How To Measure Customer Retention?

Your clients are the most significant part of your business. Like gaining followers on social media platforms, gaining customers might be an easy task for many companies. But the real challenge comes when you have to preserve these customers for your business.

Customer retention seems to be a pretty tough job for many businesses. It is critical, and simple marketing strategies aren’t quite profitable in this regard. You need to identify the shortcomings before devising the right plan to attract customers and thereby retain them for a prolonged period.

But the entire idea isn’t going to be as simple as it is stated above. Instead, it would require appropriate research work and thorough planning to gain new customers while maintaining the old ones for your business.

Did you know that many companies are still not considering this aspect and are more focused on increasing their opportunity costs? What they fail to understand with such decisions is that they can potentially lose customers in this upcoming year, 2021.

According to Bruno Estrella, every organization needs to focus on developing such strategies properly.

Bruno Estrella, Head of Acquisition at Webflow, recommends companies identify their retention metric early on. Determining this metric requires an understanding of the core that translates to product value and the frequency.

And if you, too, are struggling with such issues, read along to find ways to use customer retention metrics that benefit your company.

Customer Retention Measurement

Customer retention measurement refers to various steps taken to identify and document how a business performs and retains its clients, thereby generating revenue. How is it done? It is done by taking into consideration features like customer lifetime value, churn rate, etc.

These are aspects of customer retention metrics that require your consideration. It can help you gauge your customers’ requirements and understand whether they are interested in continuing business with your organization.

Customer retention data highlights these factors quite boldly, thereby helping your company’s management teams devise the right plan for attracting customers. Whether it is sales or marketing or even customer care services, every team needs to gather and utilize such information to enhance the customer journey and create delightful experiences.

But this can take forever for you to do the calculations. And that can be frustrating and not quite profitable for your business. You need to find the right calculator for gaining accurate insights from such retention data.

Retention Metrics CRR Calc

What Is A Customer Retention Calculator?

A customer retention calculator is an application or device that can help you save time while calculating your company’s customer retention metrics without any troubles. With this innovative application, you need to enter the numbers for your company’s business and instantly see the results.

You can see the values for revenue churn, customer retention rate, customer lifetime value, and many more such results with this unique calculator. And with these metrics, you can keep moving ahead to keep your business going.

But sometimes, the list can seem like an unending one. Here are only a few important ones for your reference:

  • Customer Churn

Among the different customer retention metrics, the simplest one has to be your company’s customer churn rate. It refers to the rate at which your clients stopped using any of your business during a specific period.

Either the customer has opted out or ended the subscription with your company. And if the rate is pretty higher than 7 percent, your management team needs to evaluate the problem as soon as possible and understand your clients’ requirements.

  • Revenue Churn Rate

Revenue churn rate is the measurement that highlights the amount of lost revenue for a company’s business. It is expressed as a whole number that can result from a canceled order or an end to the business relationship. In SaaS companies, this value seems to be the critical indicator for client health and satisfaction.

  • Existing Client Revenue Growth Rate

The existing customer revenue growth rate is significant for your business. This one is pretty crucial for your company’s business.

A climbing rate would indicate that the sales, marketing, and even the account teams successfully motivate your clients to deal with your company. A declining value would imply that the strategies aren’t profitable enough to encourage them to keep dealing with your company. In case you find a stagnant value, it can be quite dangerous for your business as it can hamper the brand reputation and scale.

  • Repeat Purchase Ratio

How can you understand if any of your previous customers have returned to your company? Well, you can do so by referring to the repeat purchase ratio.

It gives you the percentage of clients that might have returned to your company after a specific period. So, it is a pretty significant indicator of client loyalty, and uses it to assess your individual customer retention strategy’s performances and impact.

  • Product Return Rate

It refers to the total units sold and then sent back to your company. If your company sells tangible products, be slightly concerned about the product return rate. Although the reasons can be different, returning products can never be profitable for your company’s business.

  • Days Sales Outstanding

The next one is DSO or days sales outstanding. It decides the average number of days for receivable outstanding before they are collected. Thus, you can know how well managed your company’s accounts receivables are.

  • NPS

NPS or net promoter score will measure the customer satisfaction and their loyalty towards any brand. And by doing so, understand whether your customers are content with your product and services or not. So, if you want to advance your marketing strategies, focus on your NPS.

  • Time Between Purchases

You need to measure the time between any consecutive purchases made by your customers. Why? That is the measurement that gives you a basic idea about customer retention.

It highlights if your customers are engaging in repeated transactions with your brand and how happy they are with your services. If the score is below the average value, you need to focus on making specific changes according to your customers’ expectations.

Bottom Line

The above section highlights some of the profitable ways to measure customer retention. You can also refer to the loyal customer rate that has made repeated purchases over a given time frame to understand and identify your customer base in the market.

Once you know how to measure these values, it is time for your company’s professional teams to focus on these scores and devise the right plan to fulfill your audiences’ requirements.

Remember that every brand must allocate time and resources to maintain their customers if they aspire to expand their business shortly. Keep identifying and keep devising the right plan to make your customers happy and content with your services.


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