Loyalty and Retention

Customer Retention 101: How to Create Loyal Customers

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Customers are an essential part of any business. They are what keeps a business running. But the number one struggle for businesses is customer retention.

It's keeping those customers coming back to your store over and over again.

Many businesses often see customers walk in a store – whether physically or virtually – look around and leave. They may even make a purchase.

But these customers don't seem to come back and as a result, your sales keep faltering.

This means that you need to retain those customers and entice them back into your store.

So how does this work?

Let's first get some information straight about what customer retention is and why businesses need it.

What Is Customer Retention?

Customer retention is what companies, startups, businesses, large and small, work on to increase their customers and ensure that current customers are coming back.

In other words, it's a tactic to help businesses generate consistent revenue from a pool of existing and returning customers.

Customer retention normally begins when a customer first enters your store, whether online or offline. Your company then wants this customer to keep coming back.

Through customer retention, companies aim to retain customers by increasing customer loyalty via programs such as loyalty programs and referral programs.

Customer retention isn't just "answering [customers'] phone calls and helping them onboard with your software," says HubSpot, it's about "creating a process from the very beginning that fosters communication, trust, and mutual growth."

The Customer Problem

Many businesses struggle with retaining customers.

After all, it's one of those easier-said-that-done processes a business has to contend with.

The problems businesses face are:

  • Lack of customers
  • Customers who just peek and leave
  • Lack of loyal, returning customers
  • Declining revenue

So does customer retention solve these problems?

Yes it does.

The Importance of Customer Retention

Customer retention helps businesses save money because it's easier to retain customer than it is to acquire new ones.

In fact, data shows that acquiring a new customer is 5 to 25 times more expensive then retaining a current one.

In addition, a 5% increase in customer retention has been known to help companies generate more revenue between 25% and as much as 95%.

By retaining customers, you'll be both building a relationship with them and turning them into loyal buyers, who can refer you to others.

"Customer retention is important to any growing company because it measures not only how successful they are at acquiring new customers, but how successful they are at satisfying existing customers," explains HubSpot.

Moreover, and according to Brandongaille, if 12% to 15% of customers are loyal to a single brand, they are likely to represent 55% to 70% of that brand's sales.

Loyalty and Retention

Loyalty programs are one of the best tools to build and boost customer retention.

The benefit? Most loyalty programs can be easily integrated within a website or online store.

As their name suggests, they turn one-time buyers into loyal and recurring buyers.

How do loyalty programs work?

For every purchase made or action taken within your store, customers earn points, which they can later use to get discounts, free shipping, or gift vouchers.

In other words, as store owner, you'll be rewarding customers for continuously coming back to your store.

With Gameball, you can easily integrate your loyalty program with your website or store, whether it's independent or via platforms like Shopify and WooCommerce.

Plus we support 9 languages as localization is a primary part of how we do business.

We also want businesses across the world to have loyal customers.

So, do loyalty programs work?

The obvious answer is YES.

And we're not just saying that because we run a loyalty and referral program software.

But the truth is, companies as large as Sephora and Starbucks have loyalty programs and are continuously developing them.

Which means they are obviously working well for them.

Read 8 Secrets that Make the Starbucks Loyalty Program So Popular (and how to start your own program)

In fact, programs created by these mega brands among others are considered the best loyalty programs in the world and are great sources of inspiration.

Increase Customer Retention with a Loyalty Program

Loyalty programs are used across a multitude of industries, and companies and stores, far and wide, have been using them and continue to do so.

Here's what loyalty programs can help you with:

  • Build and increase customer retention
  • Make customers fall in love with your brand
  • Make customers come back to your store
  • Make customers buy more
  • Make your brand memorable for customers

There are various ways you can engage your customers through loyalty programs.

When considering a loyalty program, it's important to segment your customers and highlight their rewards early on.

And there is such a thing as a bad loyalty program. Usually, it's when customers compile points endlessly without any benefit for them or when points translate into zilch.

But these aren't the only mistakes store owners make when creating a customer loyalty program.

These loyalty programs are known not only to discourage customers but also to drive them away from businesses!

How to Measure Your Customer Retention Efforts

As a business, it's important to measure the extent of your marketing and retention efforts. These can be part of your customer retention strategy.

Plus, customer retention is affected by the number of new customers your business can acquire and how many existing customers leave, stop buying from you, or stop using your service.

That's why the best way to measure customer retention is by calculating the customer retention rate.

This method requires three things:

  • Period of time: weekly, monthly, quarterly, annually
  • Number of customers at the end of the time period
  • Customer acquired during that period

Here's what the formula looks like: (via HubSpot)

Customer Retention Rate = ( (# Customers at End of Period - # Customers Acquired During Period) / # Customers at Start of Period) ) X 100

Let's use the formula in an example to make it clearer.

Let's say your online store starts January with 20 customers, and you get five new customers every month, while one customer leaves your store also per month. The latter is called churn.

By using these numbers in the formula, it looks like:

( (24 - 5) / 20 ) ) x 100 = 95% retention

Let's broaden the numbers a bit. Let's say your store starts with 50 customers, you gain 12 customers per quarter but lose 15.

( (47-12) /50 ) x 100 = 70% retention

Once you know your average customer retention rate, you should look at your churned customers and see why they leave.

"Consider if you can add qualifying questions to your sales process or revise your ideal buyer persona to better reflect the attributes of your most loyal customers," notes HubSpot.


By now you understand the value of having repeat customers; those who don't just pop into your store once and leave.

They are those customers who come in often and with whom you have a long-term relationship.

They are those customers who provide you with a bigger chance of selling and upselling to them over and over again.

The pro side is you can start building customer retention and extending your relationship with customers in a matter of minutes through loyalty programs.

You can then increase acquisitions through referrals by enlisting your loyal customers in your referral program.

Are you ready to retain those customers?

Start now with Gameball's loyalty program and enjoy a 14-day free trial.

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