How valuable is customer retention in a business?


Marketing often focuses heavily on the acquisition of new customers. This isn’t inherently an issue, however, the question arises as to whether that is the best use of marketing budgets. Depending on the service or product offered consumers could have really high lifetime values, especially in regard to subscription services and products where the purchase frequency is a short period of time. Focusing on lifetime value and retention might be more important now than ever as Hubspot believes that since 2020 consumer acquisition costs have increased by over 50%. This should be a sign to marketers that there needs to be an increased focus on trying to retain consumers and maximising their lifetime value.

Lifetime Value 

Understanding that a customer has the potential to be very valuable to the firm through their purchases and completed baskets are what differentiates marketers who have short-term acquisition goals in mind and marketers who are more focused on the long-term implications of their work. It’s also critical to understand how important customer retention might be in your industry especially when it comes to the impact it can have fending off any unwanted competition.

Company brand awareness is great for marketing, but the real value indicator is LTV (lifetime value), seeing the good fits that have an ongoing need for marketing support.

LTV can be estimated by calculating how much value a client can bring into your company revenue over the duration of a set time frame (e.g 12 months)

This can be applied to one-off product purchases or subscription models.
For example, if you sell cars worth £5000, and a customer only ever buys one. This would be the very lowest form of customer LTV for your business:

  •   Very Low Customer LTV (<£5000)
  •   Low Customer LTV (£5001 — £10,000)
  •   Mid Customer LTV (£10,001 —£ 100,000)
  •   High Customer LTV (£100,001 — £500,000)
  •   Very High Customer LTV (£500,001+)


Short-term consumers 

As per the single car purchase example above, short-term customers and consumers who aren’t going to be returning for more purchases should still be given attention. If the product or service being offered is a one-off purchase then there might be no need to keep consumers around as engaged in your marketing. In certain cases offering the next best purchase might be an option and that’s one that Paperplanes can assist in. Retaining consumers by offering a logical purchase that will follow up on the one they just made is a valuable investment. In this instance, the consumer goes through a period of time in which they build their loyalty for the brand by making multiple purchases with the said brand (assuming they are satisfied with the product or service given).

Subscription services

With subscription services, it’s easier to track the value of a consumer and at the same time consumer retention becomes a larger priority. Customers who are subscribed for only a single purchase will not be as profitable as consumers who stay subscribed for months and even years (especially consumers who used a free subscription and cancelled after the free trial).


With a subscription service, it’s optimal to offer long-time subscribers certain priorities, benefits and even discounts. As these consumers are already aware of the service and have a certain level of interest it makes sense to use marketing to keep them engaged. A new consumer acquisition will cost the company more than the price of offering a current customer a discount or incentive to stay subscribed and not hop over to a similar service offered by a competitor. This makes customer retention for subscription services so crucial and is why the marketing department must continue its efforts in retaining customers.

Retention strategies

Customer retention is extremely valuable for business growth, typically accounting for over half of your YOY revenue generation and should equally be given more than half of your marketing resources.  Improving customer experience by personalising, rewarding, and providing sustainable efforts breeds longevity in customer LTV, as well as organic acquisitions as a result of referral marketing. 


Paperplanes programmatic direct mail is the modern solution for optimal customer retention, providing hyper-personalised physical mail promotions based on customer interaction with your website. Specific triggers will automatically generate a letter sent over to the customer’s house where they will have a personalised offer on a product providing higher engagements and better responses than any other digital retargeting counterpart.

For any E-commerce industry, PDM will provide monthly performance increases with lower marketing spending than alternatives such as email. A Paperplanes campaign with  Bigdug for example, resulted in 50%  uplift in conversion rate and a 30-75% sales performance uplift thanks to personalised programmatic mail.

Get in touch with us for a free consultation on what a programmatic direct mail campaign can do for your business’s client retention.