It’s no secret that a lot of businesses choose to prioritise customer acquisition over customer retention. This is mostly because of the satisfaction in winning a new customer after all the effort spent on marketing campaigns.

However, it’s often better for businesses to focus their efforts on customer retention, particularly for established businesses. After all, what’s the point of investing time, effort and resources into customer acquisition, only to miss out on the benefits of building a relationship with them.

In this article, we’ve outlined the importance of retention marketing and the value of loyal customers to businesses.

Retention marketing is cheaper than customer acquisition

According to Harvard Business Review, acquiring new customers is anywhere from 5 to 25 times more expensive than customer retention. With this in mind, it’s hard to argue with the value of having good customer loyalty and retention.

There are a number of retention marketing strategies that are extremely valuable as well as cost-effective. Some examples of retention strategies include email marketing and social media, using these channels you can stay in contact with your customers and take the first steps in building a sense of customer loyalty.

Another great way to improve your customer retention is through loyalty programs which reward your customers for buying your products.

Engaged customers are more profitable

Research has found that engaged customers bring 23% more revenue and profitability compared to the average customer. What’s more, a study by Bain & Company found that by increasing customer retention rates by 5%, profits increase by 25-95%. It’s therefore clear that engaged customers are more profitable and that increasing your customer retention can be very beneficial to your business.

Nurturing your existing customers can also allow you to enjoy a level of security from competitors decreasing their prices. A customer who regularly purchases from your business is less likely to shop elsewhere just because they can save a bit of money.

Continuously focusing on your customer retention can give you the opportunity to get a much better idea of who your customers are, and the data you gather can be used to further personalise and promote your brand to customers.

Loyal customers buy more

Your loyal customers are much more likely to purchase more products and even try your other products, over customers who have no sense of loyalty to your brand. By following up with your customers and working to build a relationship with them, you’ll be able to show them how much you value their business. This makes it much more likely that your customers will develop loyalty and trust towards your brand and the products or services you provide.

The opportunity to cross-sell or upsell other products is also much more likely with loyal customers. In fact, existing customers are 50% more likely to try new products and spend 31% more compared to new customers. Your existing customers can also help to promote your product and may even become brand advocates, sharing their experience with their friends and family. Not only is word of mouth marketing free, but it’s also one of the most credible forms of advertising.

Don’t underestimate the value of customer retention

Although both customer acquisition and retention are vital to a company’s success, customer retention is the key to sustainable growth and profitability for your business. By focusing on retaining the customers you have you’ll be able to build a better and more profitable relationship with them. Staying in contact with your customers and focusing on building a relationship helps to increase repeat sales, referrals and builds a customer base that you know and understand.

Strong customer retention rates can also be a great driver of customer acquisition through referrals.


PERX Rewards provides a suite of reward based marketing tools which are designed to increase your customer loyalty and retention by saving them money on the things they already buy day to day. If you’re interested in finding out more about how PERX can benefit your business, contact us at or call 01254 878 956.