Customer acquisition can sometimes get all the attention. But customer retention is where the money's at. Depending on which research you look at customer acquisition is anywhere from 5 to 25 times more expensive than retention. Moreover, according to Bain and Co. 5 percent increase in customer retention can increase a company's profitability by 75 percent.

The question is, how can you cash in on all that customer retention has to offer? To answer that, let’s first understand what customer retention is and why it’s important.

Customer retention refers to a business’s ability to attract and maintain repeat customers. You measure it by using your customer retention rate, which is the rate at which your business can retain those existing shoppers. In retail, customer retention can help you understand not only how positive the customer experience is but also how you’re able to meet customers’ expectations. Retailers have to be able to fulfill the demands of returning customers too.

But customer retention is more than just profitable. It also helps you gauge the health of your customer relationships. Not to mention, loyal customers can turn into brand advocates, doing a lot of the heavy lifting for customer acquisition for you. Word-of-mouth is the most influential factor in a purchase decision for nearly 75% of consumers.

Everyone wants to feel like a V.I.P., so start giving your customers this treatment.

Instead of offering rewards points with every purchase, some retailers opt to provide repeat customers or loyalty members with exclusive discounts, early access to promotional sales and items, and/or invitations to brand events. We’ve all been part of a “Buy 9, get the 10th one free!” promotion, but many of today’s retailers are going well beyond this elementary loyalty tactic.

Understand what your customers value and do what you can to provide it through your loyalty program. That is exactly what Amazon did when they created Amazon Prime. They knew their customers valued free and fast shipping above all, so they created a program that would allow members exclusive access to free, two-day shipping for a wide selection of products.

One of the most common and effective methods for converting a new customer into a return customer is through exclusive and targeted email discount offers and promotions. Return customers are far more likely to take advantage of discounts than new customers, particularly in the Health & Personal Care, Apparel & Accessories, and Home Furnishing industries.

Still, targeting isn’t always enough. Personalization has become a key component of strategic email campaigns, with 41% of consumers in a recent survey saying they would buy more from retailers that send them personalized emails. Putting the personal touch on customer emails has been proven to increase email open rates by 39% and reduce unsubscribe rates by 28%. While adding a customers' name is a great place to start, determining where they found you, which product(s) they have researched, and knowing their previous purchases are all ways to help you make your emails more relevant to shoppers, thereby increasing the likelihood of repeat transactions. For example, if a customer bought a bathing suit, send them emails promoting sunglasses, beach towels, and sunscreen.

Targeted discounts and personalized messaging are convenient retention strategies because interest in your brand has been established, order and search history data can improve success rates, and the ROI can be precisely controlled — you know exactly how much a discount will affect your margins.

At no time is the importance of communication more critical than between the moment a transaction takes place and when the product is actually delivered. Effectively communicate the status of a customers' order as it goes through the payment, fulfillment, shipping, delivery, and returns processes. Continually provide up-to-date tracking information through emails, in-app messages, social, and/or text messages to keep your customers informed and engaged.

Treating your customers as humans rather than sales numbers is extremely important for customer retention. A recurring theme in this article, strong brand-customer relationships drive loyalty and repeat purchases. One way to build on those relationships is through post-purchase communications.

Rather than taking customers' money and setting your sights on the next sale, use post-purchase communications to keep the conversation going, provide value, and demonstrate appreciation for their loyalty. This will make customers want to return to your store rather than a competitor’s.