8.9: Retaining Customers
Customers are the most important asset that any business has. Without enough customers, no company can survive. Firms must not only attract new customers but also retain current customers.
Here are a few facts about retaining customers:[1]
- The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospective customer is only 5-20%.
- It costs up to 7 times more to acquire a new customer than to retain an existing customer.
- 65% of a company’s business comes from existing customers.
- Loyal customers spend 67% more than new ones.
- 82% of companies agree that customer retention is less expensive than customer acquisition.
Retaining customers is the purpose of customer-relationship management—a marketing strategy that focuses on using information about current customers to nurture and maintain strong relationships with them. The underlying theory is fairly basic: to keep customers happy, you treat them well, give them what they want, listen to them, reward them with discounts and other loyalty incentives, and deal effectively with their complaints. Do you know some companies that do a good job of retaining customers? How about Amazon, Spotify, or Starbucks? These companies seem to know how to keep customers happy.
Another advantage of keeping in touch with customers is the opportunity to offer them additional products. Amazon is a master at this strategy. When you make your first purchase at Amazon, you’re also making a lifelong “friend,” one who will suggest (based on what you’ve bought before) other things that you might like to buy. Because Amazon continually updates its data on your preferences, the company gets better at making suggestions.
Developed in-house, Amazon’s CRM software captures customer data at the point of purchase, which it uses to instantly customize its users’ online experience and get a full view of the customer journey. It learns about customer habits, improves relationships from the first purchase, and reduces returns or even cart abandonment based on the customer’s e-commerce activities.[2]
Refer to Table 8.4 for key actions taken by Amazon, Nike, and Starbucks to retain customers.
| Amazon | Nike |
|---|---|
| Membership: Free two-day shipping, exclusive deals, access to streaming services (Prime Video, Prime Music), and more. | Strong Brand Identity: Creates a powerful emotional connection through the “Just Do It” slogan and campaigns featuring inspiring athletes. |
| Exceptional Customer Service: Customer support, hassle-free returns, and refunds. | Product Innovation: Constantly develops cutting-edge products like Flyknit, Air Max, and self-lacing shoes. |
| Personalization: Uses data analytics to recommend products based on customer behaviour, previous purchases, and browsing history. | Customization Options: Offers personalized products through Nike By You, allowing customers to design shoes and apparel. |
| Wide Product Selection: Offers nearly everything, from books and electronics to groceries and furniture, on a single platform. | Digital Ecosystem: Integrates apps like Nike Run Club and Nike Training Club for fitness tracking and personalized coaching. |
| Competitive Pricing: Monitors and matches competitor prices, offering deals and discounts. | Direct-to-Consumer Sales: Focuses on Nike-owned stores and online platforms, reducing reliance on third-party retailers. |
| Seamless User Experience: Provides an intuitive website and app interface with features like 1-click ordering and voice shopping through Alexa. | Community Engagement: Hosts events, challenges, and local running clubs to foster community among customers. |
| Subscription Services: Options like “Subscribe & Save” for recurring orders (e.g., household items, groceries) and Kindle Unlimited for eBooks. | Sustainability Initiatives: Introduced the “Move to Zero” campaign, aiming for zero carbon emissions and zero waste. |
| Gamification and Loyalty Incentives: Reward programs like Amazon Coins for digital purchases and exclusive deals for Prime members. | Endorsements and Collaborations: Partners with top athletes (e.g., LeBron James, Serena Williams) and designers for exclusive collections. |
| Continuous Innovation: Introduces new features like Amazon Go (cashier-less shopping), drone delivery (Prime Air), and Alexa devices. | Exceptional Customer Service: Provides easy returns, exchange policies, and support across channels. |
| Community Engagement and Trust: Provides reliable customer reviews and Q&A forums, ensuring transparency. | Social Media and Digital Marketing: Engages customers through platforms like Instagram, TikTok, and Twitter with dynamic content. |
CAREER SPOTLIGHT
Jesse Michael
Jesse Michael is the Senior Vice President, Digital Solutions at Jones Lang Lasalle, where he partners with retailers, retail property owners, venture capital and private equity firms, and internal teams to provide thought leadership on innovative business and planning processes, technology innovation, and strategic implementation/scaling across multiple organizational departments.
Jesse has 15+ years of experience in the technology industry, having built and scaled his own company. He was also a part of various leadership teams that led companies through different stages of funding, from the initial seed money to Series A, B, and C rounds.
Series A, B, and C rounds are stages of funding for startups, where Series A is the first major round to scale the business, Series B is for growth and expansion, and Series C is for further scaling and development.
Jesse was previously the Managing Director at Adeptmind. He helped the company secure $6.2 million in Series A funding and managed all operations, engineering, and revenue. He also built strong connections with retail and property tech investors, as well as over 200 owners and retail landlords worldwide.
Jesse was the Managing Director at Stocard (Klarna) and Senior Sales Director at Flipp. He formed partnerships with major retailers and consumer goods companies in North America, helping to raise $15 million in Series B funding in 2013 and $61 million in Series C funding in 2016.
These functions don’t just drive revenue—they build brand, validate demand, and create the momentum every young company needs to grow. More specifically, our marketing function plays a critical and strategic role in sales enablement, especially in a company where resources are limited and alignment is essential.
In short, sales closes deals, but marketing opens doors, provides the map, and clears the path. When the two are tightly aligned, the result is a more efficient, scalable, and successful go-to-market engine—exactly what a startup needs to gain traction and grow.”
Attribution: Photograph and text © Jesse Michael. Used under a Creative Commons Attribution-NonCommercial-NoDerivatives License.
CAREER SPOTLIGHT
Trish Almgren
As a product marketer and Conestoga College alumnus, Trish Almgren is a subject matter expert for a company that provides networking and cybersecurity products and solutions. Due to the highly technical nature of security and networking, she translates technical benefits and features into value for the customer, regardless of the medium.
She works with many stakeholders, such as field marketing, technical and non-technical sales teams, and channel marketing, helping them position the company’s products and solutions, overcome objections, and build programs and campaigns that can increase pipeline and customer acquisition.
Trish helps localize the message in different regions throughout Europe, the Middle East, Africa, and Asia, adjusting for cultural and regulatory differences.
As a subject matter expert, she spends a lot of time with customers, prospects, and channel partners, explaining how the company can help solve some of their biggest challenges while also testing messaging and increasing insights around market dynamics.
Attribution: Photograph and text © Trish Almgren. Used under a Creative Commons Attribution-NonCommercial-NoDerivatives License.
- Kiniulis, M. (2021, June 6). Customer acquisition vs. customer retention: What does the data say? Markin Blog ↵
- Binns, R. (2023, February 22). Amazon CRM case study. ExpertMarket. ↵
A marketing strategy that focuses on using information about current customers to nurture and maintain strong relationships with them.
