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Written By

Don Sturgill

Don Sturgill is a freelance writer and copywriter from Bend, Oregon, USA. Don loves helping entrepreneurs launch and grow their businesses. Find out more at

VOD Customer Retention: The Key to Growth

Are you ready for a tip that can multiply revenue and transform the way you do business? That’s not a trick question, and it’s not overstated. You work hard to get every customer, but what are you doing about keeping them?

Most VOD channel owners don’t do anything. They pump every marketing dollar into getting new customers. Meanwhile, the backdoor is wide open. If you want to stand out from the crowd and make more money with less effort, here’s how to do it:

Compute, track, and optimize your retention rate.

What you do after signing a customer is much more important than what you did to get that customer. The most successful businesses never stop selling.

In this section of Uscreen’s Video Business School, we’ll cover the basics of customer retention: why it’s important, the essential fundamentals, and the golden key principle hiding behind the fundamentals.

Don’t skip this section.

It’s critical to your long-term results.

Is customer retention really that important to a VOD website?

The statistics vary from study to study, but the conclusions agree. E-commerce sites that don’t treat customers right end up losing those customers – then paying dearly (and in more ways than one) to replace the business they’ve lost.

Stats like these are common:

  • The probability you’ll sell to a current customer is up to ten times more likely than that of selling to a new prospect
  • It can be up to twenty-five times more expensive to acquire a new customer than to keep a current one
  • Increasing customer retention by just 5% can increase bottom line revenue by 25% or more – some case studies show a 5% increase can double your revenue

One of the most amazing things in marketing is the lack of focus on customer retention. That’s good news for you, though. By making a few changes in the way you do business, you can gain a huge advantage over the competition.

How to compute your customer retention rate

Your customer retention rate is a measure of how many customers you have at the beginning of a period (you choose the period to measure), minus the number of new customers acquired during the period, then compared to the number of customers you have at the end of the period. Here’s the formula (see the graphic below).

customer retention rate

“Customer churn” is the term often used to denote the number of customers exiting your business. You may hear customer retention rate referred to as the “churn rate.” That’s the negative way of looking at business. It’s saying “The glass is half empty,” instead of “The glass is half full.”

High customer churn with low customer retention means you’re losing customers faster than you’re attracting them. It doesn’t take a mathematician to figure out a business can’t survive long when that happens.

Today’s consumers have more options than ever before. If you let them down, there’s someone else who would love to have them as customers. And in the VOD business, it’s even more sensitive because the alternative to paying for your video content is getting similar content online for free.

Quick read: 7 Reasons People Pay for Content When They Can Get It for Free

So …

What can you do?

over-the-top definition

How to keep more customers (and get more customers)

Use the customer retention rate formula, shown in the graphic above, to compute and track how many customers are sticking with you (retention) and how many are going elsewhere (churn).

Decide how often you want to check the rate, then make tracking and recording part of your routine. Most SVOD channel managers will want to look at the retention rate on at least a monthly basis.

What is a healthy retention rate? In 2017, about four out of five OTT (over the top) video subscribers in the U.S. stayed loyal to their service (81%). Across the board, the average retention rate for U.S. businesses is about 85%.

Remember: Increasing customer retention by just 5% can increase bottom line revenue by 25% or more – some case studies show a 5% increase can double revenue.

Check your retention rate, then aim to increase it by five percent over the next year. Including a customer retention goal in your overall strategic plan can make a major difference in your sales.

But, how do you do that?

We’ll give you the secret sauce for customer retention first, then we’ll list some of the most effective customer retention tactics.

The golden key principle behind all the customer retention principles is this: Do unto others as you would have them do unto you.

In other words, pay attention to your customers and treat them right. Don’t take them for granted. Show them how much you appreciate their business – not just right after the sale, but regularly.

Here are some ideas. Use them as a springboard to come up with ideas about how to build relationship with your special audience – how you can serve them so well they’ll never want to leave you.

Customer Retention Principles

  • First impressions are critical. Welcome new customers immediately. Treat them like long-lost family.
  • Build the relationship. Keep letting them know you care. Give them plenty of reason to stay subscribed or buy more.
  • Make learning about your customers and knowing their needs your number one job. Surprise them with your ability to serve them.
  • Know your key indicators and track them consistently. Review data on at least a monthly basis. If something is going south, find out why. If something isn’t performing well, find out why.
  • Continually refine the persona descriptors for your best customer. Don’t assume that information will remain static. Do everything you can to get and keep those customers.
  • Tailor your user experience to your best customers. Know what they want and give it to them.
  • Use A/B testing and other assessments to optimize the user experience on your SVOD channel.
  • Develop an email marketing program that includes campaigns to bring new customers on board, strengthen and grow your relationship with current customers, and encourage dormant customers to get active again.  
  • Use transactional emails (account notifications: receipts, channel notifications, etc.) as relationship and brand builders. Transactional emails typically will get higher open rates than any other type of email you send.
  • Prune and segment your email list strategically. Get out of the “email blast” mindset. Personalize your email. You want recipients to feel like your communications are written to them as individuals.
  • Start a loyalty program. Make sure your customers know you appreciate their business. Reward them for repeat orders, referrals, and other activity.
  • Learn from customer service calls. Whoever answers customer complaints and helps them with problems knows more than anyone about the customer experience and what needs to happen to improve it.
  • Make it your business to know how people find your VOD service and what they hope to be helped with there. You especially want to know about any barriers they come across when attempting to place an order or subscribe.

Those are starter ideas. Keep adding to the list. Keep helping your customers accomplish their goals, and they will help you accomplish yours.

And never forget this:

Most people won’t complain when they have a bad experience on your channel. They’ll just leave, go elsewhere, and you’ll never hear from them again.

One more thing. Do you remember the “customer journey” (aka marketing funnel) we’ve talked about in other sections of this course?

The customer journey begins when someone hears about you (somehow finds out about your VOD), then proceeds through these checkpoints: listening to your messages, believing you can help them, and buying from you.

It doesn’t stop there, though.

If you do your customer retention job right, then your customers will tell others about you. That’s how one customer becomes 20 customers. When you treat people like you value you them, it’s like watering seeds and watching them grow.

customer circle to grow sales revenue

Full-circle sales: Asking for and getting referrals

We’ll close this section of the Video Business School by showing you how to put the icing on the cake.

You’ve treated your customers the way you want to be treated, your customer retention rate is amazing, and your customers are helping spread the word about your SVOD channel.

Ask them for referrals.

They’ve been voluntarily helping you grow by telling people about you, give them a way and a reason to help even more.

Your best and happiest customers will be glad to not only tell a friend, but will be happy to provide a written, audio, or video testimonial for you. You can use those on your channel and on just about every piece of marketing communication you use.

How do you get your customers to do that, though?


Tell them how much you would appreciate a referral. Reward them for bringing on new customers. Hold a contest. Get creative. Just ask.

Here’s a tip for getting more testimonials: give them a format.

Many times, customers don’t leave a great review or give you a glowing testimonial because they’re not sure how to write it or what to include.

Here’s a template:

  1. What was life (in relation to your niche) like before they found you?
  2. What happened after they found you and subscribed to your channel or bought your products?
  3. What has happened for them since they put the info on your SVOD channel to work?
  4. What would they say to someone considering becoming your customer?

That’s it. Getting referrals and testimonials is simple. Be kind, be considerate, and ask. Offer the template as a set of starter ideas your customers can use to lend you a hand.

Recommended read: All of Your Questions About Video Testimonials, Answered

You Can Do This!

In this section, we’ve looked at why computing, tracking, and optimizing customer retention is essential.

We’ve provided examples of tactics you can use to boost retention on your SVOD channel.

We’ve given you the golden key, and we’ve talked about how to complete circle on the customer journey.

You’re fully equipped now, to grow your customer base.

You’ve got this.

Go do it!

Lesson 6:

Online Communities

Go to Lesson 6