Retention Rate: How to Keep Customers Through Messaging Campaigns


Table of content:

Customer Retention Rate, also known simply as retention, is a product metric that reflects the level of client activity, engagement, and loyalty to the brand. Companies tend to increase retention, because finding new customers costs at least 5 times more than retaining regular ones. At the same time, there’s an approximate 65% chance of successfully selling a product or service to an old customer. With a new customer, the chance is only 12%.

Retention is measured in percentage, and calculation requires a period of time — a quarter, month, or week — depending on the business type.

Below we explain how to calculate the Customer Retention Rate for your product and increase customer retention using messenger marketing.

Why Retention Rate is important for your business

New customers are important. But without loyal customers, a business won’t be able to make growth or financial plans. The more loyal customers you have, the easier it is to calculate your marketing budget — because meeting their needs requires less effort.

Customer Retention Rate calculation formula

Metrics that affect the Retention Rate

The Customer Retention Rate is linked to other metrics that need tracking to keep retention high. First, we’ll explain how to calculate these metrics, and then — how to impact them using messenger marketing.

Formulas for calculating the metrics
MetricHow to calculate itExample
Repeat Purchase Rate. The percentage of customers who made a repeat purchase during the time period.(The total number of customers who placed at least one order over the time period ÷ The number of customers who placed more than one order during the time period) × 100Over the month, the business had 16,500 active customers. Of these, 11,000 made more than one purchase.

(11,000 ÷ 16,500) × 100 ≈ 66,6%

Average Order Value (AOV). This indicator helps you calculate your budget, including pricing policies, and customer acquisition costs.The profit over the time period ÷ the number of orders over the time period.The monthly profit of the business was €23,000, and the number of orders was 1,000.

23,000 ÷ 1,000 ≈ €23

Customer Lifecycle Value. It helps you understand how much profit each client brings, and how much the business can invest in attracting new customers.Calculate the average customer churn rate. (The number of customers at the beginning of the time period – The number of customers at the end of the time period) ÷ The number of customers at the beginning of the time period. For example, at the beginning of the month, the business had 16,500 customers, and at the end of the month — 11,000.

(16,500 – 11,000) ÷ 16,500 ≈ 0,33.

Calculate the average duration of the client’s lifecycle. 1 ÷ customer churn rate over the time period. For example, the customer churn rate for the month was 0,33.

1÷ 0,07 ≈ 3 months.

Calculate the average number of repeat purchases. The number of purchases over the time period ÷ The number of unique customers during the time period. For example, a business had 16,500 customers and 11,000 purchases in a month.

16,500 ÷ 11,000 = 1,5 repeat purchases.

Average customer lifecycle value = The average order value over the time period × The average number of repeat purchases × The average customer lifecycle duration.

The average monthly business figures were €20,909 per order, 1,5 repeat purchases, and 3 months as the customer lifecycle.

20,909 × 1,5 × 3 ≈ €94,000

These metrics help you diagnose the state of your business and understand why the Customer Retention Rate is increasing or decreasing.

How to improve your Retention Rate using messenger marketing

In B2C, messenger marketing is a form of business communication with the client via SMS or instant messengers. It is best to use omnichannel platforms for sending such messages en masse.

Here are some tips that you can use in messenger marketing and impact customer retention:

Make personalized campaigns. Not just addressing the client by name, but also getting into their preferences. For example, discounts on products that they bought or were interested in, or reminders to make an appointment for a regular procedure. To make personalized offers relevant, your customer database needs to be segmented by interests, geography, purchase history, or other criteria that show customer commitment to certain products and services.

78% of customers who made a purchase using a personalized offer are ready to repeat it.

Provide customer support in instant messengers. Support must be prompt. Instant messenger dialogs with the support are convenient not only because of speed, but also the ability to share files, make additional sales, and collect feedback to improve the service and personalize it. Communication history will remain at the client’s fingertips, in a convenient and familiar app.

However, customer support in instant messengers is more than a dialog, but also the ability to quickly opt-in for personal data gathering, activate services, set up delivery notifications, receive receipts, and so on.

91% of customers who have received a positive customer experience are ready to repeat the purchase.

Engage customers in loyalty programs and referral programs. Motivate them to be more interested in exploring business offers and making purchases. Using mass messaging campaigns, you can add clients to the loyalty program, inform them about the referral program, send bonuses and special offers reminders, or motivate them to shop using the bonuses they already have collected.

78% of customers will be loyal to a company that has a loyalty program.

Reactivate customers. Both those who haven’t used your services in a while, and those who have an abandoned cart or information form that is not fully filled out. You can message them a reminder about the selected products, or offer help or a discount. Such messages in instant messengers can be accompanied by images, videos, and buttons to attract the customer’s attention and increase the conversion rate.

Implement recommendations by setting up automated messages — customers will move through the sales funnel without the manager’s participation.

An automated sales funnel can be based on:

  • Time. Messages are sent during the set time slots until the customer makes a purchase. These are mass campaigns: messages about sales, loyalty program motivations, new product or service announcements.
  • Behavior. Messages are sent in response to specific actions of the customer. These are personalized triggered messages: individual product selections and discounts, delivery notifications, confirmation codes, and messages for customer reactivation.

Multichannel mass messaging platforms, such as Messaggio, will help you build an automated funnel.

Examples of messenger marketing campaigns that increase Customer Retention Rate

Below are several cases of using instant messengers and SMS for motivating a customer to repeat a purchase.

Customer Retention Rate calculation formula: client return, support service and personalized mass messaging to segmented client database
Customer Retention Rate calculation formula: reactivation through a loyalty program and review request

Use these examples in your business — copy the texts and create message templates in your Messaggio dashboard ↓

Example 1. Client return + triggered message

Happy Birthday! Anna, here’s our present — any product by your favorite cosmetics brand: Pick it up in one of the Magic Cosmetics stores — the present will be waiting for you until 31.01.22!

Example 2. Support Service

Client: Hello. I have a business subscription enabled in the cab app, and my card was charged. I didn’t sign up for anything. Please disable the subscription and refund me.

Support: Stan, hello! We’re sorry about that. The subscription was deactivated and the funds were returned in full. As an apology, we give you a 10% discount on any cab ride you choose. Code 10RIDE — just enter it next time in the app.

Customer: Great, thanks!

Example 3. Personalized mass messaging to segmented client database

We know what he needs. A selection of New Year’s gifts for your man:

Example 4. Reactivation through a loyalty program

Mike, you earned 128 Coffee Points already! 1 coffee-point = 1 dollar. Redeem them and save up to 50% off your My Coffee receipt! Always happy to see you:
Wisteria Blvd, 14; Like St, 27.

Example 5. Review request + additional sales

Rita, thank you for visiting the Fresh salon. Please share your impression about us and get a 15% discount on any service:

How Messaggio helps keep customers and increase retention

We help businesses to:

Create a personalized approach to the client

  • Collect statistics on messaging campaigns directly from your personal dashboard. Analyze how many messages were sent, delivered, and read over a specific time period.
  • Segment contact groups.
  • Personalize your messages using variables such as full name, dates, email address, codes, and prices.

Set up bulk messaging campaigns

  • Send service and promotional messages that clients can respond to. Campaigns can be sent to the entire database, or to separate segments, via a channel-to-channel routing. Delivery can be delayed or scheduled.
  • Use “smooth delivery”. This is a preventive message against request overload: texting over set time intervals. It helps to relieve managers without damaging the customer experience.
  • Find the best message campaigns options. Use A/B tests, which is sending two different templates of the same message to different groups of contacts. After that, the template with the best conversion rate is selected.

Use only official communication channels

  • Verify your business accounts and get a check mark for your official Sender ID. This is necessary for customer trust and conducting legitimate business via instant messengers.
  • To get a verification mark and a branded name that will be attached to your texts, you need the messenger’s permission first. Messaggio uses only official channels for mass texting, and officially partners with mobile carriers and messengers, including WhatsApp and Viber.

  • Discover the full potential of messenger marketing by sending rich content (messages with images, buttons, and videos) to your customers. This is only possible for bulk texting via official channels.

We provide omni-channel service

  • Automatically redirect your messages from the channel to channel to ensure that the message reaches its destination.
  • Optimize your business processes — manage all channels in a single interface, and streamline customer communications.

Bottom line

Customer Retention Rate is a vital business metric. In particular, because it costs 5 times more to find new customers than to retain the old ones.

Retention measured as a percentage. Its rate is also influenced by other marketing metrics: for example, the Repeat Purchase Rate, the Average Order Value, and the Customer Lifecycle Value.

Increasing customer retention is possible with the help of message marketing — to be precise, mass texting campaigns. It helps a business to involve customers in loyalty programs, provide support, send personalized offers, reactivate customers — and more.

Message marketing tools for customer retention can be implemented in your automated sales funnel. If you automate the texts, your customers will move through the funnel without a manager’s assistance.

For message marketing, omnichannel mass texting platforms are the best. Messaggio is a platform for the task.

We help businesses to retain clients with services like:

  • personalized mass texts and client database segmentation;
  • transactional and promotional two-way mass texts with rich content;
  • only official messaging channels, that protect from being marked as spam and from losing customer trust;
  • omnichannel system, that helps to reach the recipient.

More message marketing possibilities for your business are here.

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