17 Customer Retention Examples From Successful Companies
What do billion dollar companies know about retention that others don't? This is a list of examples from Oreo, Spotify, Calendly, Canva, and many more.
Retention separates growth heroes from growth zeroes. Even a 1% improvement in retention rate can increase MRR by 10%.
This is why mature industries have invested billions of dollars into retaining users. The telecom industry, for example, has developed its own churn modeling systems and partnered with Ivy League professors and universities to develop solutions.
In this article, we'll look at examples from both software companies and non-subscription businesses, including cases like Oreo, so make sure to read to the end.
What is Customer Retention?
Customer retention rate measures the percentage of users who continue to use a product or service over a given period.
- It can span any defined period (monthly, annually)
- It applies to both subscription and non-subscription models and reflects the overall ability to keep users engaged and active.
- Retention rates include free users too.
- Formula for Retention Rate = Number of Customers at End of Period / Number of Customers at Beginning of Period × 100%
Additional Reading
Why Is Customer Retention Important?
Retention is the most important revenue growth metric.
When retention is bad, it's a silent SaaS killer. When retention is good, it acts like the compounding interest of the SaaS world. An absolute gamechanger.
Suppose you have a B2C SaaS business with 10,000 active customers. User churn is 12% and average revenue per user is $12/mo. If the company wants to grow, it's going to need to replace 1200+ users every month. Let's say you get serious about retention and bring user churn down to 9%? That brings you $150,000 more during the first year and this will compound each year after that.
This could get you several new hires, longer business runway, or investment in new growth channels.
Additional Reading
17 Best Customer Retention Strategy Examples
Calendly – Great Offboarding Experience
Calendly is one of the most popular appointment scheduling software companies. Their cancel flow (built with Churnkey) helps retain customers.
Canva provides another great example of off-boarding customers at scale. They use what we call "custom variables" to remind users of the discounts they would lose by canceling.
Your offboarding experience should give users compelling reasons to stay, whether through discounts, a pause option, or other retention strategies. For more information, read: Recipes for cancel flows.
Veed – Target Involuntary Churn
Involuntary churn occurs when payments fail due to reasons such as do not honor, insufficient funds, or other banking issues.
VEED launched in 2018 and quickly hit its stride. After just four years, they acquired tens of thousands of subscribers, generated over $7 million in annual revenue, and raised $35 million from Sequoia.
Veed deployed precision retries and dunning offers to recover 14,000 failed payments. They continuously iterated on copywriting and identified offers that best resonated with customers.
- Read Veed's case study
- Visualize your involuntary churn for free with Churn Metrics
Buildertrend – Continuous Feedback Collection
Buildertrend is a leading construction project management app. The company serves more than one million users across 100 countries and has received investment from Bain Capital.
Buildertrend is a customer-first company. By directing canceling customers through personalized Cancel Flows, they collect an immense amount of customer feedback.
Both quantitative survey responses and qualitative open fields are collected, parsed, and categorized automatically by Churnkey’s Insights AI.
Collecting qualitative feedback and analyzing them helps companies improve the core product. Read Buildertrend's case study.
Notion – Simple, Easy Onboarding
Notion's onboarding is clean, simple and effective. Profiling questions during onboarding helps them better activate users down the funnel. This information also helps them deeply understand their real Ideal Customer Profile.
Dropbox – Launch a Referral Program
Dropbox is a PLG darling. They were one of the first software companies to experience high growth due to virality.
A strong referral program does more than acquire users. It should convince existing users to stick around.
A major limitation of Dropbox's free plan is the storage limit, which was often "the point of churn."
However, by inviting other users, referrers could earn an extra 2GB of storage. This referral system helped increase users' dependency on Dropbox, enabled them to experience more value from the product, and ultimately encouraged them to stay.
Spotify – Offer or Extend Trials
One of the most effective ways to retain customers is to let them experience your premium product. Once users become accustomed to Spotify Premium's features, reverting to the free version feels like a significant downgrade.
Spotify offers 3 months trials at free or discounted rates.
With Churnkey, businesses can extend trials automatically if users cancel sooner or have low usage.
You could also consider a trial flow similar to Blinkist. They offer to remind users before the trial cancels. This has proven successful for Blinkist and was copied by many companies.
Zillow – Layer On Secondary Products
People used Zillow to buy or sell homes. You don't purchase homes all that often, maybe once a year. So, to offset that, Zillow launched a Zillow Zestimate to increase retention.
Bumble – Launch New Products
Bumble, the dating platform, launched Bumble for friends and Bumble for work. This helps recover users who have matched with someone on the dating app and have no reason to stay.
Telecom – Engage At Risk Customers
Some customers are more at risk of leaving than the others. Telecom companies have built churn prediction models that engage with customers prior to their departure. Read this research paper if you want to dig deeper.
Churnkey also has a predictive AI tool that can help identify at-risk customers.
Netflix – Run Reactivation Campaigns
If your product has an on-and-off use case or a low switching cost, reactivation campaigns might be a good idea.
Netflix sends reactivation emails after someone has churned.
Not all churned revenue is possible to recover but with a good offer and a one-click purchase button, it might just turn around your retention rates.
Leverage Churnkey's one-click reactivation campaigns to maximize revenue potential. These go far beyond what your lifecycle email marketing tools can do.
Starbucks – Implement Loyalty Programs
40% of Starbuck's revenue comes from loyalty programs. Giving users points or cashback helps reduce the pain that comes with making a purchase and also encourages repeat purchases within a certain window.
Those cash balances are a cash manager’s dream as they are equivalent to an interest-free loan from the customer base.
Other notable loyalty programs include Marriott Bonvoy and airline frequent flyer programs. Companies can also partner with ancillary businesses to extend their loyalty programs' value proposition.
Oreo – Piggyback On Another Campaign
Oreo piggybacked on one of the most successful campaigns of all time — the Got Milk? campaign.
When Got Milk? rose to fame, their agency decided to do a co-marketing campaign with the other complementary products. Oreo being one of them.
These trigger moments are important because every time people think of milk, they should think of Oreo.
Eventually, Oreo found another horse to ride – the entire desserts menu.
Instagram – Layer on Network Effects
Most social media sites thrive on network effects. Network effects help the marketplace be more valuable as more users join.
It is possible to layer on a network effect even when there isn't one supposed to be (eg, Strava that makes workouts community-driven).
Canva, Adobe, Spotify – Offer Daily/Weekly Passes
There are several companies that will offer a day or a week pass instead of a subscription. You can make these publicly available or have them hidden. This uses pricing as a competitive advantage.
Summary
Some of the world's biggest companies understand that retention is the most important metric in their business. To have good retention, you can deploy offboarding campaigns, offer users reasons to stay as they cancel, piggyback on more retentive products, layer on a network effects strategy, implement a loyalty program to drive winbacks and so much more.
Typically, successful companies constantly work on retention. Reducing churn is possible. Try out Churnkey.
