Defining customer retention
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Most sales training focuses on prospecting, lead nurturing, and closing techniques. In other words, the things a sales rep needs to know to attract new customers.
But what should a seller do after securing a new buyer?
Retention starts with the right fit: Sales reps should focus on selling to ideal customers who are most likely to stick around, grow with your product, and refer others.
Trust drives loyalty: Keeping promises, managing expectations, and building personal credibility help turn one-time buyers into long-term advocates.
Ongoing engagement matters: Stay top-of-mind by expressing appreciation, sharing new offerings, and maintaining consistent, value-driven communication.
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Smart salespeople know that the initial sale is small potatoes compared to the numerous sales they can make in the future if they learn to retain their current customers. So today, we’re diving deep into the world of customer retention.
Keep reading to learn what customer retention is, why it’s vital to business success, and what you can do as a sales rep to better retain your customers.
Customer retention is the act of retaining customers over a specific period of time such as a month, quarter, or year. The metric is most useful when expressed as a percentage. To find your company’s customer retention rate, simply apply this formula:
Customer Retention Rate = ((# Customers at End of Period – # Customers Acquired During Period) / # Customers at Start of Period) X 100
For example, if your company started the quarter with 50 customers, acquired 9 during it, and only lost 4, your customer retention rate would be 92% as illustrated below:
((55 – 9) / 50) X 100 = 92%
Now that you know what customer retention is and how to apply a fancy formula to discover your company’s customer retention rate, let’s talk about why you should care.
You’re a salesperson, which means your primary job is to meet with prospects and close deals. What a customer does after the deal is done is somebody else’s problem, right? Wrong! Customer retention is vital to both the success of your company and your sales career, and shouldn’t be completely outsourced to your Customer Success team. Here are three reasons why this is true:
Why customer retention is important to business success
You’ve heard the stats before: it’s 5–25 times more expensive to acquire a new customer than it is to retain a current one. That means your company can generate more revenue at a more affordable cost if it can increase its customer retention rate.
Customer retention is also specifically important to sales reps as some organizations have instituted commission claw-back policies for customers who churn within a specific time frame. If the folks you sell to regularly return products or split after a month of using them, your personal bank account could very well suffer.
Studies also show that customer retention generally leads to higher spending amounts. That’s to say, current customers will often spend more with your business than new buyers. How much more? 67% more according to recent research.
This is obviously great news for sales reps!
Once you’re able to demonstrate value to your customers, they’ll continue buying from you in the future, which makes hitting your sales targets so much easier.
Lastly, retained customers are more likely to tell their friends and family about your products and/or services than new buyers. This makes sense because new buyers are still trying to determine for themselves whether your offerings meet expectations.
Since 92% of modern consumers trust referrals from friends and family more than all other forms of advertising, happy customers could be an amazing source of quality leads for you.
Related: How to Build an Automated B2B Referral Machine
Whether you’re building your first sales process or overhauling an existing one, these Nutshell-approved templates will give you a great head-start.
The data doesn’t lie—customer retention is a big deal for both companies and the salespeople that work for them. With this in mind, let’s take a look at how you, an ambitious sales rep looking for ways to up your game, can better retain your buyers.
How to increase customer retention as a sales rep?
The easiest way to increase your customer retention rate is to only sell to viable leads. To do this, you have to have a deep understanding of your target market and who your ideal customers are before you even begin prospecting.
If you’re not sure who your target market should be, take a look at your current customer base. Which ones have been with your company for a significant amount of time and purchased multiple products and/or services? Do these folks have anything in common?
Once you’ve identified commonalities amongst your top current customers, you can begin to look for these same qualifications in future prospects.
Understanding your customers will also help you upsell new or related products to buyers. If you know that Customer A likes Product X, you can use this information to suggest other offerings. As we discussed above, repeat purchases strengthen customer retention.
If you want to retain your customers—and let’s face it, we’d all love to do that—you have to build a relationship of trust between them and your organization. You can’t do that if you’re constantly breaking your promises. In fact, even one broken promise can damage a company/customer relationship beyond repair.
Related: The 4 kinds of promises you should never make to customers
Fortunately, keeping your promises as a sales rep isn’t that difficult. Did you set up a meeting with a client? Make sure you show up. If you promised to send a follow-up email the week after initial contact, send the email at the appointed time.
From online calendars to email automation tools, there are plenty of solutions on the market to help ensure you keep promises like the ones just mentioned.
Another way to keep your promises as a salesperson is to never oversell your product. This is a really shady old school sales technique that doesn’t work these days anyway. Why would a customer buy a second product from you if the first failed to meet expectations?
Overselling products (or services, for that matter) is one of the quickest ways to lose customers. It may help you in the short-term, but you’ll definitely pay for it in the long run.
What does the public think about your organization? It will be hard to make sales and retain customers if the general consensus is that your offerings are low-quality.
As a sales rep, there might not be a lot you can do to change the reputation of your entire company—especially if you sell sub-par products. But you can still do your part by never overselling (as we covered above) and committing to honesty.
You can also work to improve your own reputation as a seller. When your target market views you as a trusted partner, they’ll be much more willing to stick with your company and recommend your offerings to family, friends, and colleagues.
There are a few things you can do to improve your personal reputation. For example, you could:
Reputation does matter in sales. Improve customer retention (and your sales career as a whole) by presenting yourself in a positive light.
Do you appreciate your customers? Better question: do your customers feel appreciated by you? If not, your company’s customer retention rate will likely suffer.
Everyone wants to feel loved and appreciated. It’s a basic human need. If you can make your customers understand how much you value their patronage, it will be much easier to keep them around. Luckily, showing appreciation is pretty easy:
Each of these ideas will allow you to show your appreciation to your customers. Try one or two of them out and see if it helps your company’s customer retention rate.
Finally, customers are easier to retain if you’re able to offer them something new on a regular basis. Now, “something new” could mean different things to different organizations…
For company’s offering SaaS products, for instance, “something new” could be updates to your existing app. E-commerce businesses might consider giving their customers free overnight shipping (at least for a period of time.) Of course, “something new” could also refer to the shiny new product your team has been working on for the last 18 months.
There are plenty of potential options. The point is to continually keep your customers engaged so that they never feel the need to purchase from a competitor. If you can do that, you’ll see your customer retention rate skyrocket.
Acquiring a new customer is 5 to 25 times more expensive than retaining an existing one. Furthermore, existing customers are 67% more likely to spend more with your business than new buyers. By focusing on retention, sales reps can hit their targets more easily and generate more revenue at a lower cost to the company.
To find your retention rate, use this formula: ((# Customers at End of Period – # Customers Acquired During Period) / # Customers at Start of Period) x 100. For example, if you start the quarter with 50 customers, gain 9, and lose 4, you would have 46 customers at the end. The formula would be ((46-9)/50) x 100, resulting in a 92% retention rate.
The most effective strategy is to only sell to viable leads. Trying to force a sale on a “bad fit” customer leads to frustration and high churn rates. When you sell to customers who actually need and can benefit from your product, they are much more likely to remain loyal in the long term.
In modern sales, being viewed as a “trusted advisor” rather than a “sell-at-all-costs huckster” is vital. Sales reps can improve their personal reputation by seeking LinkedIn endorsements, asking for referrals, and being radically honest about what their product can and cannot do. A strong personal reputation builds the trust necessary for long-term partnerships.
Appreciation is a basic human need that translates directly into business loyalty. Simple tactics include sending personal thank-you notes (both to new and long-time clients), setting aside time each week to answer customer questions personally, and offering exclusive discounts or branded gifts to your top-tier clients.
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