Customer retention

Customer Retention is a strategy used by companies trying to reduce the number of existing customers from leaving.

This can often take the form of offering discounts, free products or services.

Sounds kind of desperate when you think about it – “Please don’t leave me. Here, have free stuff!”.

That’s never going to end well.

Of course, it would be much better to never let things get to that stage.

You know, look after your customers so they never want to leave…

Why Customer Retention Matters

If plain common sense doesn’t seem to sink in, there are lots of stats around on why improving your customer retention is good for business – here’s a few I picked out:

  • Acquiring a new customer can cost five times more than retaining an existing customer.
  • Increasing customer retention by 5% increases profits 25-95%.
  • The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%.

How to calculate Customer Retention

Learning how to calculate customer retention is a bit like Employee Retention – it looks complicated but it’s not really that tough!

Retention rate = ((CE-CN)/CS))100.

CE = number of customers at end of period, CN = number of new customers acquired during period, and CS = number of customers at start of period.

At first glance, the formula may look complicated, but it’s not too difficult once you start using it.

For example, if you start the given period with 200 customers and lose 20 customers but gained 40 customers, at the end of the period you have 220 customers. 220-40 = 180.

180/200 = 0.9, and 0.9 x 100 = 90.

The retention rate for the given period was 90%.

Does that all still look too hard?

Download our free Customer Retention Calculator (in Excel)

How to increase Customer Retention

Given this is only a glossary I’m not going to give everything away here now am I?

The short version is just look after your customers and do everything you can to improve the Customer Experience (CX).

Thankfully, I’ve got over 80 articles on how to improve the CX in your business all written by industry experts and all free – take a look >>>

Recommended further reading: The False economy of Customer Retention.

Find a list of all the upcoming industry courses, conferences, networking events and more on the Industry Events Calendar >>> 

Upcoming Industry Events:


Chief Customer Officer Online ANZ

Free
Scheduled
Event Organiser:
Corinium Intelligence
Virtual/Online

Budgets have been cut and CX professionals are expected to stay ahead of the curve and generally do more with less. Join Australia and New Zealand's leading CX experts as we discuss what's next in CX over for three FREE days of insights at CCO Online A/NZ!

Auscontact 2020 Virtual Conference

$300
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Event Organiser:
Auscontact
Virtual/Online

Given the challenges with COVID, this year the Auscontact 2020 National Conference will be virtual with a guest panel sharing their learnings and insights and Auscontact's new Research partner will present the findings from the latest Consumer CX Insights report.

Australian Contact Centre Best Practice Report 2020/21 Launch

Free
Scheduled
Event Organiser:
SMAART Recruitment
Virtual/Online

Join experts from across the industry on 29th October 2020 to discuss the results of The 2020/21 Contact Centre Best Practice Report, including how the industry is responding to COVID. All attendees receive a free hard copy of the 100 page report.

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