Customer Loyalty and Retention Strategy: Start with Your Team

A customer loyalty and retention strategy keeps the customers you already have coming back, and it starts with the people who serve them. Customers stay where they trust the people they deal with, and those people stay with managers who take care of them.

Keeping a customer usually costs much less than finding a new one, and a customer who stays tends to buy more and send you referrals.

Most customer retention strategies focus on the customer side, such as loyalty programs, surveys and follow-up calls. Those all help, but customers often stay because of a person, like the banker who knows their business or the technician who remembers their dog's name.

When that person leaves, the relationship is at risk, which is why the strongest customer loyalty and retention strategy starts with keeping your best people.

Jump To: Employee Retention | 5 Parts | When Someone Leaves | Example | FAQ

Why Employee Retention Drives Customer Retention

Employee retention and customer retention move together. When your people feel valued and know what's expected of them, they stay longer and get better at their jobs, and customers get to know them.

There's an old saying that people leave managers, not companies, and research backs it up. Gallup has found that the manager accounts for at least 70% of the difference in how engaged a team is, which means you have more control over turnover than you might think.

Treat your people the way you want them to treat your customers. Get to know each person, ask how things are going in regular one-on-ones and act on what you hear. The Skip-Level Review gives you a structured way to hear from the people who report to your managers, and when someone does leave, the Employee Exit Survey helps you learn why.

5 Parts of a Customer Loyalty and Retention Strategy

Whether you call it a customer retention strategy or a loyalty plan, it works best when these five parts support each other.

1. Keep your best people. Everything else depends on the people your customers know. Watch turnover as closely as you watch sales, and treat a good employee's resignation as a customer retention problem as well as a staffing one.

2. Give sales and service shared goals. Give each person a service goal and a sales or referral goal. A service employee who asks a few questions while fixing a problem may find a need worth referring, and a salesperson who hears about a service problem should own it until it's resolved. Sales Recognition Programs has ideas for rewarding both.

3. Know your customer segments. Customers don't all have the same needs. Your largest or longest-standing customers may need a named contact and a call every quarter, while others are happy with fast, friendly service when they come in. The Customer Contact Plan helps you decide how often to reach out to each group.

4. Use systems that keep service consistent. A good customer database, appointment reminders and one place to log complaints help every customer get the same experience, whoever they talk to.

5. Measure retention. Track the percentage of customers you keep each year and review it with your team. The Customer Retention Formula shows how to calculate it, and Tracking Customer Service covers the other numbers worth watching.

“Take care of associates and they will take care of your customers.”

- J. Willard Marriott, founder of Marriott

How to Keep Customers When an Employee Leaves

When a well-liked employee leaves, some customers will follow if they get the chance, especially at the first sign of a service problem. Plan for it the day you get the resignation.

List the customers who work most closely with the departing employee, and put your largest and longest-standing relationships at the top.
Introduce the new contact in person or by phone before the employee's last day whenever you can, so the hand-off feels planned.
Call your top customers within a week of the change to make sure nothing has slipped.
Watch service closely for the next 90 days, because a missed callback or a mistake is often when a customer decides to leave.
Hold an exit interview, and use what you learn to keep the next person from leaving for the same reason.

Customer Loyalty and Retention Strategy Example

Erin manages a veterinary clinic with 11 employees and about 2,400 active clients. In one year she lost 3 of her 4 receptionists, and the share of clients coming back for their pet's annual visit fell from 84% to 76%.

ERIN'S CLINIC

What she learned: The exit surveys from all three receptionists mentioned the same thing, a schedule that changed from week to week with little notice.

What she changed: She set front desk schedules a month ahead and started a 15-minute one-on-one with each person every month. She also gave the front desk and the technicians a shared goal for reminder calls, and asked the same technician to call the owners of senior pets after each visit.

A year later: She lost one receptionist instead of three, and the share of clients coming back for annual visits rose to 83%.

Measure	Before	A year later
Receptionists who left	3 of 4	1 of 4
Clients back for annual visits	76%	83%

Seven more points of retention on 2,400 clients is 168 clients, and at about $450 a year each, that's about $75,600 a year the clinic kept.

Customer Loyalty and Retention Strategy FAQ

The questions below address what leaders most commonly ask about customer loyalty and retention strategy.

Click on the (+) sign below to expand each question. Click the (-) sign to collapse it again.

What is a customer loyalty and retention strategy?

A customer loyalty and retention strategy is a plan for keeping the customers you already have and earning more of their business. It usually covers who serves each customer, the service standards you hold, how you stay in touch and how you measure the share of customers you keep each year.

How does employee retention affect customer retention?

Customers build relationships with people. When a trusted employee leaves, those customers are more likely to leave too, especially if service slips during the change, so keeping good employees is one of the strongest ways to keep customers.

What's the difference between customer loyalty and customer retention?

Customer retention measures whether customers keep doing business with you. Customer loyalty is the reason they stay, such as trust in your people or confidence in your service, and loyal customers tend to buy more and send referrals.

How do you keep customers when an employee leaves?

Introduce the new contact before the employee's last day, call your top customers within a week and watch service closely for the next few months. An exit interview helps you learn why the employee left so you can keep it from happening again.

How do you measure customer retention?

Take the number of customers at the end of a period, subtract the new customers you added during it, divide by the number you started with and multiply by 100. For example, starting with 200 customers, ending with 210 and adding 30 new ones gives a retention rate of 90%.