Learn To Improve Your Customer Retention Rate

“Statistics are everything” – “No, understanding your statistics is everything.” In sports, we like to say, “you’re only as good as your last game”. In business and customer service, You should live by, “Your company is only as good as your last customer interaction.”

Your customer retention rate is the key factor to determining how good your customer service is and a he factor in how quickly you can grow your business. If you can get the formula right, you will start retaining more customers, which will lead to strong business growth.

If you start the month with 100 customers. By the end of the month, you have 105 customers (15 have cancelled their contracts and you brought on 20 new customers). Let’s do some math and it looks like this:

That means that 85% of your customers are continuing to use your services, thus a customer retention rate of 85%. Why should you measure your customer retention rate?

Many companies know their acquisition rate, after all getting new customers is fun. Relatively few know their attrition rate; losing customers is no fun.

Here are the cold hard facts on why customer retention is important.

It is 5-7 times more expensive to acquire a new customer than to keep an old one
Loyal customers are worth up to 10 times as much as their first purchase
Additionally, it is a great indicator of how good your customer service is and how loyal your customers are. Customer retention rate can be defined as a metric that indicates the proportion of customers that have stayed with you for a while. The retention rate can be calculated annually, monthly or weekly.

My thoughts are that your customer retention rate is calculated by measuring the percentage number of customers that you have retained over a given period.

Sometimes customer retention rate is confused with attrition rate. Attrition rate is the compliment of retention rate. If a company has a 20% attrition rate it will have an 80% retention rate. Your attrition rate can be defined by the percentage number of customers you have lost over a given period.

Learn to benchmark and improve your customer retention rates.

Is your company looking for customer service solutions to help you deal with customer interaction? SMART Service Desk IT Service Management Software is your answer. We know that your satisfied customers will return again and again. Let us help you increase productivity, reduce operations cost and improve customer experience with our ITIL compliant solutions. No matter the size of your business we have your customer retention solutions.

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