Customer Retention Rate

Customer retention is an art and we are artisans with perfection in our profession.

Customer Retention Rate

Customer retention is an art and we are artisans with perfection in our profession.

What is Customer Retention?

Customer Retention is defined as the number of customers that are satisfied with your services to the extent that they are willing to conduct business with your company in the future as well.

Akin to Customer Satisfaction (CSAT) and Conversion Ratio, Customer Retention is also of paramount importance to your business. It can inform you whether or not your customers are satisfied with your services. Moreover, it further notifies whether you are maintaining a competitive edge over your competition, as a higher CSAT ratio alone does not justify a higher Retention ratio. You have to offer your customers something extra, something more valuable in order to make them stay loyal to your brand.

Why is it important for any business?

Determining Customer Retention rate (CRR) is pivotal to your business, because if your customers are loyal, then you can devise better future strategies in accordance with your set-objectives. There are several reasons behind why Customer Retention is an integral component of your business. Some of them include following:

It’s Cheap – The Cost of Acquiring a new customer is nearly 7 times more than the cost of retaining an existing one.

More Profitability – You loyal customers are nearly 10 times more worthy than their initial purchase. Moreover, as little as, 5% increase in your retention rate can increase your profit margin up to 90+%

More Opportunities – Loyal Customers will, where conduct their future business with you; will also result in free-of-cost Referrals, which in reality are easier to convert.

Higher Conversion Ratio – The probability of converting an existing customer into a repeat customer is relatively higher (up to 70%) in comparison to the probability of converting a new prospect into a full-fledged customer (up to 20%).

Better Feedback – Feedback is imperative to scale your services in accordance with customer expectations. Similarly, your loyal customers would be more than happy to provide you in-depth & constructive feedback in regards to your products/services so that you can improve them accordingly. In contrast to this, new customers are generally more reluctant at the start to offer any kind of genuine feedback.

Measurement of Customer Retention percentage, where require minimalistic efforts on your part, the result provides valuable insights that can be effectively used to evaluate your efforts so that you can change your approach to meet customers’ requirements better.

How is it calculated?

Calculation of Customer Retention Rate (CRR) is a fairly simple task; however, you do have to keep few things in mind to calculate it effectively. Likewise, following essentials required to be kept in mind to properly calculate CRR:

  • Total Customer Remaining
  • Customers Acquired
  • Already present Customers (old Customers)

Each of these three essentials has a single constraint, which is a specific time-frame. Customer Retention Rate is a time-specific metric. Therefore it is always calculated for a particular time-period. Hence, you need to select a timeframe beforehand to calculate your CRR. The time-frame usually depends upon your business strategy, i.e. whether you want to determine your yearly CRR or whether you are more interested in determining your monthly and quarterly CRR.

Finally, after a particular time-period is selected, you can calculate customer data in reference to above essentials and calculate your CRR by using below formula:

What is the industry-wide standard?

The industry-wide standard for Customer Retention Rate mainly depends upon your operating industry. For instance, CRR is higher in industries like Healthcare & Legal in comparison to E-commerce businesses and there are several elements that contribute to this result, such as the nature of a business, length of Customers Buying Cycle, & the overall complexity in Customer Journey etc.

Similarly, the optimal CRR for any enterprise regardless of their industry would be a full 100 percent, which means that you have been able to successfully retain all of your customers. However, it is highly unlikely, mainly due to the fact that you simply cannot satisfy everyone, hence the result that some customers will churn. Consequently, the average Customer Retention Rate for a contemporary organization in the present-day is between 80%-90%.

As far as Customer Retention is concerned, it’s simple; a higher CRR signifies Brand Loyal Customers as well as your company’s growth & expansion in the near future. Meanwhile, on the other hand, a lower CRR signifies that it is time to reevaluate your business & Customer Service strategy to increase customers’ loyalty and subsequently build Brand Relationship with them.

How we increase customer retention rate?

Acquiring new Customers require whale sized efforts along with significant financials. However, retaining these customers, on the other hand, is an entirely different matter. In fact, in order to retain your most valued customers all you have to do is to offer them a state-of-the-art customer support experience throughout their whole journey.

Customer Loyalty is an indispensable element in the present business environment. Now, more than ever customers are willing to move to somebody else if you are unable to meet their expectations. Likewise, there are several ways you can increase customer retention, however, the most prominent methodologies include:

  • Omni-Channel Customer Experience
  • Uninterrupted Customer Support
  • Loyalty Programs
  • Proper Follow-ups

The combination of an uninterrupted Customer Support in conjunction with an Omni-channel experience is the most effective way to increase your customers’ retention proportion. This is mostly attributed to the wish & need of contemporary customers to get support from their desired business enterprises at any moment of the day, and that too on their preferred device & channel.

Apart from these two essentials, customer loyalty programs & proper follow-ups after a purchase and events like holiday seasons & promotional campaigns are critical to customer retention rate as well. For instance, Proper Follow-ups & distribution of reward points as part of loyalty programs indicate your customers that you actually care about them. This kind of gestures increases both your customers’ satisfaction as well as their brand loyalty proportion, thus, ultimately resulting in greater Customer Retention Ratio.

Final Words

The best way to increase your Customer Retention Rate is by offering your customers an Omni-channel experience along with the access to a first-rate uninterrupted Customer Support Services. This is primarily attributed to the fact that a significant (81%) amount of customers are willing to pay for better customer experience.

Moreover, in terms of Omni-Channel approach, companies with well devised Omni-channel strategies in the present day are able to retain nearly 90% of their customers, in comparison to the 33% retention percentage of companies that have weak Omni-Channel strategies.

We can assure you that with our years of experience & dedicated support teams; we can provide state-of-the-art support experiences to your customers at their desired instances.

We work on the after sales touchpoints to make your customers life easier by giving them timely & uninterrupted support access. Likewise, after a support session has ended completely, our follow-up teams effectively verify how satisfied your customers were with our services. The worldwide standard for Customer Retention rate is between 80%-90% and we are proud to state that we are included in this list, as those who are persistently achieving this benchmark.

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