5 Ways to improve customer satisfaction and retention

According to a study, customer retention rates increase by 5% for every 1% increase in customer satisfaction. Another study finds that only a 5% increase in customer retention can increase company revenue by 25-95%.


According to a study, customer retention rates increase by 5% for every 1% increase in customer satisfaction. Another study finds that only a 5% increase in customer retention can increase company revenue by 25-95%.

These two figures alone signify why businesses should take customer satisfaction and retention seriously. If done right, it does not only make customers loyal to your brand but also serves as a catalyst for attracting new clients through word-of-mouth marketing your satisfied customers do.

But on the flip side, a poor job at customer satisfaction and customer retention can also significantly damage your business.

So, how can organizations devise effective ways of improving customer satisfaction? Read this blog and discover five highly effective ways to improve customer satisfaction and retention.

But let’s first start with understanding how deeply both of them are interlinked.

Customer satisfaction and customer retention: What’s the correlation?

Customer Satisfaction is a measure to evaluate customer experience and thereby your business’s performance. It shows how much shopping from your business makes customers happy.

The main factor to influence a customer’s experience is the product or service that your company delivers. It can involve the extent to which your product or service’s price, quality, and features meet the customer’s expectations.

But beyond that, your store’s environment(if you have a brick-and-mortar business) and customer service which could include chat/call support or your in-store staff’s behavior are all determining factors of customer satisfaction.

Customer retention on the other hand is the art of making customers stick to your business once they have shopped from you. It involves doing everything to ensure your customers come back for repeat purchases and do not resort to a competitor.

There is only one boss: the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.

Sam Walton, Founder of Walmart

Losing customers will drive up the churn rate which is a measure directly opposite of the repeat customer rate.

As for the link between customer satisfaction and retention, if you do a good job at satisfying customers, it naturally makes them come back for more. So, the key is to make your customers’ buying experience so good that they become fans of your business.

In short, customer satisfaction compliments customer retention, improving the former means the repeat customer rate increases too.

Now that you are aware of how customer satisfaction and retention go hand in hand, it is time to jump to the main part and learn how to achieve them.

5 Ways to improve customer satisfaction and retention

Here are 5 ways to make customers so happy that they refuse to buy from your competitors:

Conduct customer satisfaction surveys and act on the feedback

As mentioned earlier, customer satisfaction and retention are interlinked. To have customers keep coming back to you, you need to focus on customer satisfaction. And customer surveys make an integral part of the action plan to improve customer satisfaction.

They give you firsthand knowledge about what your actual customers think about you and how future customers may perceive your business. Through a customer satisfaction survey, you’ll get targeted insight into what exactly needs improvement. It tells you whether the issue lies in the product, process, or your approach.    

But merely collecting the feedback isn’t enough. It’s the changes you implement based on this information that will improve customer satisfaction and customer retention, in turn.

Seymour Fine, a Fullbright Scholar and Social Marketing and Strategic Planning counselor, perfectly captures the importance of customer feedback when he says,

When a customer complains, he is doing you a special favor; he is giving you another chance to serve him to his satisfaction. You will appreciate the importance of this opportunity when you consider that the customer’s alternative option was to desert you for a competitor.

And when it comes to customer satisfaction survey tools, there’s no better option than Formaloo. It gives you the option to build your survey from scratch or customize pre-built templates with smart features.

Have smooth customer onboarding

Customer onboarding is another key factor you should focus on to improve customer service and retention. The process involves making it easy for new customers to integrate and guiding them through the product setup and usage stages.

The process kicks in as early as the user’s initial contact with your business and continues for as long as they are using your product. In other words, it covers the initial sign-up, welcome and follow-up emails, usage guides, and product walkthrough tips.

For instance, you should offer additional signup options besides just asking the user to make a new account. If your product is software, you should also offer multiple download options for customers using different operating systems.

Moreover, the user should be able to resolve product issues or get to know the product better by referring to product documentation or educational materials from your site.

For this, you must cater to different preferences, as some users like how-to videos, while others may enjoy short written steps or detailed blogs.

In short, your onboarding process should be tailored to a wide range of preferences so that everyone can find it easy to adopt and use your product.

With a smooth onboarding process, you will not only appeal to a diverse customer base but also witness high customer satisfaction and retention rates.

Identify customers about to break up with you and make them stay

The book Marketing Metrics states that selling to an existing customer has a 60-70% success rate while getting a new customer on board has a 5-20% chance. This alone shows why customer retention is important and why you need to prioritize your existing customers.

Existing customers have already seen the value in your products and hence they’re more likely to buy again or trust new offers. But this can continue for as long as you’re giving them no chances to complain.

Once customers feel that your product no longer meets their expectations fully or their complaints aren’t being heard and a competitor is providing a better service, they’ll quietly say you goodbye.

Luckily, warning signs start showing up in advance. The key warning signs include decreased usage, price point dissatisfaction, and account changes. To reduce customer churn, you should look for these signs and promptly address the cause(s).

Secondly, you should conduct a customer retention survey frequently to assess customer satisfaction and identify weaknesses.

It’s always better to employ a proactive approach to drive up customer satisfaction and retention rather than feeling sorry over spilled milk once the customer has churned away.

Upsell strategically

Upselling is another powerful tactic that can improve both customer satisfaction and retention. It involves pitching new products or upgraded packages to your existing customers.

But make sure you only upsell to satisfied customers. Upselling to an unhappy customer is counterproductive as they’ll see it as a cash-grab scheme and may damage your reputation.

You need to keep communications open with your happy customer base by providing more customer success through newer offerings and gaining more trust while increasing your sales, simultaneously.

Further, make sure you upsell strategically. It means you should not upsell a car if the buyer has purchased a bike. Your upsell should be aligned with the customer’s needs or wants.

This will help in boosting the happiness of satisfied customers and converting them into loyal customers. As a result, both customer satisfaction and customer retention improve.

According to Forbes, studies find that existing customers are 50% more likely to try new products and spend 31% more than new customers.

So, if you’re looking for a sure-shot answer to “how to retain customers in business”, upselling is your smartest bet. It’s the recipe for strengthening customer relationships and making them last longer.

Reward your customers in exchange for referrals

While having a positive customer satisfaction rating will automatically make users advocate for your products, you can sweeten the deal by attaching a reward to referrals.

This approach can bring in loads of new customers and boost the satisfaction of existing customers at the same time.

These rewards can be in the form of discounts, upgrades, or in-app credits. Offering such rewards incentivizes customers to make a special effort to convince others to join your bandwagon.

Your customers’ credibility among their circles makes this approach highly effective in acquiring new customers.

As Mark Zuckerberg says.

People influence people. Nothing influences people more than a recommendation from a trusted friend. A trusted referral influences people more than the best broadcast message. A trusted referral is the Holy Grail of advertising.

So if you’re scratching your head questioning “how to retain loyal customers” or “how to acquire new customers”, see if a referral program is that missing piece of the puzzle.

Keep customers coming back for more!

An increase in customer satisfaction is considered a tangible benefit. It not only converts satisfied customers into loyal customers and hence boosts your revenue, but it also helps in expanding your customer base by attracting new customers.

This blog has walked you through key strategies that promise improved customer satisfaction and retention rates. These strategies hit the nail on the head and increase the repeat customer rate while also ensuring a low churn rate.

While these strategies may appear simple, implementing them is the tricky part. Tools like Formaloo are specifically designed to simplify such processes.

Formaloo makes your business easier by offering drag-and-drop tools to build survey forms, automate tasks, and analyze the data to gain insights.

So, sign up for free and take your first step towards high customer satisfaction and customer retention figures.

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5 Ways to improve customer satisfaction and retention