Mobile Messaging Made Easy

Text marketing’s 98% engagement rate means your messages will be read and responded to — fast. No other channel comes close.


Customer Retention for Small Business Owners

Move from one-time to lifetime customers with these top customer retention tips and strategies.

vibrant illustration depicting a customer “family,” showing a business with a network of loyal customers
December 19, 2023
Chloe Mulliner
Share: Facebook LinkedIn Twitter Email
Reading time about 15 min

As a small business owner, attracting new customers can keep you up at night. After all, it can be a full-time job figuring out how to target customers and persuade them to buy your products or retain your services. But, what if we told you your current customers are far more valuable to your company than potential future consumers?

Learn how to keep your customers happy and loyal and boost their lifetime value with these top customer retention strategies and best practices.

But First, What Is Customer Retention?

Customer retention is motivating existing customers to return for more and keeping them from turning to competitors (aka retaining customers).


Why Is Customer Retention Important for Small Business?

Customer retention is important for small businesses because keeping customers is crucial to helping your company grow and boosting ROI. Let’s dive a little deeper into the benefits of implementing a customer retention strategy:

  • It’s less expensive than customer acquisition: Attracting a new customer is five times more expensive than keeping an existing one.
  • An existing customer is far more likely to purchase than a new one: The success rate of selling to an existing customer is 60% to 70%, but only 5% to 20% for a new customer.
  • It will increase your profits: Boosting customer retention rates by just 5% could increase your profits by a whopping 25% to 95%.
  • Customer loyalty (and new business) will grow: Customer retention can help to build brand loyalty — when customers are happy with your business, they are more likely to make purchases and recommend you to their friends and family.

How Can Small Businesses Measure Their Customer Retention Rate?

Small businesses can measure their customer retention rate by using the following calculation:

Customer retention rate = (# of new customers at the end of a given period) - (# of acquired customers during that period) / (# of existing customers at the start of that given period) x 100

customer retention formula

Now, what might be considered a “poor” retention rate for one company might be a great retention rate for another, depending on your line of business — it’s all relative.

Knowing your retention rate simply provides a temperature check, helping you gauge where you are and where you want to go.

What Are Some Strategies for Improving Customer Retention?

Whether you’re looking for B2C or B2B customer retention strategies, use these tips to keep your audience coming back.

1. Personalize the Customer Experience

Customers don’t want to be just another number on your sales sheet. Personalize their experience with your brand by:

  • Using their first name in your marketing messages
  • Leveraging customer segmentation strategies to send targeted messages
  • Referring them to a product or service that they clicked on or interacted with or upselling after a purchase

These strategies for customer retention will help your customers feel less like a transaction and more like a valued part of your business.

2. Offer a Loyalty Program

Reward your customers, and make them feel special! One way to do this is to create a customer loyalty program or VIP initiative. For instance, you could create a text-based punch card program, a special VIP membership program, or a referral system.

Sample Text Message

The benefit of these customer retention strategies is two-fold. For one, they encourage customers to purchase your products because they know they’ll get perks in return. Second, these strategies inherently boost sales. The more loyal your customers are to your brand, the more likely they will make additional purchases. Not to mention, if they already know they love your products and trust your brand, why bother looking elsewhere?

Learn more about how to build a text-based loyalty program.

3. Communicate Regularly

A big part of customer retention is keeping your audience engaged. No, you don’t want to bombard them with sales messaging daily, but you don’t want them to forget about you, either.

You might wish your customers a happy birthday via SMS or email with a free gift or a discount. Or maybe you could use EZ Texting’s creative MMS templates for holiday greetings and seasonal promotions. Not only will these perks be a welcome surprise for your customers, but they’ll come to look forward to them each year, meaning they’re more likely to stick around.

You should also create a communication calendar for text and email marketing. Send regular updates regarding discounts, abandoned carts, and more, and leverage drip campaigns to keep customers interested.

4. Provide Excellent Customer Service

One of the best customer retention strategies is providing excellent customer service — it can be the difference between a one-time and a longtime customer. Delight your audience with stellar customer service by providing timely order and shipment tracking, leveraging two-way texting to answer questions or provide more information, and sending appointment or payment reminders.

The key here is to make it easy for your customers to get what they need when needed. To make it easy on small business owners, here are SMS templates for customer service.

5. Gather and Respond to Customer Feedback

Sample Text Message

Your customers are more likely to be loyal to your business when they feel they’re being heard and that you care whether their needs are being met. Allow your customers to engage with your brand and tell you what they think about your business.

You can ask customers to complete surveys via text, join a customer phone interview, respond to follow-up emails, leave reviews, or even participate in focus groups.

After eliciting feedback, be sure to respond to your customers. Address their concerns, embrace their opinions, and thank them for their input. And remember, don’t just ignore negative feedback or complaints, as this could hurt your business and make you lose even more customers. This is a learning opportunity for you to find ways to positively and productively engage with customers who may have had a poor experience with your brand.

6. Encourage Aftersales

If you think your job’s over as soon as a customer makes a purchase, think again. In fact, that’s just the beginning. You’ve managed to hook a customer, so how do you keep them?

Sample Text Message

Aftersales is a solid strategy for customer retention. Consider how you can encourage your customers to come back for more. Is there an add-on product that can help their routine? Or can you follow up with an aftercare or maintenance plan?

Let’s say you offer dog grooming services in your town, and a new client just came in with their poodle puppy for his first nail trim. You cared for his nails, but what about all that fluffy fur that must be groomed and cleaned monthly?

This is a prime opportunity to get that pup on the books for a monthly nail trim and additional grooming services. To seize this opportunity, you could follow up by offering a first-time spa day deal, providing discounted rates on monthly services, or even inviting them to join a VIP program.

When you feature after-sales, it helps keep your business in mind as your consumers see the benefits of continuing business with you for the long run.

7. Monitor Your Metrics

Finally, you won’t change your customer retention rate without monitoring your data. You need to consistently and constantly define—and redefine—your retention rate on a weekly, monthly, and quarterly basis to see what direction you’re moving in.

If you’re not getting your desired results, dig a little deeper. What do your customer engagement numbers look like? Have you checked Google Analytics to see how your website is performing? What messages are your customers opening, and which ones are they ignoring? Check out your social media presence, too. What posts generate interest and shares, and which messages fall flat? Also, review the data on your SMS platform and track your SEO analytics—these mobile marketing and SEO stats can help you see the bigger picture.

Once you know what’s working and what’s not, you can regroup, assess your goals, and pivot your strategy to get the desired customer retention results.

Reporting dashboard

8. Use SMS to Your Advantage

Sample Text Message

With SMS messaging, you can use texting as a retention tool because it lets you send text messages directly to your existing customers’ mobile phones. This opens up a world of direct communication between you and your customers. With its unrivaled 98% open rate, text marketing continues to deliver phenomenal results for both businesses and consumers. Because no other marketing channel can boast open rates that can compete with text, and no other channel is faster, it is the perfect tool to leverage for your retention strategies.

An SMS platform provides many customer retention tools you need to implement the strategies listed above. You can even interact with your customers one-on-one through 2-way texting. This allows you to answer questions, clarify information, and address concerns in real-time, providing the ultimate customer service experience.

What Are Some of the Challenges of Customer Retention?

There are some challenges of customer retention that you might experience:

  • Competition. There are a lot of businesses vying for your customer’s attention. Stand out in the crowd by creating stellar brand positioning, customer service, and products/services.
  • Changing customer needs. Customer needs can change depending on cultural trends, evolving social perspectives, and plain ol’ personal preferences. Be sure to take a pulse with your audience by conducting surveys and polls to assess your customers' needs.
  • Customer churn. As you implement different customer retention strategies, your business might experience customer churn, which is the rate at which customers stop doing business with you. Use this data to tweak your strategies to fit your audience’s needs.
  • Lack of resources. If your small business doesn’t have the resources or bandwidth to implement retention strategies for customers, you might not see the results you want. Hiring the right people and using the right tools to make your strategies effective is important.

What Are Some of the Tools and Resources That Can Help Small Businesses with Customer Retention?

Here are some tools and resources to help your small business retain customers.

Customer Relationship Management (CRM) System

A CRM system should be used for any customer retention strategy. This system is where you’ll store all of your customer information, manage your marketing campaigns, track sales, and oversee customer service interactions. It’s one of the keys to managing the customer journey.

Email and SMS Marketing Platforms

You can create and track all messaging through these channels with email and SMS marketing platforms (like EZ Texting). These platforms are crucial for effective customer communication.

Loyalty Program Software

You don’t have to manage your loyalty program alone. Many loyalty software platforms will help your business keep track of digital stamp cards, VIP programs, and more. Plus, many of these can be integrated with your CRM system or email/text marketing platform.

Customer Service Tools

Enjoy effortless customer service with AI, which can produce faster customer service responses, 24/7 communication, targeted analytics, and chatbots or virtual assistants.

How EZ Texting Can Improve Your Customer Retention Strategy

When it comes down to it, many of these customer retention strategies involve a strong communication platform, and that’s where EZ Texting can help.

With EZ Texting, you can develop a small business SMS marketing strategy to cultivate customer retention, from promoting your loyalty programs to encouraging customer engagement with your brand. Our SMS platform lets you interact with your customers in a way that can help build and strengthen your relationships. Start your free trial with us today to see how text can help your small business.


The benefits of customer retention include increased customer loyalty and potential new business, increased profits, and better success rates of sales. Plus, customer retention strategies are less expensive than customer acquisition tactics.

Some of the mistakes that small businesses make when it comes to customer retention include:

  • Not personalizing the customer experience
  • Not offering a loyalty program
  • Not sending out regular communication via email or SMS marketing
  • Not providing stellar customer service
  • Not gathering or responding to customer feedback

Some of the best practices for customer retention are personalization, offering a loyalty program, communicating regularly with customers, focusing on customer service, and requesting feedback.

Future trends in customer retention include broader applications of AI in customer retention strategies, incorporating new social media platforms and trends, and gathering and tracking more robust data analytics to improve the customer experience.

Share: Facebook LinkedIn Twitter Email
SMS Texting for Marketing & Sales

Introducing New Generative AI Features!

Now it’s even easier for your team to connect with your audience and collaborate on inbound messages. Yes, that means fewer missed messages!
Welcome to texting transformed.

TEAM INBOX: Assign and collaborate on 1:1 messages, enabling faster problem resolution through streamlined teamwork. Start Here
AI REPLY: Drastically reduce two-way texting response time by letting AI handle inquiries - faster, smarter, better! Start Here
AI COMPOSE: Craft captivating mass messages to start and continue conversations with generative AI. Start Here