artistic passions include script writing, humorous poetry, songwriting, singing, drawing and acting. To add more creative juice to her online freelancing career, Heba teaches improvisational drama in a children’s art center in Cairo.

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