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Do Customer Satisfaction and Retention Complement Each Other?


Businesses are obsessed with leads. They tend to forget that getting customers to buy from you once is simply not sustainable in the long run. As evidence, a survey of marketers shows that more than 60% of respondents still concentrate their marketing efforts on targeting new leads.

It clearly shows that instead of focusing on nourishing the relationships with their existing customers and building more trust, companies focus on acquiring new ones. They keep forgetting that a bird in the hand is worth two in the bush.

The truth is, keeping an existing customer is five times cheaper than acquiring a new one. Statistics show that the conversion rate among existing customers is up to 70% and generally is attributed to positive experiences, compared to new customers that barely reach 20%. In other words, maintaining existing customers satisfied and loyal is the recipe for sustainable growth. New clients simply do not deliver the same value as the existing ones. 

With this in mind, this article will explore the definition of customer satisfaction and retention and their importance, and show how these two concepts complement each other to provide sustainable business success. 

What Are Customer Satisfaction and Retention?

Customer retention refers to the consumers’ loyalty toward a brand and their habitual purchasing. It also involves the actions companies take to promote a positive interaction for existing customers to encourage repeat business and a continued association with a brand.

Whereas customer retention is all about the ability of a company to turn customers into repetitive buyers and prevent churning — customer satisfaction is all about measuring how happy they are with their products and services. It represents the metric by which companies can quickly find out the pulse of the existing customer base and how truly engaged they are with a brand. 

There is a direct impact between customer satisfaction and a company retention rate. If your customers are happy and their expectations are met, they will stay loyal to your brand. 

How Do Customer Satisfaction and Retention Correlate?

Customer satisfaction and retention are two sides of the same coin. Ensuring customers have more positive interactions with your brand will result in loyalty, lifetime value, and retention. It means they will buy more products, believe in their value, and recommend your brand to family, friends, and their social media following. 

By measuring how satisfied your customers are with what you offer and how they respond to those actions, you can use the data to predict retention and loyalty. But more than that, you can identify the churning reasons and improve your strategy to influence future positive customer behaviors.

This symbiotic relationship between customer satisfaction and retention can start a chain of reactions that will only have a spectacular impact on your business’s bottom line. 

So, how do you improve both of them? Keep reading to discover our top recommendations for improving customer satisfaction and retention. 

Tips to Increase Customer Satisfaction and Retention

Improving customer satisfaction and retention requires time, effort, dedication, and consistency. As Rome wasn’t built in a day, these also won’t improve overnight. However, if you work on the process consistently, it will pay off. 

Here are our top recommendations to get the ball rolling in the right direction, help you win loyal customers, and boost conversion and retention rates:

Provide Exceptional Customer Service

The quality of your customer service is essential to ensure happy customers will return to your brand time and again.

The best way to do that is to demonstrate that you value their time and ensure a hassle-free and smooth experience regardless of the communication channel they choose to reach out for support. An impeccable service will add lifetime value and encourage customers to stay with your brand.

To get your employees to deliver outstanding customer service, you should invest first in the company culture. Trained employees know how to provide timely, friendly, and knowledgeable customer service. 

Design a Customer Onboarding and Education Strategy

Customer onboarding represents the first interaction someone has with your product and service. It’s similar to the first impression when meeting someone new. You must shake hands, present yourself, and respond to the usual question: What are you doing for a living?

Onboarding is meant to personalize the customer journey. Use any contact data to welcome your customer into your world and explain what your products and services do and how to make the most out of them. Simply put — present yourself. 

Studies demonstrate that failure to onboard customers successfully jeopardizes engagement and leads to high customer churn. In fact, up to 60% of product returns are because customers couldn’t understand how to use them.

Implement a Customer Loyalty Program

Successful loyalty programs help build a tighter relationship between you and your customers. These could come in the form of discount codes, gift cards, bonuses, gamification, or membership points meant to reward your customers for simply choosing you.

These programs also have the power to convince your customers to favor you to the detriment of competition because they demonstrate your deep appreciation for the customer community. As a result, they encourage repeat purchasing and contribute to further increasing retention. 

In addition to being an incentive, the possibility of acquiring a gift card can both solve the never-ending pain of finding the ideal gift for friends and family members, and boost brand awareness. 

Loyalty programs can also prompt loyal customers to try your new products or purchase the same products more than once. Just ensure they are on the VIP list of the new product releases, limited editions, promotions, final sales, and other special offers.

Gather and Analyze Customer Feedback

The best way to determine whether customers are happy or not with your brand is to ask them directly through targeted surveys. You can approach them by email, live chats, mobile app (if applicable), messaging, or phone. 

Their feedback offers a great insight into what works and what doesn’t and whether your product or services meet customer expectations or not. Understanding why customers abandon ship helps you work proactively to tend to those issues and prevent churning. 

Make sure to listen to what customers say, as this could be the key to improving the way you deliver your product and service. Let them feel you understand them by taking into consideration their input, or taking extra care of their needs. Thanks to these seemingly unimportant things, you’ll be winning the loyalty of your customers and bringing more value to the table. 

A Fresh Perspective on Customer Satisfaction and Retention — Collabo Creative 

Customer satisfaction and retention are the key elements of any business growth — especially when these rely on product or service sales to make a profit. If companies keep consumers engaged and happy, they encourage repeat business and thus, ensure the company’s success. 

Our process to improve customer experience and retention in a company has two fundamental approaches:

Journey Mapping Training — As everything in life changes, the needs and expectations of your customers change as well. As such, trying to understand how your customers think, behave, and feel about a product or service will help you find effective ways to deliver your product in a way that meets their constantly changing expectations. Mapping out their journey is one of the best ways to lay out what your customers are going through and adjust your strategy accordingly. 

Insight Research on Company Culture —  A culture centered around customer service should be at the core of your business if you want your employees to provide great customer experiences. Our approach is simple, we analyze your company culture and help foster a deeper connection between your customers and employees.

Journey Mapping In Action — A Case Study of Indiana University Health

Our partnership with Indiana University Health had begun following a rebranding initiative under new leadership. Their main focus was to deliver a better patient experience across a network of 15 hospitals and 150+ medical facilities. Subsequently, the IU Health’s Experience Design team called us to assist them with this task and develop a customer journey map.

The challenge was to:

  • Better understand their patient’s needs
  • Improve IU’s health systems to deliver better service

We carried out in-depth interviews with over 500 patients to map out their journey. The purpose was to learn as much as possible about their interaction with IU Health and identify their expectations and pain points. 

After a deep analysis, we categorized their stories into larger groups and compared them with IU Health’s model of experience to determine what actions they should take to improve patient satisfaction and experience. 

The result? We designed four journey maps that helped the IU Health Experience Team visualize the major stages patients go through in their journey, establish how well departments work together to solve pressing issues, and identify where there’s a need for improvement. 

Bottom line

Customer satisfaction and retention go hand in hand when it comes to business growth. If customers’ needs are met, their problems are solved, and the interaction with a company is positive, they will return after the first purchase. 

The challenge is keeping up with the ever-changing needs and expectations and being in the loop about what’s happening in your customers’ life.

Our recommendation is to invest time and resources to train your employees to be customer-focused and map out the customer journey in order to identify their needs and find ways to improve.

If you’ve heard about customer journey maps already but don’t know where to begin, check out our intensive programs on customer journey mapping, so you can understand your customer needs, increase retention, and get the rewards you deserve.

Contact us today and let’s launch your next journey mapping project.



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