Customer retention strategies: 8 smart ways to offset rising acquisition costs

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A customer visits your online store, finds something they love, and makes a purchase. Success!

But here’s the million-dollar question: will they buy again?

Every day, ecommerce brands pour resources into attracting new customers—crafting the perfect ads, optimizing landing pages, testing offer after offer.

Yet too often, that hard-won first purchase is one and done.

Your existing customers are your greatest asset. They already know you—and they already trust you. Now you just need to give them a reason to come back.

That’s what customer retention is all about.

What is customer retention and why does it matter now?

Customer retention is how well you keep existing customers buying from your brand over time. When customers choose your brand again and again, they’re more likely to become loyal fans who spend more and recommend you to others.

And the importance of building these long-term customer relationships has never been greater.

At the time of this writing, 20 US states have data privacy laws that give people more control over how companies collect and use their data. While regulations differ from state to state, for the most part, customers now own more of their personal information—and brands must actively collect express consent to use it.

This highlights why customer retention is so important: once someone trusts your brand enough to give you explicit consent to contact them, you’ve entered into a symbiotic relationship. The data you gather through direct interactions is a lot more valuable because it’s based on permission, and the customer benefits through more personalized experiences that reflect their actual needs and desires.

Customer retention vs. acquisition: finding the right balance

The relationship between acquisition and retention isn’t an either-or proposition—it’s about finding the right balance.

Your customer acquisition strategy builds your customer (and referral) base, provides more opportunities for retention, and helps offset natural customer churn.

Your retention strategy, meanwhile, maximizes customer lifetime value (CLV), proves more cost effective than constant acquisition, and creates predictable revenue streams through loyal customers who become brand advocates.

Higher advertising costs, increased competition on ad platforms, and economic uncertainty have made acquisition more expensive and challenging, and retention much more attractive.

“You actually do have to play with both sides of the coin at the same time,” says Amanda Kwasniewicz, VP of customer experience at Love Wellness. “Sure, you can just let it rip for acquisition. But you’re going to be doing retention work in a few months to try to repair the bleeding hole you’re ultimately going to have if you only focus on acquisition.”

You have to play with both sides of the coin at the same time.

8 customer retention strategies for maximizing marketing efficiency

In an increasingly unpredictable global economy, how do you retain customers and increase CLV? Here are 8 ways to do just that.

1. Consolidate your customer data

Every time a customer interacts with your brand, they tell you something valuable. They might browse specific products, open certain emails, or contact support with questions. But if this information lives in different systems, you miss opportunities to use it.

For example, when a customer contacts support with a product question, that agent should be able to see all the touchpoints that led to that purchase. A customer’s stated preferences, previous promotional SMS interactions, and even their birthday can all help your brand go above and beyond in creating a post-purchase experience that stands out from the rest.

This is what consolidated customer data can help you achieve. It can transform your retention efforts and help make sure your whole team works together to keep customers happy.

In other words, unified data is the foundation of personalized marketing—and personalized marketing is a key ingredient in customer retention. Here are just a few examples of how a single view of your customer can form the basis for the kinds of personalized communications customers cherish:

• Targeted win-back campaigns based on past purchase behavior
• Personalized support conversations with relevant customer context
• Lower customer churn through predictive churn risk and proactive retention campaigns
• Tiered loyalty programs for VIPs

2. Create personalized post-purchase experiences, across channels

Unified data is also important because your relationship with a customer doesn’t end the moment they complete a first purchase—it’s the beginning of the next stage of your relationship. How you handle the post-purchase experience determines whether that customer comes back.

Successful brands weave this personalized experience across multiple channels. “I think a lot of people try to condense retention marketing down to just email and SMS, but it goes much further than just these two channels by themselves,” says Jacob Sappington, director of strategy at Homestead Studio. “Retention marketing is a multi-channel effort.”

Retention marketing is a multi-channel effort.

A truly integrated post-purchase strategy includes:

Email and SMS

• Order confirmations followed up by product education guides
• Shipping updates that set expectations and proactively communicate delays
• Replenishment reminders timed to product usage patterns

“Some people think that with automated email responses, you’re losing a personalized touch,” says Molly O’Connell, former tech partnerships lead at Gorgias. “But in reality, if you set that up beforehand in a smart way that does connect with all of your tech stack, you can do personalization in a 1:many way.”

If you set up your automated email responses smartly, you can do personalization in a 1:many way.

Customer support

• Support agents who can see a customer’s complete purchase history and previous interactions
• Quick responses across email, SMS, and/or social media—recent Klaviyo research reveals that 43% of customers expect a response within 24 hours
• AI chatbots across multiple channels that can handle common and simple customer inquiries without burdening your customer service agents

Website and mobile

• Personalized product recommendations based on past purchases
• Easy access to order history and tracking
• Account dashboards that show loyalty points, available rewards, or subscription status
• Homepage experiences tailored to customers

Love Wellness, for example, creates a different website experience for subscribers vs. one-time buyers. “Subscribers are a huge part of our business that keep our DTC machine going, so we tailor our website experience so that if we can identify you as an active subscriber, the website looks totally different,” says Amanda Kwasniewicz, former VP of customer experience.

“Instead of offering those site visitors a one-time discount that isn’t applicable on their subscription, we make the website focus on rewards,” she explains.

The key, here, is consistency. When your post-purchase messages work together across key channels, customers feel understood and valued—and that makes them more likely to buy again.

Subscribers are a huge part of what keeps our DTC machine going, so we tailor our website experience to be able to identify active subscribers.

3. Scale those personalized experiences

Based on some of the examples above, it should be clear by now that personalization is no longer just about inserting a customer’s first name into an email. True personalization means understanding and responding to customer behaviors, preferences, and needs—at scale.

The challenge lies in delivering these personalized experiences consistently across thousands or even millions of customers, without losing authenticity or overwhelming your team.

Smart personalization strategies that scale well include:

• Tailoring offers to purchase history, such as discount shoppers vs. high spenders
• Adapting up-sells to regional seasonality, such as winter gear to customers in cold regions and summer items to those in warm areas
• Using real-time website behavior to understand intent to purchase again, such as casual browsers vs. serious shoppers based on time spent on product pages

Homestead cuts through the complexity of personalization at scale with the practical approach of customer segmentation. Based on responses from post-purchase surveys, the team figures out which “bucket” the majority of their customers fall into.

“Then, we create more content that supports that bucket,” Sappington explains. “Instead of the classic personalization of, ‘Hey, First Name, thanks for shopping with us today,’ it can be more geared toward what we know about our different audiences.”

Love Wellness shows how this works in practice. “If we know what you’re already subscribed to in the vaginal health category, we might pitch a great recommendation on the gut health side,” Kwasniewicz explains—an example of cross-category selling that succeeds because it’s based on a genuine understanding of customer needs, rather than generic up-selling.

4. Implement loyalty and referral programs

Loyalty programs and referral programs are powerful tools for retention. Beth Wells, former senior partner marketing executive at LoyaltyLion, says that first-time customers who join loyalty programs spend 40% more on average than non-members.

But an effective program requires more than just points and perks. Wells emphasizes the importance of making programs both accessible and worthwhile with these tips:

• Start with a simple sign-up process that clearly communicates the benefits. Your rewards page should reflect your brand’s personality, while making it easy for members to understand their status and available perks.
• Create multiple tier levels that give members something to aspire to. The journey from regular customer to VIP status should feel both achievable and rewarding.
• Use special occasions to add a personal touch. Birthday perks, anniversary bonuses, and early access to sales make members feel valued.
• Get social. Social media promotion of your loyalty program helps reach potential members where they already spend time.

Most importantly, make sure the points earned from first purchases are substantial enough to demonstrate real value. Sriya Karumanchi, director of marketing at Catbird, observes that loyalty strategies are about shifting buyers through their lifecycles and growing those valuable cohorts toward the repeat and loyalty end.

“On an aggregate level within our customer data platform, we have our subscribers, first-time purchasers, repeat customers, and loyalists,” she explains. “Our loyalty strategy is focused on how many more people we can shift into 3x purchasers within a calendar year, increase purchase frequency, and get subscribers to make their first purchase.”

5. Optimize subscription programs

Not every product makes sense as a subscription. But if customers regularly replenish your products—like skincare, coffee, cleaning supplies, pet food, etc.—a subscription program can transform one-time buyers into loyal, long-term customers.

Even if you sell items people don’t often need to replace, consider whether product-adjacent subscriptions—like care kits or seasonal add-ons—could work for your brand.

Subscription programs are inherently great for retention and recurring revenue, but success depends on creating experiences that genuinely make customers’ lives easier. It’s important to understand that subscription customers have different needs and expectations than one-time buyers.

These customers need flexible delivery schedules, easy ways to modify their orders, and clear communication about upcoming charges. They’re also more invested in your product ecosystem, making them perfect candidates for education about product use, care, and complementary items that enhance their experience.

Follow these tips for subscription program success:

• Improve the sign-up experience with a clear welcome sequence that explains delivery schedules and billing dates.
• Let customers easily pause or skip orders—like when they’re on vacation or still have some product left.
• Show customers the value they get with messages like, “You’ve saved $120 this year through your coffee subscription.”
• Send targeted win-back messages. If someone cancels due to price, offer a discount. If they have too much product, suggest a longer delivery interval.

Coffee brand Grind show what’s possible with a well-executed subscription program that leverages customer data. With Klaviyo, they recover lost subscribers through a personalised flow based on the subscriber’s reason for cancelling.

Now, 71% of Grind’s revenue is from repeat customers —and the automated cancelled subscription emails drive some of Grind’s highest revenues per recipient across all their flows in Klaviyo.

6. Leverage reviews and user-generated content

User-generated content like product reviews can be a social proof goldmine for improving customer retention. When someone leaves a 5-star review, you’ve identified a potential brand advocate. These satisfied customers make perfect candidates for your loyalty program or personalized product recommendations.

Make review collection part of your post-purchase workflow. Time your requests thoughtfully—too early and customers haven’t fully experienced the product, too late and the excitement has faded.

And consider offering incentives for detailed reviews with photos. This content proves invaluable for marketing campaigns.

Compass Coffee, for example, implemented a conditional split in their review request flow: if a review has a photo, the reviewer gets a 15% discount on their next order; if it doesn’t, they simply get a thank-you email and a reminder to leave a photo next time.

This simple incentive contributed to a 3.7x QoQ increase in photo submissions.

7. Implement RFM analysis

RFM analysis transforms your customer data into actionable insights by examining 3 crucial dimensions of customer behavior:

1. Recency: how recently they purchased
2. Frequency: how often they buy
3. Monetary value: how much they spend

This framework assigns scores from 1 to 3 for each dimension, creating a comprehensive picture of customer value and engagement.

Understanding these scores helps you identify distinct customer segments and tailor your retention strategies accordingly. A customer scoring 3-3-3 represents your ideal customer, while someone scoring 1-1-1 needs immediate attention.

Once you’ve built out your RFM group segments, you can start to target each segment with specific offers and messaging designed to either retain them or push them up into a higher value group.

8. Lean on essential tech integrations

Effective retention requires more than just strategy—it needs the right tools working in harmony.

From managing subscriptions to handling support queries, the following solutions can help you execute retention strategies at scale while maintaining the personal touch that keeps customers coming back.

• Subscription management: Recharge manages subscription programs with real-time event tracking and automated response systems. The platform excels at reducing churn through flexible subscription management. Customers can easily pause, skip, or modify their orders.
• Reviews collection: Okendo transforms customer feedback into a powerful retention tool. Beyond basic review collection, it captures rich customer insights through customizable questions and attribute-based feedback.
• Loyalty programs: LoyaltyLion specializes in creating engaging rewards programs that drive repeat purchases. Its multi-tier program capabilities let brands create sophisticated loyalty journeys, while personalized rewards keep members engaged.
• Mobile experience: Tapcart brings your store to mobile devices through native apps that drive engagement. The platform’s push notification system enables timely, relevant communications about everything from back-in-stock alerts to exclusive offers.
• Fulfillment: ShipBob enhances the post-purchase experience through comprehensive order tracking and proactive communication. Real-time shipment status updates keep customers informed, while pre-shipment alerts set proper delivery expectations.

Build lasting customer relationships: from strategy to success

Customer retention isn’t just about keeping customers—it’s about building relationships that drive sustainable growth. As the only CRM built for B2C, Klaviyo helps brands build those lasting relationships.

With more than 350 integrations, Klaviyo helps businesses:

• Focus on customer experience at every touchpoint.
• Use data as a foundation to build personalized experiences.
• Create value beyond transactions.

Remember, every customer retained is one less you need to acquire. In today’s challenging market environment, that makes all the difference.