Retaining customers is essential to your brand’s financial success. According to a recent report by market research platform Gitnux, a five percent increase in customer retention can boost profitability by 75 percent—which can significantly impact your company’s financial health.
Before exploring strategies for engaging and keeping customers, here’s a primer on customer retention.
What Is Customer Retention?
Customer retention is a valuable marketing metric for measuring how many customers stay with your business over time. By assessing how consistently they interact with and advocate for your brand, you can determine their loyalty and engagement.
Customer retention can be difficult in the face of increased brand competition and technological advancements. According to Gitnux, the average business loses 15 to 20 percent of its customers annually.
While many companies attract new customers to combat that issue, doing so can be expensive.
“Acquiring new customers is costly,” says Harvard Business School Professor Sunil Gupta, who teaches the online course Digital Marketing Strategy. “It costs far more to acquire a new customer than it does to retain that customer.”
Another important metric to pay attention to is churn—the rate that current customers don’t repurchase.
Churn can happen for reasons such as:
- Changes in consumer behavior
- Poor customer service
- Increased competition
“Churn is a serious issue, even for the most successful companies,” Gupta says in the course.
To overcome churn, consider incorporating social media, email, and content marketing into your digital marketing plan.
“Keeping customers engaged with your brand is essential to retaining them,” Gupta says in Digital Marketing Strategy.
Whether you work at an emerging brand or an established business, here are three engagement strategies for retaining customers in the digital age.
3 Engagement Strategies to Help You Retain Customers
1. Personalization
Personalization isn’t a luxury in today’s market—it’s an expectation. Customers want messaging and advertising that’s tailored to their interests, behaviors, and preferences.
According to a report by global management consulting firm McKinsey, 71 percent of consumers expect companies to deliver personalized interactions, and 76 percent are frustrated when it doesn’t happen.
In Digital Marketing Strategy, Julie Bornstein, founder and CEO of fashion company THE YES, discusses how her brand offers personalized online shopping experiences to customers. Instead of a large catalog to browse, THE YES prompts customers to react to products using a “yes” or “no” button, which helps create personalized pages that only show items they’ll love based on their responses.
“We’re offering personalization at scale based on all the nuances each customer has in their preferences,” Bornstein says in the course.
Beyond reducing friction when scrolling through products, personalization is an effective engagement strategy. The more customers respond “yes” or “no,” the more personalized their experiences become—creating a loop where they increasingly return and interact with tailored content. This type of cycle helps strengthen the consumer-brand connection and can turn occasional users into loyal advocates.
2. Story-Making
The most effective engagement strategies get customers emotionally invested. According to research by content marketing agency Headstream, 55 percent of consumers are more likely to buy your product if they love your brand's story.
In Digital Marketing Strategy, Raja Rajamannar, Mastercard’s chief marketing officer, talks about how the company shifted its strategy away from traditional tactics to enhance customer engagement.
“Advertising has been the main mode of communicating to the consumers and with the consumers,” Rajamannar says in the course. “Unfortunately, when every brand thinks up the same methodology to reach consumers, there’s an information overload.”
Rajamannar implemented story-making through Mastercard’s Priceless Surprises campaign. With its #PricelessSurprises platform, the company rewarded customers who tweeted the hashtag or used their cards with surprises based on their interests.
For example, music lovers received exclusive music downloads, concert tickets, and access to some of the biggest stars. The company also rewarded passionate golfers with Arnold Palmer meet and greets and tickets to prominent tournaments.
Cardholders then shared their “priceless” experiences on social media and contributed to Mastercard’s brand story.
“We said, ‘People remember things that they experience, as opposed to things that they listen to or watch,’” Rajamannar says. “If you experience something, it lasts with you for a long, long, long time. And that's very self-evident. So we said, ‘From storytelling, can we go to story-making? Meaning it's simply celebrating people, observing and celebrating priceless moments in people's lives. Can we curate priceless moments for people?’”
By using story-making, you can make your brand more relatable and authentic and entice customers to contribute to and advocate for it.
Learn more about branding in our recent episode of The Parlor Room featuring HBS Professor Jill Avery. You can also watch it on YouTube.
3. Community Building
Community building is a powerful engagement strategy that keeps customers talking about your brand. According to community-powered marketing platform TINT, 41 percent of consumers say their involvement in online communities will increase in 2024—up nine percent from 2023.
“Brand communities can be a valuable asset,” Gupta says in Digital Marketing. ”But they’re also challenging to cultivate and manage.”
That’s because, unlike other engagement strategies, brand building requires consumers to actively participate and assume a sense of ownership over your brand’s story.
According to Digital Marketing Strategy, building a brand community requires:
- A sense of belonging or “we-ness”
- A sense of responsibility and helping
- Rituals and traditions
For example, LEGO's IDEAS platform is a powerful brand community that allows fans to submit and vote on new product designs—giving them direct influence over the company’s offerings. The community promotes innovation, and nostalgia helps foster brand and customer loyalty.
While established companies with loyal customer bases like LEGO have an advantage, emerging brands can also build powerful communities. Through discussion forums, loyalty programs, and app-based features, you can deepen your connections with customers and make them feel included and valued.
Keep Your Customers Engaged
A well-crafted strategy and digital marketing skills are crucial to reaching and retaining your target audience.
One of the most effective ways to learn how to engage with customers through digital channels is by enrolling in an online marketing course, such as Digital Marketing Strategy. Through real-world case studies and interactive exercises, you can better understand how to meaningfully connect with consumers.
Do you want to engage and retain customers in the digital age? Explore Digital Marketing Strategy to discover how to use the latest tactics and tools to position your brand for success. Or, if you want an easy guide to marketing terminology, check out our free Marketing Terms Cheat Sheet.
