The Importance of Customer Retention

Well I had hoped I was done talking about this topic, but I guess there are a couple more times I have to do it. I don’t like it any more than you do, but I guess at least this time it’s constructive repetition to a small extent at least. But, I feel that I’ve already illustrated the importance of customer retention multiple times in very recent pieces.

But, since people seem not to be clear, I guess I’ll ramble tediously for a bit on the importance of customer retention, and explaining that analogy of energy in and work coming out, which is also a driving force of conservation in financial practices (vis a vis business) as well.

A Quick Lesson in Science:

It’s ok, this will be over with quickly, and painlessly. You likely already know this stuff, even if you didn’t pursue science eagerly as a school kid. But, to bring this to the forefront, let’s discuss it quickly.

Thermodynamics is a set of rules regarding energy, matter and the interactions between them in any given circumstance. We all know of the conservation of energy. In order for work to be done (things to happen), energy has to be spent.

Much of engineering and technological progress is about finding ways to use less energy for more work, or to find better sources of the energy, which is a similar means to the same basic ends.

As Business:

So, conservation of energy translates pretty directly to business. Primarily, there is the financial analog of money equaling energy put into a structure, and customers as revenue as the result.

Obviously, you want revenue to exceed money put in, and the more it exceeds it, the better. This is called cost effectiveness and profitability, and they’re incredibly down to earth concepts we all understand. But, do you see how the systems are parallel concepts?

Acquisition versus Retention:

Acquisition of customers requires far more effort than returning customers, for obvious reasons. If you’re familiar with customer experience, as a journey of phases from need creation, to research and comparison, and onto training, delivery and support, then you can see that spanning the whole journey is more onerous than starting ninety percent of the way through. Watch loyalty curves, in diagrams where they are present, do just that.

Not Cost-Free:

Well, aside from service or product rendered overhead, it’s still not cost-free, it’s just drastically lower-cost if you’re handling things the proper way.

There are several tactics used to retain customers, the absolute best thing being … well, having fantastic services or products, a likeable company identity, and having exemplary service and support where needed. These inflict varied costs depending on too many things, but they’re the ones where that’s the hardest to define.

Other approaches such as maintenance marketing, where you just keep yourself visible and present to help remind repeat customers to come and continue to use you, has definable cost incursions. It’s not wise to hold yourself up to the standards that giant corporations use for this, where even maintenance marketing campaigns are mind blowing.

For most practical companies, that’s not the case.

Well, we’re not here to debate what approaches work the best, we’re here only to appreciate the importance of customer retention, and I think we’ve done just that today.


Matthew is the Lead Author & Editor of CXperience Blog. Matthew established the CXperience blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Customer Experience.