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How to keep your users happy: a complete guide to customer retention
You know when you’re telling a story you think is riveting, but everyone’s eyes start to glaze over? That very problem also troubles SaaS and ecommerce businesses, but they call it customer retention.
If you don’t capture your users’ attention early and solve their problems, they’ll drift away. Your job is to keep users around for the long haul, so your relationship, product, and bottom line grow.
Last updated17 Oct 2022
What is customer retention and why should you make it a priority? This guide covers why customer retention matters and what it looks like in action for different roles, like a UX designer and product manager, with some practical tips on how to drive it.
Knowing your users is the first step toward retention
Hotjar helps you learn about users through Recordings, Surveys, Heatmaps, and Feedback to make decisions they’ll stick around for.
What is customer retention?
Customer retention is a gauge of how many long-term customers your company has. When you retain customers, they stay with your business for longer and adopt your product into their daily routine or workflow, instead of just briefly trying it out and then walking away.
Like telling a story to friends, you want to engage as many users with your product experience (PX) for as long as possible.
Customer retention is most relevant for companies with recurring billing, like SaaS businesses or subscription-based ecommerce sites. But every business benefits from repeat customers, so don’t write it off if your company is in a different category.
The difference between ‘customer retention’ and ‘customer loyalty’
It wouldn’t be product management without nearly-identical-but-surprisingly-not-interchangeable lingo, right? Customer retention and customer loyalty aren't interchangeable.
Customer loyalty is a person’s likelihood to choose a product as their preferred solution to a problem over and over again.
That might sound really similar to customer retention. The catch is that you can retain a customer without gaining their loyalty.
For example, if you make users jump through hoops to cancel their subscription to your service, you may retain them, but they won’t be thrilled with the prospect.
But how do retention and loyalty go together? You need to increase retention to increase loyalty. As you retain users, you’ll identify ways to deliver more customer delight and the best product experience. You'll prioritize empathizing with your users and product research, so users turn into loyal customers (and maybe even product advocates and brand champions).
Do you know who your fans are?
Net Promoter Score® (NPS) is a measurement that asks customers how likely they are to recommend your product or service to others on a scale of 0–10—it’s a shortcut to understanding customer loyalty.
Customers with a score of nine or ten are considered promoters, AKA your raving fans. Once you discover them, you can learn what they love about your product and maybe even encourage them to share their positive opinions with others.
Hotjar’s NPS Surveys help you find out who your biggest fans and users are
Why customer retention matters
Users and organizations both want enjoyable and reliable interactions, and customer retention is about finding a way to align those needs. Since customer retention affects everyone, it’s truly a cross-functional effort.
Here are some of the reasons why everyone should care about retaining customers:
Company leadership: customer retention means more stakeholder buy-in for user-driven development and direction
Marketing and sales: lower cost of acquisition means you get more room to experiment with new channels and campaigns
Product team: the longer you spend with a customer, the more you learn about how their needs evolve and make changes to create product-led growth
Customer support: happier, more product-knowledgeable customers mean fewer requests
Most of the discussion about customer retention, including some of the examples and strategies in this guide, focuses on the benefits for businesses. That’s only part of the story—customer retention is great for customers, too. Having a go-to product or service that you can count on to achieve your goals is much better than getting frustrated with the user and product experience of a solution and product-hopping.
What customer retention looks like in action
While everyone plays a role in keeping customers satisfied and engaged, how they impact and drive retention varies.
Here are some customer retention examples and how different people carry them out:
A product manager using product prioritization to deliver a feature that delights users, resulting in higher NPS scores.
A UX designer reviewing recordings to uncover website bugs that prevent users from completing their core tasks, consequently increasing the customer lifetime value.
A marketing manager sending a post-delivery feedback email to continuously learn and make customers feel heard while increasing the existing customer revenue growth rate.
3 tips to improve customer retention
Your relationship with customers is just that: a relationship. That means it's multifaceted, and there isn’t a one-size-fits-all method. But there are a few customer retention strategies you can use to keep your customers happy in the long run.
Let’s take a look at ways to drive customer retention:
1. Map the customer journey
A customer journey details how customers interact with your product across multiple touchpoints, and the better you understand it, the more you can improve the user experience. The more intuitive and helpful the experience, the higher your retention rate.
Customer journey mapping tools like heatmaps show you where there are issues in your product experience. For example, if heatmaps reveal that users don’t scroll far enough down a page to see an important feature, you can redesign that page to ensure they’re getting as much value as possible.
Touchpoints are the moments the customer interacts with your brand, be it through social media channels, your product, or customer support. The quality of these experiences affects the overall customer experience, which is why it’s important to be aware of them. Consider what happens before, during, and after a customer makes a purchase or uses your product.
2. Create an interactive onboarding experience to drive adoption
Product adoption is when a customer realizes the value of your product (also called the ‘aha moment’) and makes it a part of their workflow or routine. You want to create adoption quickly and reliably, and in-app onboarding is one way.
For example, use recordings to learn how people engage with your product, so you know how to guide new users. When you watch what users do just before and after completing a task, you discover what steps you need to optimize—so your customers can easily navigate between them. Playbacks of real-time interactions give you more context into a user’s experience than page analytics alone, which you can use to make customer retention decisions.
3. Use design thinking to make product decisions that delight customers
Customer satisfaction drives loyalty, and identifying what drives satisfaction helps you create a product that retains customers. Here’s where design thinking comes in. Design thinking is a framework for approaching product management with curiosity and empathy, so you can understand your customers and create satisfaction.
Use surveys and feedback to let user opinions, not team assumptions, influence your product decisions. Empathizing with and understanding users before you spend weeks developing a new feature to boost retention saves time and helps you make decisions and changes that lead to more tangible results for users and your business.
📈 Pro tip: choose which customer retention metrics to track, like churn rate and NPS, to quantify and measure your efforts. As you try, test, and learn, use these data points to decide whether to keep going or rethink your strategy.
Bonus: metrics make it easy to share your progress with stakeholders and get buy-in for your ideas, faster.
Adopt customer retention as a mindset
Customer retention is in the best interest of your users and your organization—but your efforts might fall flat without a healthy dose of empathy and curiosity.
You have to stay close to users to make customer retention an innate part of your business from top to bottom.
But how do you bolster a customer retention mindset across your organization? Combining quantitative product analytics and qualitative customer feedback for a thorough understanding of the product experience is a great place to start. But don’t stop there! Share what you learn, stay curious, and never stop improving.
Observe, ask, retain
Hotjar’s Heatmaps, Recordings, Surveys, and Feedback connect you with user experiences that guide your customer retention efforts.