Regardless of which marketing and sales techniques you implement in your business, the process of finding new customers is costly. In fact, data indicates that it is five times more expensive to find a new customer than to retain an existing one.

With this in mind, it is surprising that an overwhelming majority of businesses spend a disproportionate amount of time and money on customer acquisition in comparison to customer retention. In many cases, these companies squander their resources by devoting excessive marketing budget to acquiring customers that don’t buy enough to reimburse the initial investment spent to procure them.

For this reason, we believe that building a strong customer loyalty focus is the most undervalued marketing practice in today's climate—a practice that is essential to creating a sustainable business.

The Endless Battle for Attention

Due to increased competition in the digital space, the cost of advertising is rising fast; meanwhile, ads are reaching and converting fewer buyers.

The rising price of ads is advantageous to companies like Google and Facebook, who continue to maintain dominance over the digital ad space, but it is detrimental to business owners, who are spending more money for less traffic. Meanwhile, the visitors that do reach their sites are leaving quicker and spending less during their stay.

Social media is now an inseparable part of our everyday lives. On average, we spend about 2 hours and 22 minutes of each day on social networking and messaging platforms, much of this is time we used to spend browsing the internet. Which means, as entrepreneurs we are competing with the biggest companies in the world for the attention of our customers, and we are then buying back that attention at increasingly unsustainable prices.

This underscores one of the numerous reasons why customer acquisition is delivering less return on investment as digital advertising power becomes more centralized.

The Rise of Retention

According to recent research, increasing your company's customer retention rates by five percent increases your profits by up to 95 percent.

All of the most powerful businesses in the world understand that customer retention is an integral part of marketing, and luckily for them, the rest of us struggle to compete.

Estimated Customer Lifetime Value (CLV)

  • Starbucks: $14,099 per customer
  • Apple: $8,000 per customer
  • Netflix: $291.25 per customer (and growing)
  • Amazon: $916 per customer
  • Amazon Prime: $2283 per customer (and growing)

Microsoft, Google, and Facebook are also exemplary models of effective CLV management in comparison to other businesses whose average customers only shop with them once. Surprisingly, only a mere 42 percent of companies are even capable of measuring their CLV.

In order to compete in this day and age, business owners must shift their perspective towards attracting the customers who are more likely to be loyal, and creating stronger relationships with them.

How increased Kriptomat's revenue by 1700%

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4 Secrets to Retention Success

There are some clear steps that will help shift the perspective and momentum of your business towards customer loyalty and, therefore, drastically improve your retention rates.

1. Measure Customer Lifetime Value

Customer Lifetime Value is possibly the most critical and underutilized metric in business.

If your business desires to acquire and retain highly valuable customers, then your marketing team must learn about CLV, how to calculate it, and how to improve upon it.

To calculate Customer Lifetime Value you need to:

  • Calculate average purchase value
  • Multiply that number by the average purchase frequency rate
  • Multiply that number by the average customer lifespan

2. Loyalty Programs

A well-designed loyalty program will delight your customers, engage their desires, while motivating them to interact with your brand and, ultimately, spend money with you.

In reality, any ordinary loyalty program will boost growth and retention while creating happier customers.

There is no measurable downside to creating an effective loyalty program for your business—the only drawback can come from investing time and money into an ineffective loyalty program that doesn't yield results.

3. Prioritise Sustainable Marketing Practices

Keep track of every marketing campaign, the specific customers that each one brings in, and the CLV of those accounts.

Repeat the marketing campaigns that deliver loyal customers to your business and eliminate the unproductive strategies from your arsenal.

4. Optimize Customer-Acquisition incentives

Reward your sales and marketing teams for acquiring high value customers.

Create incentives that reward longevity instead of temporary acquisitions.

Sales people that are rewarded for simply getting customers in the door can have a net-negative effect on business momentum because they often resort to high-pressure sales techniques that created bad experiences and reflect poorly on your brand.


While businesses undoubtedly need to acquire customers, if they are not maintaining loyalty, customer acquisition can actually cost more money than it creates.

There are various actionable steps that can get your business improving its retention rate quite quickly, but the most critical action to take is to shift the priorities of your marketing department towards generating more successful customer relationships, as opposed to simply generating more customers.

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