Top 4 customer retention strategies to unlock new agency growth

Customer retention strategies are talked about all the time. But what exactly is customer retention? Why do you need it? How do others retain their customers? What can you do to build a customer retention strategy?

These may be some of the questions you are asking yourself, and we don’t blame you!

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Retention has been a buzzword for quite some time now. And guess what… It lives up to the hype.

Anna Tavares, the Director of Strategy here at Vendasta, let us in on the why, the how, and the what, as it relates to customer retention, so that you can unlock new growth. 

Why Focus on Customer Retention? 

There are 3 pretty convincing reasons why you should focus on customer retention: 

  1. Keep recurring revenue coming! 
  2. Position your LTV:CAC to ensure sustainable growth
  3. Future customer acquisition advantage

Let’s break these down a little. 

1. Keep recurring revenue coming! 

If you’re in a recurring revenue business, it only makes sense to try to keep as many customers as you can. If a customer leaves, so does that revenue stream. 

A study by Totango found that only a tiny percentage (about 5-30%) of company revenue will come from new customers. When you keep customers, they grow with you. They renew their subscriptions and buy upsells, which ends up bringing in 70-95% of revenue. 

In your agency, recurring revenue may look like a monthly social media management fee, or maybe a monthly website upkeep fee. These are customers who continue to pay you for ongoing access to your service. 

2. Position your LTV:CAC to ensure sustainable growth

As a recap: 

  • CAC: Customer Acquisition Cost
  • LTV: Lifetime Value

CAC will equate to all of the costs associated with marketing and sales to get the lead to convert into a customer. LTV is the estimated gross revenue the customer will bring in during their customer lifetime.

Using these two customer retention measurement tools, you have the ability to gauge how sustainable your growth will be. If you have a higher CAC than LTV, it’s not looking good for you. If LTV is higher than CAC you’re in a sweet spot! 

With a focus on customer retention programs, your company is positioning itself to ensure LTV keeps growing and CAC stays the same or decreases.

3. Future customer acquisition advantage

It’s clear that successful customer retention strategies positively impact incoming revenue and LTV. There’s also another hidden bonus. Ready for it?

Happy customers will generate leads. And not just any leads. Leads that have a short sales cycle, a high conversion rate AND are basically free.

This is some very exciting news for demand generation teams who know all too well how expensive new leads can be, especially with CAC on the rise. If you’re finding (like most do) that cold leads are very costly, take a long time to sell to, and have a low conversion rate, then listen up because you’re going to want to start leveraging this. 

Here’s how it works. A customer is delighted by your company by finding success through your product or service. They become a happy customer. Then, because they are so excited about what they found in your offering, they talk about your company to their network of colleagues, peers, friends, family, and everyone in between. Your happy customers become some of your most valuable, unpaid salespeople.

How? Expert Customer Retention Strategies

In her presentation, Anna talked about Apple and Spotify. She’s an Apple user. Does everyone remember the latest Spotify Google Home Mini giveaway?

For some people, this would have been the perfect opportunity to switch. Goodbye Apple Music, Hello Spotify. 

But not for Anna, she decided to stay with Apple.

Apple succeeded in retaining Anna as a customer. So what was their customer retention strategy?

Yes, their customer service is great and their software works well, but let’s talk about the real reason Anna stayed with Apple Music.

Anna stayed because of her curated music library. All of her favorite albums, songs and playlists are already there. Could you imagine how hard it would be to switch?

To retain your customers, you need to provide value that outweighs the pain of switching away.

What that means is you have to become sticky to the customer. The best way to do that is to make your offering customized to work for the customer’s needs. As a customer retention strategy, this works because the customers have to make a conscious effort to leave your platform. When the switching cost is high and you’re still providing value, the customer will see no good reason to leave you.

Tada! There you have successfully implemented a customer retention plan.

4 Customer Retention Strategies to Unlock New Growth

To build out a customer retention plan that will work for you, it is important to understand some of the most proven customer retention strategies. That’s why all of the strategies Anna talked about are proven from the Churn Study, which was done by Vendasta over a period of 3 years, using data from over 200k SMBs. Let’s dive in!

1. Solve Multiple Customer Problems

This customer retention strategy is all about being a one-stop-shop. By addressing multiple needs, the customer doesn’t have to do any other shopping or looking around to solve their problems. Plus, they already trust you so your offering will quickly rise to the top of the list of choices available. 

To use this customer retention strategy as an agency, your best option is to offer as much as you can from the marketing stack.

Once you’ve started selling more services to your clients, you’ll notice they will start to stick with you for longer. This customer retention program is all about upselling and continuously assessing customer needs

As mentioned, these customer retention strategies are all proven to be effective. The results from the churn study showed that after 3 years the number of retained customers who purchased 1 product was 31%. When customers purchased 4 or more products, 55% of customers were still around after 3 years.

SMBs that were sold 4 or more products stayed 3 times longer than those who were only sold 1 product. 

2. Bundle New Products with Your Existing Offerings

The bundling strategy is one you’ve probably already heard of before. You might even be a customer of a company who bundles their products.

Think about communication companies. You may have a bundled plan including your cell phone, wifi, and maybe some TV channels. Another example is Apple. If you take a look at your iPhone, you’ll see Apple Music, Apple Podcasts, Apple News, Apple Photos, and many others that came with your iPhone.

The key to this customer retention strategy is to provide more value. By putting together a cohesive product bundle, you have the opportunity to prove to your customers that you have so much to offer them - without charging them for each piece.

Bundling is a strategy that relies on basket size, rather than margin. You’re not going to be able to charge the same price as you would for each offering individually, but instead, will discount it as a group.

This is also a great strategy when you’re launching a new product. Rather than going with a solo strategy, bundle the new product in with something you’re already offering and, BAM, your customers will start to consider it more.

So you’re probably waiting for the proof. How do I know bundling will work?

In the churn study, agencies who offered their products in a traditional every-product-for-itself way retained 41% of their customers. With the bundling customer retention program, agencies who bundled their offering with a Vendasta product (a new product to their customers) retained 61% of their customers over 3 years.

Long-story-short, the proof is in the pudding. Put together a bundle of joy for your customers and they will stick with you for longer.

3. Offer Insights that Prompt Engagement

Getting your customers to use the platform and engage is one of the key ways to increase retention. This customer retention strategy is all about finding ways to give your users reminders, tips, and new release notifications to get them engaged.

We all know Anna is an Apple Music user by now and they did a great job of using this strategy. Anna got a notification that looked like this:

Not only was she excited to listen to the album, but she sent a screenshot to her sister. So by using this strategy, Apple Music got Anna to go use their platform and share it with someone. User engagement and virality. Name a better combo. I’ll wait.
When customers engage regularly, the churn study has proven the rate of retention increases significantly. This graph shows that with daily engagement, users who engaged with the platform once per day had a 78% rate of retention after 3 years.
To make this customer retention strategy work for your agency or platform, you’re going to need to know about your customer.

If Apple had sent this notification out to a punk-rock and metal band gal, would she click on the notification to check out Beyonce’s album? Maybe not.

What will get their attention? This is the key question you’re going to need to answer to make sure the key insights you are providing will promote engagement. This information should be accessible through data about what they click on in your online store, a new product they have been asking for in the past, or maybe even a review they received.

The churn study came back with some pretty great results about customers who responded to reviews. Users who engaged with reviews had an increased rate of retention by 34% after 2 years.
The medium in which you send these notifications is another detail to consider. Do people access your website on their mobile device more often than their desktop? Do you have other communications going out over email? 

To leave you with one key takeaway for this customer retention strategy, it’s to know your customer well enough to be able to send them something that matters to them in order to prompt more engagement. 

4. Offer Proof of Performance  

Proof of performance is all about showing the value you provided the customer. When you provide a visual representation of what you provided and the outcomes they had, the customer is far more likely to stick around. 

As an agency, proof of performance can look like reports. These reports can be about social media performance, organic website traffic, advertising results, and more. These reports should be sent out regularly to show where progress has been made and where there is room for improvement. 

If you went on a really awesome trip and didn’t post any pictures, did you even go? Of course you did, but it is hard for others to see that. Same thing goes for your agency. If you provided value and positively impacted a client’s business, give proof of performance to show that it really happened. 

The proof is (in) the pudding. Customers who were sent proof of performance reports for at least half of their lifetime had a 38% increased retention rate after 3 years compared to those who had no proof of performance.


Customer retention is one of the best ways to grow your company without bringing in new customers. Recurring revenue and upsells make up 70-95% of revenue and happy customers become the best lead generation you could ask for.  

Because customer retention is so key to company growth, it is a great idea to develop a customer retention strategy. No matter how great your product is, it is important to have some ideas about how you are going to keep people around, especially with the stiff competition always trying to steal them away. 

The 4 customer retention strategies to unlock new growth are as follows: 

  1. Solve multiple customer problems
  2. Bundle new products with your existing offerings
  3. Offer insights that prompt engagement
  4. Offer proof of performance

By using these proven customer retention strategies, you’ll be on your way to exciting new growth.

About the Author

A busy bee that you can find spending time at the gym, reading, hanging out with her black lab Joey, or visiting the newest restaurants in town. Alyssa is a former marketing intern and onboarding success specialist with Vendasta.

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