The Complete Guide to Customer Retention


The Complete Guide to Customer Retention looks at the three primary stages of the journey and shares best practices to achieve measurable results.

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What is Customer Retention?

Customer retention is the process of retaining customers over a specific period of time. A robust customer success strategy needs to involve the entire customer journey – not just onboarding or renewals. Essentially, there are stages you should follow to generate repeat business from existing customers, to retain them. These stages focus on ensuring customers remain engaged with your product and invested in what your brand offers. To maximize customer value, all stages need a specific plan to ensure customers get the right level of engagement at the right time.

Three stages of Customer Retention
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The Complete Guide to Customer Retention looks at the three primary stages of the journey and shares best practices to achieve measurable results. The three primary stages that affect customer retention, which we will look at in-depth throughout this guide, include:  

  1. Onboarding  
  2. Adoption
  3. Renewals and upsells

These stages will help you incorporate best practices into your customer’s onboarding experience, guide their growth in the adoption of your product, and promote the renewal of their relationship with you. Following customer retention best practices to optimize each of these stages of the customer experience encourages higher repeat business and referral rates. After reading the guide, you will be able to create programs that will influence the outcome of the journey, and provide the right level of engagement at every stage to ensure loyal, happy customers.

Why You Should Focus on Customer Retention

Customer retention increases your ability to control your repeat business, referral rates, and revenue levels. Customer retention is important because repeat business represents the most cost-efficient way to generate revenue. The marketing investment required to attract a new lead and convert them into a paying customer costs much more than it takes to retain an existing customer. The marketing investment cost to acquire a new customer can be as much as 5x the cost of keeping an existing customer. This is partly because current customers are much more likely to buy from you. When a customer has already purchased from you and already knows the value your product delivers, they already trust you and they are predisposed to buy from you again. In contrast, a new customer needs to be persuaded that your brand is trustworthy and your product offers value. This means that any steps you can take to improve customer retention increase the efficiency of your marketing investment. Customer retention promotes long-term loyalty, making the most of your marketing dollar.

Customer retention also promotes referrals, another cost-efficient marketing method. If a customer is satisfied with your product and it has made a positive impact on their lives, they will be sure to share this with others. In contrast to marketing strategies such as advertising and SEO, referrals typically cost you simply the time and effort of treating a customer properly. Yet, they have higher conversion rates than other types of marketing due to the fact that the referral is coming from a source the prospect already knows and trusts. In this way and in other ways, customer retention can complement customer acquisition. Using retention strategies to promote customer loyalty pays off in referral revenue.

On the other hand, if your customers aren’t satisfied with your brand, they not only won’t generate referrals, but they’ll drive business away from you with negative word of mouth. This means that if you’re not retaining your current customers, you’re also bound to lose potential customers. Failing to adopt a customer retention strategy can cost you revenue on multiple fronts.

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Three Customer Retention Strategies

Customer retention strategies aim to optimize each stage of the retention process. They are divided into three main groupings, corresponding to the stages of the customer lifecycle:

Obstacles to Customer Renewal
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The onboarding stage of your customer’s relationship with you begins immediately after purchase and continues until your customer starts using your products and begins seeing value. If your customer fails to see value from your product within the first 90 days after purchase, they become increasingly unlikely to renew their relationship with you. This makes the onboarding process a crucial phase for customer retention.


Once a customer begins seeing value from your product, the adoption stage of their relationship begins. During this stage, your customer should begin seeing increased value from their purchase through increased adoption of product features. Cross-sells and upsells that complement their initial purchase can also add to the value they derive from their relationship with you. If your customer begins seeing increased value during this stage, they become more likely to renew their relationship with your brand. Conversely, failure to see increased value can make them at best complacent about renewal and at worst disinterested.

Renewals & Upsells

The renewal stage unfolds as the customer decides whether or not to continue their initial relationship with you at the end of a designated period, such as the expiration of a subscription or contact. The customer’s experience during the onboarding and growth stage influences this decision, but you can also take additional steps specifically designed to encourage renewal. In the renewal stage, you can introduce an upsell of your product to bring more value to their original purchase. How well you manage these additional steps can either persuade the customer to close a renewed deal with you or convince them to take their business elsewhere.

Each of these stages has its own set of tactics and best practices.



Customer onboarding strategies aim to provide your customers with a positive experience of your brand during the initial stage of your relationship immediately after they buy your product. For best results, aim to deliver value to customers as soon as possible after their purchase. Strategies to achieve this objective include:

•          Standardizing onboarding procedures

•          Setting mutually agreed upon onboarding goals

•          Identify Key Performance Indicators for Onboarding

These strategies serve both to deliver value to new customers and to communicate that value in a quantifiable way.

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Standardizing Onboarding Procedures

Standardizing your onboarding procedure allows you to systematically reproduce successful results. You can standardize your procedure by breaking it down into steps that define what to do at each stage of your onboarding process. Steps you should cover include key items such as:

Put the Right Processes in Place

The right processes need to be put in place to make sure companies can monitor progress and know where each customer is during onboarding. It is important to identify the processes upfront, so companies can plan them accordingly.

Get Visibility Into Customer Status

Once onboarding starts, it is vital to know exactly how your customers are making progress. Consistently monitoring the status of your customers will help to know if more proactive measures need to be taken.

If the account is in good health, let the customer continue along their journey. If onboarding is slow to start, it is imperative that the customer success manager reach out to stakeholders to make sure they move the process forward.When using Totango, customer success managers can set up automated tasks as reminders.

Complete Key Milestones Within the Desired Timeframe

Key milestones are a necessary prerequisite to develop a tight timeframe for your customer onboarding. Milestones are quantifiable, such as the number logged in users, usage of key features, specific business outcomes, etc. and are used to show if customers are seeing value during onboarding. Beyond milestones, it is also important to track any other key events that may need your team’s attention.

Create Just the Right Program to Drive Adoption

To drive adoption during onboarding, it’s good practice to employ nurture campaigns. Establish automated, relevant messages, and content that is based on measurable goals specific to onboarding customers. Paired with the right event triggers, Totango email campaigns can help successfully guide the onboarding process.‍

Analyze Bottleneck Reports

It's always best practice to track business outcomes and create reports for management or customers to see if there are issues during onboarding that need to be resolved.

This is critical if there is a need for executive support or buy-in to resolve an issue. Using active, real-time monitoring will help to identify any bottlenecks quickly or even prevent them from happening in the future.

Create a Usage Report and Adoption List

With a usage report, you can see which customers are adopting the different modules of your product. It also helps to identify when a key contact has stopped using the product or a key product feature. In addition, you can create a specific SuccessPlay to notify the customer success team when there is a drop in product usage for important accounts or create ongoing campaigns to increase product adoption.

Perform Regular Check-ins with Customers

Because onboarding is only the first phase of the customer journey, companies must plan strategically on providing long-term check-ins with customers to make sure they are seeing value throughout their journey. A good avenue to gather feedback from customers is using campaigns, i.e., sending customers a satisfaction survey after onboarding. A SuccessPlay can be created to make sure your customer success team reaches out to the accounts on a regular basis.

Setting Onboarding Goals

In order to frame customer expectations of what a successful relationship with your product and company should look like, set goals with your customers during the onboarding process. These goals should align with your customers’ business goals in order to underscore the practical value derived from using your product. They should also be measurable so they can be tracked objectively. Set up a meeting with new customers to elicit their goals and review how your product can help them attain their objectives

Identify Key Performance Indicators for Onboarding

Companies use key performance indicators (KPIs) to gauge how effectively they have achieved key business objectives. Similarly, for onboarding, a customer success department needs to ensure they have their onboarding KPIs so that they can evaluate their success at reaching goals. The KPIs include:

Time to complete onboarding

Onboarding should be completed within a reasonable amount of time. If it takes too long to onboard a customer, it obviously does not bode well for the company and customer.

Usage after onboarding

‍Companies can look at license utilization to see how many customers have started using or adopted the product(s). Once the customer is using your product/solution and sees the business impact and value, their onboarding is complete.

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Once customers have been onboarded and begin seeing value from your product, adoption strategies seek to deliver added value. You can deliver additional value in several major ways: 

  • Support current product adoption
  • Training and Support to Promote Increased Adoption
  • Cross-sell to promote new product adoption

Each of these methods serves to increase the value that customers experience after the onboarding process has been completed.

Support Current Product Adoption

After onboarding, customers may encounter various issues that require support. These can range from challenges using product features to technical problems to billing issues. The better support you deliver in response to these concerns, the more value your customers will experience from your product and brand. Optimize your support procedures in order to help customers consolidate the value they experience from their initial purchase with you.

Training and Support to Promote Increased Adoption

During the onboarding process, customers begin learning the basics about using your product. As they continue using your product, they can experience additional value by learning to use advanced features and applications. By providing advanced training and support, you can point customers towards ways they can derive additional value from your product. You can deliver this type of ongoing training through means such as online tutorials, email tips, and suggestions volunteered during support tickets.

Cross-sell to Promote New Product Adoption

As customers explore applications of their initial purchase, they may encounter situations where they would benefit from purchasing additional products. You can help customers access this additional value by promoting cross-sells geared towards meeting the needs of customers who have already purchased from you. Cross-sells involve the purchase of products that complement a customer’s initial purchase. For instance, offering customers an app integration for a software product would be a cross-sell.


Renewal and Upsell

During the renewal phase of customer retention, you invite your customer to continue your relationship with you. This invitation can take the form of offering a subscription or license renewal, or it can take other forms such as offering an opportunity to upgrade. You can increase a customer’s inclination to accept your invitation by implementing proven renewal strategies. These strategies each involve their own tactics, procedures, and best practices.

Standardizing Your Renewal Process

Just as standardizing your onboarding process allows you to reproduce successful onboarding experiences, standardizing your renewal process can promote successful renewals. Map out the steps that are involved in your customer renewal process, and create detailed procedures for each step. You can then use these procedures as a checklist to ensure a smooth renewal process. Typical steps may include:

Digital-First Renewal Process
  • Automated renewal reminders
  • Automated renewal billing
  • Notifications of changes to service agreements or pricing
  • Invitations to upgrade or purchase add-ons

Depending on the specifics of your product and your customer’s situation, your renewal process may involve additional steps.

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Motivations for Renewal

Every customer renewal is an opportunity to communicate the value derived from your products and align future goals with your customer. Here are the most important criteria customers will consider during the renewal process:

  1. The product has created ongoing value
  2. The company has become dependent on the product for one or more business use cases
  3. The cost required to cancel or switch is higher than the value of a replacement product

It may prove difficult to prove #3, but your team can leverage product consumption data to understand #1 and #2. How your customers engage with your products and the features they adopt are critical to understanding and, more importantly, proving your products’ ROI. Customers would be highly motivated to renew if your Customer Success team could prove that your products helped them increase revenue, improve productivity, or generate higher quality work.

Getting Customers to Renew

Your customer success team should create a Renewal Success Program for every customer renewing in a specific time period. Each of these programs should include the vital projects and activities necessary to achieve a positive business outcome. They should always be based on your deepest level of understanding of the customer. There are two key activities associated with a Renewal Success Program:

Create a Renewal Plan

Prior to extending a renewal invitation, you can influence a customer’s decision to renew by taking preliminary steps. For example, providing customers with periodic reports documenting the value they’re getting from your product can remind them why it’s in their best interests to renew. For automated renewals, you can lay a foundation for a smooth renewal process by reminding customers when expired credit cards need to be updated. Create a checklist mapping out any actions you should take with customers prior to offering a renewal invitation.

The CSM should document all the steps taken by your company and the customer leading up to the renewal contract. Other possible steps in the process include training, upgrades, escalation resolution, or personnel changes that are specifically requested by the customer for renewal.

Conduct a Renewal Audit

Your renewal plan should include an audit to flag potential barriers to renewal. Obstacles to renewal can include:

  • Low product engagement
  • Low awareness of metrics illustrating product value
  • Lack of awareness of upgrade and cross-sell opportunities
  • Unresolved support issues
  • Billing problems

Create a list of any potential problems that may pose obstacles to renewal, and take steps to resolve these before the time comes for a customer to make a renewal decision.

Totango's Renewal SuccessBLOC enables customer success managers to work hand-in-hand with their customers throughout the renewal journey. Using the Renewal SuccessBloc will enable your team to monitor renewals at risk while increasing your renewal rate, all while being on time.

Expanding the Relationship With an Upsell

While customer renewal is tied to a specific window of time, customer upsell opportunities are not timeline-based, but rather a function of three different scenarios; One being your customer is approaching full utilization capacity, or perhaps you’re launching a new product or feature that aligns with their use case or business goals and lastly, your customer may be seeking functionality that only an upsell could assist with. Upsells could (and should) happen any time there is a customer need. In this case, you can use an Expansion SuccessPlay to achieve a smooth upsell:

Review Frequency and Depth of Product Consumption

Your team needs to know who is using your product across the entire organization, how they are using it, and what results they are achieving for every user on the account. By understanding the product consumption across different levels, you will have a much better chance of convincing the customer that it is the right time for expansion.

Incorporate Product Consumption Into Regular Cadence of Reviews with Customers

Changes in product consumption should not come as a surprise to you or your customers. By including a regular review with your customers, you are helping bring high utilization top-of-mind more frequently, which will make expansion a more logical progression. In addition, using a digital scorecard or a technology-based review will give your customer success managers a real-time view of product consumption.

Have Someone Other Than the CSM Close the Expansion Transaction

‍You do not want the customer to feel as if their CSM is monitoring their consumption for the sole purpose of selling more products at the first sign of high utilization. By having another individual on the team manage the expansion, the customer will not feel that the CSM just wants to sell them more products.

Using these best practices will greatly reduce the element of surprise during the renewal process and provide your company with greater revenue predictability. Managing renewals and upsells shouldn’t be complex. Totango’s SuccessPlays and Revenue Center can automate tasks associated with your renewal plan and accurately forecast retention, churn, and upsell revenue. With Totango, companies achieve higher customer retention rates by providing visibility into product consumption, actively monitoring for customer health changes, and driving proactive engagements so your team is well prepared for the renewal events.

Understanding and Calculating Customer Retention Metrics

You can measure the effectiveness of your customer retention strategy by monitoring key metrics. Two of the most important key performance indicators reflecting successful retention are:

  •  Customer retention rate
  • Churn rate

These metrics directly impact your revenue, forming a relationship between customer retention and profitability.

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Customer Retention Rate

Your customer retention rate (CRR) measures the number of customers you retain over a given time frame. To calculate your customer retention rate:

  • Take the total number of customers you have at the end of a given time frame, represented by E
  • Subtract any new customers (N) from E
  • Divide the difference of E-N by the number of customers you had at the start of the time frame (S)
  • Multiply by 100 to convert your result from a decimal to a percentage

This procedure can be summed up by the formula:

((E-N)/S) x 100 = CRR

If the difference between E and N is equal to S, you will have a 100% retention rate. Any lost customers will lower your retention rate.

Let's look at an example of how to calculate this formula. You have 500 customers currently. Over the given time of 3 months you have gained 25 new customers however, you started the time frame with 481 customers.

((500-25)/481) X 100 = 98.75

This means that your customer retention rate is 98.75%.

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Churn Rate

Churn rate, also known as the attrition rate, represents the flip side of the customer retention rate. It represents the number of customers you lose over a given time frame. A simple way to calculate the churn rate is by subtracting your customer retention rate from 100%. If you notice your churn rate is high, or if you notice it is increasing from one month or quarter to the next, take steps to identify the cause and implement corrective measures.


In today’s economy, it has become more important than ever to retain your existing customers. By boosting your customer retention rate and focusing on the strategies that help you retain customers, you will be able to increase your company's revenue.

Following the steps in this guide will help you do this, generating more repeat business and revenue. By standardizing your onboarding process and setting onboarding goals you can ensure your customers will adopt your product and find value quickly. By providing ongoing training and cross-selling additional products you can grow your existing customer accounts while boosting loyalty. It's important to start the renewal process early and know in real-time with a digital scorecard how your customers are utilizing your product. Creating a renewal plan that increases product consumption, with an upsell, will establish your relationship for years to come.

You can optimize your implementation of these strategies by adopting a software platform geared towards customer retention. Totango’s Spark solution makes it easy for you to track customer success goals so you can increase retention rates and reduce churn. Try Totango for free to see how our solutions can help you increase your customer retention.

Download Customer Retention Case Study

Download Customer Retention Case Study

Successful Customer Onboarding


Identify Key Performance Indicators for Onboarding


Put the Right Processes in Place


Get Visibility Into Customer Status


Complete Key Milestones Within a Desired Timeframe


Create Just the Right Program to Drive Adoption


Analyze Bottleneck Reports


Create a Usage Report and Adoption List


Measure Onboarding Results


Perform Regular Check-ins with Customers

Successful renewals & Upsells


Motivations for Renewal


Getting Customers to Renew


Expanding the Relationship with Upsell

Download Customer Retention Case Study