Two checks before you start
Retention marketing only works if two things are true.
You have customers to keep. If you've only had a handful of sales, put your time into finding buyers first.
"Retention will do nothing for you if you have no customers" Alex McEachern, writing on HubSpot's blog
People are happy after they buy. A reminder can't make up for a late delivery or a haircut someone hated. Read your last 20 reviews and complaints. If the same problem shows up three times, fix that first. Otherwise your reminder just reminds them why they left.
Why the second sale matters so much
Say a new customer costs you $40 in ads. Their first order leaves you $25 after your costs, so you're down $15. Then an email brings them back for a second order, and you keep another $25. Now you're up $10. A third order puts you up $35.
Those numbers are made up, so try it with yours. When your sums look like that, the first sale only pays for finding the customer. The profit comes later.
You may have heard that finding a new customer costs 5 to 25 times more than keeping one. That range is wide because it changes with the study and the type of business, so your own sums will tell you more.
You still need new customers. Retention makes each one you pay for worth more. A group of repeat customers also makes next month easier to guess, and that helps when you're ordering stock or planning staff.
Step 1: Find your number
Pick a month about a year ago. Count the people who first bought from you that month, then count how many have bought again since. If 100 people first bought last October and 22 have come back, your number is 22 out of 100.
Here's where to look:
- On Shopify: Go to Analytics, then Reports. Click the Category filter, then Customers. The Customer cohort analysis report groups people by the date of their first order and shows how many bought again. The Returning customers and One-time customers reports give you the names.
- With a booking system, till or invoicing tool: Export your customers and their purchase dates into a spreadsheet.
- With none of those: Go through your receipts or invoices by hand, starting with that month. It's dull, but you'll only have to do it once.
Don't worry about what's normal for other businesses. A coffee shop and a roofer will never have the same number. Your goal is to beat your own number three months from now.
Step 2: Work out when each customer is due
Plenty of customers who don't come back have no complaint at all. Life got busy and you slipped their mind. So the job is to show up right when they're about to need you.
Find your row:
| What you sell | When they're due | What to do |
|---|---|---|
| Things that run out, like coffee, skincare or pet food | A few days before it runs out | Send a link to reorder the exact same thing |
| Regular visits, like hair, cleaning or lawn care | The usual gap between visits | Book the next visit before they leave, and remind them if they didn't |
| Yearly or seasonal jobs, like a furnace check, car service or tax return | Two or three weeks before the season | Send a reminder with open dates |
| Big one-off jobs, like a roof, a wedding or a mattress | Maybe not for years | Ask for a review and a referral, then check in once a year |
| Courses and coaching | When they finish, or when they stop showing up | Offer the next step, or ask what got in the way |
| Gifts | The same date next year | Ask what the occasion was, then remind them a few weeks ahead |
Not sure of the gap? Find ten customers who have bought at least twice. Count the days between their first and second purchase. Put those ten numbers in order and take one from the middle. That's your usual gap, and it's a better guide than your gut.
Now make the list. You need one spreadsheet with these columns:
- Name
- Email or phone
- Okay to message? (yes or no)
- What they bought
- Date they last bought
- Date they're next due
- Notes, like "daughter's wedding in June" or "hates phone calls"
Sort it by due date every Monday and message whoever comes up. It should take about ten minutes. The notes column is where small businesses beat big ones, because a big company can't remember that Maria's dog is scared of the clippers.
Step 3: Send three messages
You only need three to begin with. Write them the way you'd text someone you know.
1. The check-in. Send this a few days after the purchase arrives or the job is done. Don't sell anything.
Hi Maria, how's the new espresso blend working out? If anything's not right, just reply and I'll sort it out.
This catches problems while you can still fix them. It also shows you're a person who reads replies.
2. The due-soon reminder. Send this just before their due date. Make it about them, and make it one tap to act on.
Hi Maria, your last bag should be running low about now. Here's the same one, ready to reorder: [link]
3. The "been a while" message. Send this when someone has gone about twice their usual gap. If they normally come every six weeks and it's been twelve, this is the moment. Ask a real question.
Hi Maria, it's been a while since your last order. Did something go wrong, or did life just get busy? Either way, I'd really like to know.
Hold your discount for now. If someone has been gone far longer than that, trying to win back customers is its own job, and a good offer may help there.
Keep it legal. These are the US rules, so check your local ones if you're elsewhere.
- Email: The US spam law, called CAN-SPAM, covers marketing emails to past customers too. Use an honest subject line. Include your postal address and a clear way to stop getting your emails. If someone asks to stop, you have 10 business days to do it. Your email tool should handle most of this.
- Text: The FCC, which makes the US phone rules, says marketing texts need written consent when they're sent by an automated system. So add a line to your order or booking form: "Can we text you reminders and offers?" Then fill in that yes-or-no column.
Should you start a loyalty card?
Maybe, but after the three messages. A loyalty card spends its life in a wallet with eleven others, including one for a sandwich shop that closed in 2019. Yours has to earn its place.
If you do run one, here's a trick worth stealing. Researchers tested it at a real car wash using 300 cards. Half the cards needed 8 stamps for a free wash. The other half needed 10 stamps but came with 2 already filled in. Both groups had to buy 8 more washes. About 19 out of 100 people finished the plain card, and about 34 out of 100 finished the card with the head start.
So give people a couple of free stamps and tell them why: "Two on us to get you started."
Pick a reward that costs you little and feels good to get, like a free coffee. Be careful with big discounts, though. Someone who already comes every six weeks would have come anyway, so 20% off just cuts your profit. Real customer loyalty tends to come from being easy to buy from and remembering people, and a card only adds to that.
Other retention marketing strategies, once those work
Add these one at a time. Stop adding when you run out of time to do them well.
| Strategy | What it costs | Best for |
|---|---|---|
| Book the next visit before they leave | Nothing | Anything with regular visits |
| Ask happy customers for a referral | A small thank-you | Big one-off jobs and local services |
| Offer a reorder subscription, and make it easy to pause or cancel | A small discount | Things that run out |
| Give past customers first access to new products or busy dates | Almost nothing | Shops, classes and seasonal services |
| Send a short monthly email with one useful tip and one offer | An hour a month | Businesses where people buy less than once a month |
| Write a thank-you card by hand | A stamp and two minutes | Your best customers |
Also look at who gets your best deals. If every offer is for first-time buyers, your regulars are paying more than strangers. They do notice.
Ask the ones who didn't come back
Your list will show you people who were due and never came. Call or message five of them this week. Say this:
We're a small business and I'm trying to get better. You bought from us in March and I noticed we haven't seen you since. Was there a reason? Honest answers really help.
Then act on what you hear:
- "I just forgot." Your reminders will fix this.
- "Something went wrong." Say sorry, make it right and fix the cause. This call may be the most valuable one you make all month.
- "I found it cheaper." Check whether that's true. If it is, decide whether you can give them a reason beyond price. You may not be able to, and that's okay.
- "I don't need it anymore." Thank them and take them off the list.
Five honest answers will tell you more than a dashboard full of charts.
Find out why they bought in the first place
Your messages get much better when you know the reason behind a purchase. Someone buying puppy food will need bigger bags soon. Someone buying a gift has a date you can remember next year.
So ask one short question on your order or booking form: "What's this for?" Put the answer in your notes column.
If you sell online, you can ask while the person is still shopping. That's what we built Possible to do, so you know we're biased. Possible is an AI built on real sales psychology. It asks each visitor the right question at the right moment, remembers the answers and guides them to a sale, sign-up or booking. It's free to start. Here's more on our AI sales assistant for online stores. Keep your list and your three messages either way.
What to skip for now
With a few hundred customers, you can leave these for later:
- A customer data platform. This is software that pulls customer records together from many systems. If your records fit in one spreadsheet, you don't need it.
- Tools that predict who'll leave. You can see who's overdue by sorting a column.
- A points app with tiers and badges. Try a paper card or a simple reward first.
- Messaging on every channel. Use one that your customers actually read.
- Weekly sale emails. They train people to wait for a deal and to unsubscribe.
Your first two weeks
- Today: Find your number. Write it down with today's date.
- Tomorrow: Work out your usual gap and find your row in the table.
- Day 3: Build the spreadsheet with your last 50 customers. Add the permission line to your forms.
- Day 4: Write your three messages in your own words.
- Day 5: Send the check-in to everyone who bought in the last two weeks.
- Week 2: Send due-soon reminders to everyone coming up. Contact five people who didn't come back.
- Three months from now: Count your number again.
Questions about retention marketing
What is retention marketing?
It's everything you do to get past customers to buy from you again. That includes reminders, check-ins, loyalty rewards and good follow-up after a sale. Marketing that finds brand new buyers is called acquisition marketing.
What is an example of retention marketing?
Say a dog groomer texts each customer five weeks after a visit: "Biscuit's due for a trim next week. Does Tuesday at 10 work?" The message is short, personal and sent at the right time. That's retention marketing.
What are the best retention marketing strategies for a small business?
Start with booking the next visit before people leave, a check-in after each purchase and a reminder just before they're due. These cost almost nothing. After that, add referral requests, a simple loyalty card or a reorder subscription, depending on what you sell.
What are the three R's of customer retention?
There's no single official list. One common set is rewards, relevance and recognition. Another is retention, related sales and referrals. Related sales just means selling more to people who already buy from you. Either way, the job is the same: thank people, send them things that fit them and give them reasons to come back and tell a friend.
Is 90% customer retention good?
It depends on the time period. If you keep 90 out of every 100 customers over a full year, that's strong. If you keep 90 out of 100 each month, you'd have only about 28 of them left after a year. If your customers buy once in a while and don't pay every month, skip this figure and use your number from Step 1.
How much should a small business spend on retention marketing?
At first, mostly your time. The email or text tool you already pay for is usually enough. If you don't have one, start with a cheap one. Spend more only when your number starts to climb and you can see which message brought people back.
Should I use email or text?
Ask your customers. Put the question on your order or booking form and follow their answer. Texts suit short reminders for appointments. Email gives you more room for product links and tips.
Does retention marketing work if customers only buy once?
Yes, though the goal changes. A roofer won't sell you a new roof next year. But a happy customer can leave a review and recommend you to a neighbor, and that often matters more than a second sale. Ask right after the job goes well, then check in once a year so they remember your name when someone asks.