How Excellent Customer Service Can Retain Customers

How Excellent Customer Service Can Retain Customers

We’ve all heard the quote: it takes five times as much money to acquire a customer as it does to retain one. For some industries, acquisition is key, but there are many industries that can thrive on repeat custom. So, keeping customers happy matters. That’s probably why 96% of companies agree that customer service is a big concern for them. But how does excellent customer service help retain customers?

Why Does Retaining Customers Matter?

What is customer retention?

Customer retention is the ability of a business to maintain its current customer base over time. While acquiring new customers is essential for growth, retaining existing ones is equally, if not more, crucial. Studies consistently show that existing customers are more likely to spend more on products or services compared to new customers. Overall, it’s clear that customer retention plays vital role in sustaining a thriving business.

Customer Loyalty & Spending

Focusing on exceptional customer service to retain customers nurtures loyalty and increases lifetime value. A study by Harvard Business Review found that a mere 5% increase in customer retention rates can lead to profit boosts ranging from 25% to 95%. Moreover, loyal customers tend to spend more over time, with research from Adobe indicating that the top 10% of customers contribute three times more to a company’s revenue than the average customer.

Positive Word-of-Mouth

Satisfied customers are natural brand advocates, sharing their experiences with friends and family. This can significantly impact a company’s reputation. When we asked consumers to rank factors that positively influenced their opinion of a brand, recommendations from family & friends came in at number 3. Happy customers drive new business through referrals without even really trying and with very little cost to the business.

How Can Excellent Customer Service Help Retain Customers?

Enhancing Customer Experience

Many businesses make the mistake of seeing customer service as an afterthought. After all, you’ve already gotten the sale from the customer, right? Well, not quite. Customer care is part of the entire experience, and your customers won’t differentiate between pre- or post-sale interactions.

By investing in customer service, you’re showing your customers that you care about their experience every step of the way. In fact, our own research found that 80% of consumers believe poor delivery of customer service reveals a brand’s general lack of care towards its customers.

However, satisfied customers are more likely to become repeat buyers and advocates for your brand. Exceptional customer service creates an environment where customers feel valued and respected. When customers know that they can rely on a business to address their concerns promptly and effectively, trust and credibility are established.

Preventing Customer Churn

Conversely, negative customer experiences can lead to customer churn, where customers abandon a brand in favour of competitors. Our own research found that 50% of consumers would stop buying from a brand after a poor customer experience. This highlights the crucial role exceptional customer service plays in mitigating negative experiences and preventing customer churn.

Proactive Problem-Solving

When you invest in customer care, you can begin to forecast for busy times, sales, product launches, etc. By anticipating customer needs during these times, you can send out proactive communications before your customer care team becomes swamped with incoming calls. Similarly, you can allow customers to voice their opinions, provide feedback, and express concerns. An open line of communication fosters a sense of transparency and community.

Of course, no business is immune to occasional issues or hiccups. However, how a company responds to these challenges defines its customer service quality. With a fantastic team in place that can scale flexibly, you can respond to problems efficiently and with empathy. And, with automation, you can very easily reach out to customers rather than waiting for them to get in touch after they’ve already encountered the problem. When customers feel heard and supported during difficult times, they are more likely to stay loyal to the brand.

The Personal Touch

Personalization is a powerful tool in customer retention. Effective customer service involves understanding individual customer needs and preferences. By leveraging customer data and tailoring interactions accordingly, businesses can create a personalized experience that resonates with customers, making them feel valued and understood.

Creating meaningful relationships with your customers also allows your customer service team to upsell, encourage repeat purchases, and advocate for loyalty programs. Empower your advisors to offer perks, discounts, or exclusive access to loyal customers. This not only demonstrates the brand’s appreciation for their ongoing support, but it also incentivizes repeat business and strengthens the emotional connection between customers and the brand.


Exceptional customer service is the secret sauce that builds lasting connections, fosters loyalty, and transforms customers into brand advocates. The friendly, human side of these interactions creates a positive atmosphere that goes beyond transactions. As businesses navigate the ever-evolving landscape of customer expectations, investing in exceptional customer service becomes not only a strategic advantage but a fundamental requirement for long-term success. By understanding how excellent customer service can retain customers and implementing effective strategies, your business can build lasting relationships with customers that encourage them to spend with your brand again and again.