Customer retention examples: The best customer retention strategies
Forget slashing prices. Discover alternative ways to boost customer loyalty and retention.
Long gone are the days when loyalty programs and discounts were the only way to boost customer retention rates.
Today, businesses can choose from a myriad of options – from events, personalized emails, VIP clubs and even fractional shares – to increase loyalty and create superfans.
The following are some leading examples employed by Afterpay merchants around the world…
1. How fashion retailer Review created a secret VIP club
Offering a loyalty program has become a popular way to build brand love, and fashion retailer Review has long had a program, which is available to all customers and offers perks and even a dedicated loyalty app.
Browse through the retailer’s website, however, and you won’t find any mention of its other loyalty program - The Dress Circle - which is only available to a select group of VIPs.
“Our Dress Circle [program] is unspoken,” says Anna Samkova, head of loyalty and digital marketing at PAS Group, which owns Review. “You won’t find any reference to it our website.”
The program came about after Samkova asked the marketing team to identify Review’s highest spenders. “I wanted to know how much our highest spenders actually spend - and how many we had - because we didn’t know at the time.”
The team quickly discovered that there was a cohort of around 450 shoppers who each spent between $5,000 and $20,000 a year. “We thought, ‘Wouldn’t it be a good idea to acknowledge them and do something special for them?’” says Samkova.
But in creating The Dress Circle, which offers discounts, perks and previews, Samkova made an unexpected discovery. It wasn’t the discounts that Review’s top spenders valued most.
"They just wanted to be acknowledged and thanked for shopping with the brand.”
“Nine out of 10 of them came back to us and said, ‘You’re really generous with your discounts, we don’t want more. We really just appreciate you acknowledging the fact that we are your valuable customers. That was it. It was as simple as that,” says Samkova, who adds, “Sometimes we think we should give [customers] more [discounts] but they really just wanted to be acknowledged and thanked for shopping with the brand.”
The Dress Circle, which requires customers to spend $5000 each year to retain membership, has been a successful initiative for the brand. Members of the VIP club routinely spend more, and the program has grown from 400 customers to 1400. Today, the Dress Circle accounts for 11 percent of the brand’s revenue, despite representing just three percent of customers.
2. How Wolf & Badger uses events to encourage customer retention
In just over a decade, independent design marketplace Wolf & Badger has grown from a small boutique in Notting Hill, London, to a global chain with stores in London and New York, and an LA outpost due to open soon.
The retailer credits its success to creating a true sense of community. This is achieved by designing stores that are created to be places in which to linger - with juice bars, stationery concessions and, in London, even a restaurant - and through an events program.
“Bringing to life the soul of our designers is really powerful."
“Bringing to life the soul of our designers is really powerful,” says Wolf & Badger’s head of growth David Walby, who adds that it’s a priority to create a sense of connection among customers, designers and staff. “We offer pop-up spaces for designers where they can show off their work in fabulous surroundings. Our events are highly personable, lots of fun and sculpted around what customers find engaging, informative, valuable and entertaining.”
Wolf & Badger gives designers the freedom to host the type of event they choose. “We’ve seen everything from lampshade-making workshops to wreath-making sessions, to sip-and-shop events around new collections.”
The brand measures the success of events in the form of customer feedback, designer feedback, social shares and designer sales from shopping events. “Relevancy wins in this world, so customers’ experiences sits at the core [of this].”
3.How Shhh Silk surprises and delights its customers
Few people expect to receive flowers or chocolate from their favorite brand, but silk bedding brand Shhh Silk has been known to send this – and more - to its top customers. And it’s an approach that pays off.
“At the end of January, we sent flowers to our most loyal customers [with a note saying] ‘Hey we just wanted to let you know that you’re currently one of our most loyal customers’” says founder Olivia Carr.
She describes her approach as ‘random acts of kindness’ and the brand aims to do it regularly, with the intention of creating brand love that “goes beyond loyalty”. The key to success says Carr is an organic and customer-centric ethos.
“We don’t sit down and say, ‘OK who are we going to surprise this month?’ We might see that one of our customers – and we follow a lot of them [on social media] - is having a bad time or maybe it’s their birthday and we will send something, whether it’s a gift card [or product]."
It’s an approach that isn’t reserved for top spenders, either. Recently Carr realized that rising gas prices were a challenge for many of her customers, so she ran a social media competition for $300 in gas gift cards.
"Loyal customers can’t help but be powerhouse advocates for your brand."
4.How St Tropez uses regular communication to build loyalty
Self-tanning brand St. Tropez launched in the U.S. in 1992, and soon became market leader. Part of this success – along with the strength of their products – comes down to regular communication with customers, says Tessa Taylor, St. Tropez’s acting global head of brand.
This communication starts with replying to every correspondence received from customers or potential customers. Taylor explains, “We reply to every comment, email and direct message across all channels and welcome all feedback, positive or negative. We keep customer feedback in mind to help shape future brand plans, ensuring that people are at the core of what we deliver. The fact that our customers feel heard and respected is of utmost importance to us and definitely drives that customer loyalty.”
“We reply to every comment, email and direct message."
The tanning brand, which has 185,000 followers, uses different social media channels in different ways. “We have a close-knit Facebook group where we share exclusive content, quizzes and polls with brand enthusiasts, and members share their tanning tips and thoughts on their favourite glow," says Taylor.
“On Instagram, we often share question boxes and polls, giving customers the opportunity to provide honest feedback. This creates a sense of community where customers feel a part of something, helping them feel connected to the brand on a deeper level and therefore creating brand loyalty.”
St Tropez also emails customers regularly, sharing exclusive offers and tanning tips. “These emails re-connect customers to the brand and engage them so they continue to come back,” she concludes.
How Hey Bud Skincare created a Facebook Group to drive retention
Since launching in 2019, hemp skincare Hey Bud has built a loyal following of Gen Z fans.
Today, the brand boasts a customer retention rate of 25 per cent, thanks to the efficacy of its products and a focus on building and listening to its community.
Alex Roslaniec, who founded the brand with Fedele D'Amico and Ollie Watts, explains that Hey Bud launched a VIP Facebook group early on. There, customers can share tips, pre-order new products and share feedback.
“We rigorously listen to our customers and take on board all feedback,” she explains. “For example, we have reformulated products, changed the messaging of our brand, and launched the most requested products – all of which led to a higher retention.”
“We believe in reaching out and closely listening to our customers,” she says. “Over time this has led to higher retention. With our emails and comms, we don’t try to sell to our customers straight away, instead we educate, entertain, build a community first and we find people naturally want to buy anyway.”
Want more inspiration?
Discover the creative ways in which some of the world’s biggest brands drive customer retention.
Ulta Beauty offers true brand ownership
Ulta Beauty has one of the world’s most successful loyalty programs, with 30 million members and 95 percent of the retailer’s sales coming from shoppers who belong to the program.
Recently they tried a new loyalty tactic, and worked with tech company Bumped to reward loyal customers with fractional shares (or fractions of shares) in the company. An independent analysis revealed success, with customer rewarded shares transacting 73 percent more per month and increasing their monthly spend by 67 percent.
Cole Buxton gifts fans NFTs
Luxury sportswear brand Cole Buxton places a premium on rewarding community, which is why the British fashion label gifted its first collection of NFTs to its most loyal customers. If the NFTs are sold or traded the brand’s royalties will be donated to its soon-to-launch charitable foundation.
Another way the brand strengthens customer loyalty and a sense of community? The founders recently filmed a documentary about the brand and how they found success.
Sephora treats top spenders
Beauty retailer Sephora is known for its tiered loyalty program. The brand also encourages shoppers to stay engaged and active by sending members a sample on their birthday.
Sephora’s top spenders are even treated to travel packages, which might include flights, a makeover and a dinner for two at a buzzy restaurant.
All references to any registered trademarks are the property of their respective owners. Afterpay does not endorse or recommend any one particular supplier and the information provided is for educational purposes only.
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