Business Recovery Strategies You'll Love
Introducing The 4 Pillars of Performance
Your Fast Track Guide to Understanding, Calculating and Improving 6 Minute Read
Pillar # 1 - Your Customer Acquisition Cost [CAC] in 2023
What Is Your Customer Acquisition Cost [CAC] ?
Your Customer Acquisition Cost, or CAC, is a crucial business indicator used by businesses of all sizes to determine the resources they need to attract new customers and continue their growth. Its a quick and easy way to understand how your business is performing . Once you know the cost of acquiring each new customer you'll know that the lower that number the higher your profit margin is. If you want your business to expand its customer base and still make a profit, then it's vital to understand what CAC stands for, its significance, and how to calculate it.
A business's CAC is the total sales and marketing cost required to earn a new customer over a specific time period. The total sales and marketing cost includes all program and marketing spend, salaries, commissions, bonuses, and overhead associated with attracting new leads and converting them into customers. Successful businesses are aiming to constantly reduce the cost of customer acquisition — not just to recoup revenue, but because it's a sign of the health of your sales, marketing, and customer service programs.
Think about it: If your inbound marketing program is operating successfully, you don't have to dedicate as many resources to ad spend to generate poor-fit leads when your blog content is bringing in high-quality organic leads 24 hours a day. If your sales staff is constantly prospecting and nurturing a healthy pipeline, you don't need to rush to hire additional reps to hit your quota each quarter. And if your customer success team can retain and cultivate relationships with happy customers, they will help generate new customers by writing testimonials and reviews, serving as case studies, and telling their friends and family about you. In addition, if the leads from these sources become customers, you will have earned them free of charge, which will lower your customer acquisition cost even further.
If your company is looking to lower its CAC, you first need to know how to calculate your current customer acquisition cost.
How to Calculate Your Customer Acquisition Cost
The easiest way to calculate your CAC is to add up all the cost elements associated with acquiring each new customer and then divide that amount by the number of customers acquired. This is typically viewed in a specific period, such as a tax year or per quarter.
Here's a simple example, if you spent €15,000 in the past month to acquire new customers (including marketing, sales, salaries, and overhead costs) and had 1000 purchases from new customers, your CAC would be € 15.
Let’s assume a CRM software company spends €30,000 on a marketing campaign. After the campaign, the company discovers that 1,200 new customers started a subscription for their service. Every year, the company is expected to spend an extra €50,000 on technical and production costs for these new customers. The CAC for this software company would be: CAC = (€50,000 + €30,000) ÷ 1,200 = €80,000 ÷ 2,000 =€ 40This means the software company spent €40 to acquire each new customer.
Provided you manage these new customer relationships well, you’ll be able to motivate these customers to generate more new customers for you at an exceptionally low cost using modest rewards, genuine testimonials, reviews and sharing their experience of your service with their friends and family. If the leads from these sources become customers, you will have earned them free of charge, which will lower your customer acquisition cost even further.
3 Practical Ways to Reduce Your Customer Acquisition Cost
To reduce your CAC you should do everything possible to convert leads into paying customers, increase the value of what customers receive, and use a customer interaction management (CRM) platform to maintain engagement with your audience.
1. Easy Works Best
Make sure it's simple and straightforward for visitors to convert into leads or for leads to convert into customers and make purchases on and offline . Optimize your site for mobile form submissions and shopping, test website copy to make sure it's as clear as possible, and try to create a touchless sales process so your visitors can buy from you 24/7. You can use Google Analytics to monitor the basics, like how often customers abandon their shopping carts after adding an item. You can also check how fast your web pages load and think about how to make your landing pages more attractive if your website visitors leave without clicking on other pages. You should also check how your site looks on mobile devices and how smooth the checkout process is for buyers. Making all of these experiences better for the customer will lead to more conversions
Why It Works
Most of us consciously or subconsciously seek simplicity in our lives. Making sure your sales and returns processes are transparent, easy to follow and efficient and will help you convert more leads into sales.
2. Add Value to Your Offer:
The value that users perceive of your products and services is subjective, so adding features that other similar companies have implemented may not have the desired effect. It's best to spend time interacting with customers—via surveys or emails—to find out what best suits their needs. You can also study statistics such as customer retention rates and the more subjective comments of the reviews you receive. If you see correlations, improving one can enhance the other.
Always be looking to enhance your customer experience by giving them what’s valuable to them. Collect customer feedback, and whether it's a product fix, a new feature, or a complementary product offering, do your best to give customers what they're asking for to make them stick around longer.
Why It Works
Customers love to feel they are getting added value at no extra cost . Competing businesses often use this tactic to differentiate their customer proposition to convert more leads into sales.
3. Use a CRM system:
A CRM platform is invaluable wen it comes to tracking new and existing customers, their movement through your sales funnel, how much they buy, when and where, loyalty program participation etc. You can also use it to manage email lists and campaigns, such as promotions, seasonal email advertising, and drip campaigns , which regularly send emails with engaging content
Why It Works
A no brainer really. To be able to work in a structured way with customer relationships requires order and order. It is therefore the first and most important goal of CRM for many companies. A CRM system gathers all the customer information you need in one place and makes it easy to find the right information when you need it.
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Your Fast Track Guide to Understanding, Calculating and Improving 5 Minute Read
Pillar # 2 -Your Customer Lifetime Value [CLV] in 2023
What is the Customer Lifetime Value ?
Customer Lifetime Value [CLV], is a performance indicator that tells you the total revenue your business can reasonably expect from a single
customer throughout your business relationship. It considers a customer's revenue value and compares that number to your predicted customer lifespan. The longer a customer continues to purchase from your business the greater their lifetime value becomes. It tells you which customers spend the most with you and which ones will remain loyal to you for the longest amount of time. Once you know your CLV you can work out the most efficient ways to acquire new customers and retain existing ones while optimising and maintaining your profit margins.
If the CLV metric is a calculation you’re unfamiliar with you’ll never really know how well or otherwise your business is performing and importantly whether you’re leaving money on the table. Your CLV can also be used to help you make important business decisions. For example, you can use your CVL to identify customer segments that are most profitable for your business so you can target accordingly.
Use the formulas and model provided below and start calculating the LTV for your business today.
How to Calculate Your Customer Lifetime Value.
If you review CLV as a priority in your business, you can identify any worrying trends and come up with action items to address them. For example, if you find the CLV to be consistently low, you can work to optimise your customer support strategy or loyalty program to better meet the needs of your customers.
Customer Lifetime Value = (Customer Value * Average Customer Lifespan)
To find your CLV, you need to calculate the average purchase value and then multiply that number by the average number of purchases to determine customer value. Then, once you calculate the average customer lifespan, you can multiply that by customer value to determine customer lifetime value.
Take the average order value, multiply it by the number of sales they’ll make in a given period, then lastly multiply it by overall retention time.
For example, our online food shop has an average order value of € 75 which is made four times every month. The customer stays for a total of 6 months, until leaving. Therefore, we take €75, multiply it by four which gives us € 300, lastly, we multiply this by the retention time of 6 months – €1,80
Simple right? Apply it to your own business and gain a powerful insight into where your business is heading.
3 Practical Ways to Improve Your Customer Lifetime Value
Now that you know your customer lifetime value, how do you increase it? Here are some strategies that can help.
1. Improve Your Customer Service.
90% of UK buyers say that customer service is one factor they consider when choosing companies to do business with. So if you want to improve your CLV you should pay attention to your customer service and look for ways to make it outstanding. You can enhance customer service by making small and inexpensive changes to the way you do business e.g. by offering existing customers a more personalised service, exclusive loyalty membership , or an easier returns or refund policy.
Why This Works It’s simple: The better your customer experience the more customers feel valued by your business for more than just their purchases. If you stand behind your products with substantive return and refund policies, it communicates to customers that your priority is quality and satisfaction, not overall sales volume. The result? Increased CLV.
2. Build Long-Lasting Relationships.
Long-term customer relationships are based on trust. If buyers believe that your business offers them the best prices on the products and services they want, they’ll come back. But this is just the beginning. With social media now an important part of any branding and marketing efforts, customers want more than just a business-based relationship — they want to cultivate a personal connection that makes them feel like more than simply a road to better business ROI.
As a result, it’s critical to engage with customers on your social media accounts with more than just canned advertising posts. For example, your teams could start a back-and-forth conversation about something that interests your target customer base, or you could do some social sleuthing to discover more about your customers and then send them a (small) free gift that aligns with their interests.
Why This Works
This works because you need to stand out from the crowd. Quick and easy eCommerce and slick offline sales are now par for the course — if you can forge an actual connection with customers you’ll keep them coming back and increase your total CLV almost immediately
3. Embrace Good Advice.
Sometimes in business it’s better to listen than talk. Customers often have good advice on how you could improve business practices to better serve their needs — and you can increase CLV by taking it.
For example, you could create a poll on new product or service ideas and see what your customer base thinks. Make sure you don’t lock them into a specific set of choices; give them room to add their own ideas that could help make things better. While not every customer will participate, those that do will often have good advice and can end up being some of your most loyal customers.
Quick tip: Give credit where credit is due. If a customer comes up with a good idea, credit them for the help and consider sending them something as a token of appreciation.
Why This Works
This works because it shows you’re willing to listen. Too many businesses take the stance that they always know what their customers want better than customers themselves, which in turn can lower total CLV. By taking the time to listen and respond — even if customer advice isn’t exactly what you want to hear — you can facilitate long-term loyalty and boost CLV.
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Customer Lifetime Value [CLV], is a performance indicator that tells you the total revenue your business can reasonably expect from a single
customer throughout your business relationship. It considers a customer's revenue value and compares that number to your predicted customer lifespan. The longer a customer continues to purchase from your business the greater their lifetime value becomes. It tells you which customers spend the most with you and which ones will remain loyal to you for the longest amount of time. Once you know your CLV you can work out the most efficient ways to acquire new customers and retain existing ones while optimising and maintaining your profit margins.
If the CLV metric is a calculation you’re unfamiliar with you’ll never really know how well or otherwise your business is performing and importantly whether you’re leaving money on the table. Your CLV can also be used to help you make important business decisions. For example, you can use your CVL to identify customer segments that are most profitable for your business so you can target accordingly.
Use the formulas and model provided below and start calculating the LTV for your business today.
How to Calculate Your Customer Lifetime Value.
If you review CLV as a priority in your business, you can identify any worrying trends and come up with action items to address them. For example, if you find the CLV to be consistently low, you can work to optimise your customer support strategy or loyalty program to better meet the needs of your customers.
Customer Lifetime Value = (Customer Value * Average Customer Lifespan)
To find your CLV, you need to calculate the average purchase value and then multiply that number by the average number of purchases to determine customer value. Then, once you calculate the average customer lifespan, you can multiply that by customer value to determine customer lifetime value.
Take the average order value, multiply it by the number of sales they’ll make in a given period, then lastly multiply it by overall retention time.
For example, our online food shop has an average order value of € 75 which is made four times every month. The customer stays for a total of 6 months, until leaving. Therefore, we take €75, multiply it by four which gives us € 300, lastly, we multiply this by the retention time of 6 months – €1,80
Simple right? Apply it to your own business and gain a powerful insight into where your business is heading.
3 Practical Ways to Improve Your Customer Lifetime Value
Now that you know your customer lifetime value, how do you increase it? Here are some strategies that can help.
1. Improve Your Customer Service.
90% of UK buyers say that customer service is one factor they consider when choosing companies to do business with. So if you want to improve your CLV you should pay attention to your customer service and look for ways to make it outstanding. You can enhance customer service by making small and inexpensive changes to the way you do business e.g. by offering existing customers a more personalised service, exclusive loyalty membership , or an easier returns or refund policy.
Why This Works It’s simple: The better your customer experience the more customers feel valued by your business for more than just their purchases. If you stand behind your products with substantive return and refund policies, it communicates to customers that your priority is quality and satisfaction, not overall sales volume. The result? Increased CLV.
2. Build Long-Lasting Relationships.
Long-term customer relationships are based on trust. If buyers believe that your business offers them the best prices on the products and services they want, they’ll come back. But this is just the beginning. With social media now an important part of any branding and marketing efforts, customers want more than just a business-based relationship — they want to cultivate a personal connection that makes them feel like more than simply a road to better business ROI.
As a result, it’s critical to engage with customers on your social media accounts with more than just canned advertising posts. For example, your teams could start a back-and-forth conversation about something that interests your target customer base, or you could do some social sleuthing to discover more about your customers and then send them a (small) free gift that aligns with their interests.
Why This Works
This works because you need to stand out from the crowd. Quick and easy eCommerce and slick offline sales are now par for the course — if you can forge an actual connection with customers you’ll keep them coming back and increase your total CLV almost immediately
3. Embrace Good Advice.
Sometimes in business it’s better to listen than talk. Customers often have good advice on how you could improve business practices to better serve their needs — and you can increase CLV by taking it.
For example, you could create a poll on new product or service ideas and see what your customer base thinks. Make sure you don’t lock them into a specific set of choices; give them room to add their own ideas that could help make things better. While not every customer will participate, those that do will often have good advice and can end up being some of your most loyal customers.
Quick tip: Give credit where credit is due. If a customer comes up with a good idea, credit them for the help and consider sending them something as a token of appreciation.
Why This Works
This works because it shows you’re willing to listen. Too many businesses take the stance that they always know what their customers want better than customers themselves, which in turn can lower total CLV. By taking the time to listen and respond — even if customer advice isn’t exactly what you want to hear — you can facilitate long-term loyalty and boost CLV.
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Your Fast Track Guide to Understanding, Calculating and Improving 4 Minute Read
Pillar # 3 -Your Customer Conversion Rate [CCR] in 2023
What Is the Customer Conversion Rate ?
Your Customer Conversion Rate [CCR] is an important performance indicator because it tells you how many leads you have converted into paying customers or have been persuaded to take a specific action.
For any business to grow its important to monitor how activity and expenditure are performing to ensure targets are being achieved or if changes need to be made. Conversion rates can be used to track any desired action you want to monitor to make sure your marketing strategy is running efficiently, and your sales funnel and website are fully optimised for maximum results.
For example, monitoring the sales conversion rate on your product’s landing page means you can assess whether you need to make any improvements. A low conversion rate could be due to overcomplicated copy or a confusing layout with many distractions. By understanding and monitoring your conversion rates, you can track if any changes you make improves how your desired action converts.
How to Calculate Your Customer Conversion Rate [CCR]
To calculate a conversion rate, firstly select your desired action and divide it by the total time the desired actions could have happened, lastly multiply by 100 to get a percentage.
For example, 1,000 people saw the pop-up to get your lead magnet, however only 123 signed up. Therefore, we would take 123 and divide it by 1,000, and finally multiply it by 100 to get our percentage – 12.3%
(123 / 1,000) x 100 = 12.3% conversion rate.
3 Practical Ways to Improve Your Customer Conversion Rate
1.Deliver the Right Value Proposition
Your value proposition is a key component of your marketing activity and it needs to be consistent across your business. It should be reviewed regularly to ensure it accurately reflects what you can do for potential customers . Get it right and you will enjoy higher conversions both on and off line. Its worth spending time working on your value proposition as it will reward you generously for your efforts .
Why This Works
Your value proposition plays an important role in creating a strong first impression and conveys to potential customers that you have got exactly what they need.
2. Add Social Proof Across Your Business
Social proof is powerful because it plays a huge role in buying decisions of most of us. When someone is thinking over a purchase or trying to decide between two different brands, they’ll often turn to other people that have experience with the products for guidance.
70% of people say they trust consumer opinions posted online. That's why successful businesses take every opportunity to seek customer feedback which can then be used to increase buyer confidence. Social proof can be in the form of testimonials, reviews, star ratings, and real-time statistics. Businesses can help increase conversions by validating the buyer’s decision, which is why it’s essential to incorporate it into your marketing strategy. In the long run, it helps in building brand credibility.
Why This Works
In a few words: social proof gets your business more sales.
Imagine you’re shopping for a new bedside table. You’ve found three that you love, based on the pictures alone. One has over 500 reviews with an average rating of 4.8 stars. The second has 140 reviews and a 2 star rating. The third has no reviews. Which do you buy?
3. Make It Easy To Take Action Now
Customers take action for their personal gains and the best way to encourage prospects to take action immediately is to offer offers and incentives In fact 61 % of consumers rank discounts and incentives as their most important consideration when making buying decisions.Maximising your conversion performance means using incentives that motivate prospects to act immediately. They play on the potential customer’s emotional motivation by increasing the reward for action and reducing the emotion of regret.
Why This Works
By creating a sense of urgency and triggering Fear-of-Missing=Out [FOMO], limited time offers including discounts, extended free trials, bonuses for taking action can all motivate prospects to make quicker decisions. about a purchase..
Need Help or Have Questions ?
If you have any questions or require assistance, Contact Us
What Is the Customer Conversion Rate ?
Your Customer Conversion Rate [CCR] is an important performance indicator because it tells you how many leads you have converted into paying customers or have been persuaded to take a specific action.
For any business to grow its important to monitor how activity and expenditure are performing to ensure targets are being achieved or if changes need to be made. Conversion rates can be used to track any desired action you want to monitor to make sure your marketing strategy is running efficiently, and your sales funnel and website are fully optimised for maximum results.
For example, monitoring the sales conversion rate on your product’s landing page means you can assess whether you need to make any improvements. A low conversion rate could be due to overcomplicated copy or a confusing layout with many distractions. By understanding and monitoring your conversion rates, you can track if any changes you make improves how your desired action converts.
How to Calculate Your Customer Conversion Rate [CCR]
To calculate a conversion rate, firstly select your desired action and divide it by the total time the desired actions could have happened, lastly multiply by 100 to get a percentage.
For example, 1,000 people saw the pop-up to get your lead magnet, however only 123 signed up. Therefore, we would take 123 and divide it by 1,000, and finally multiply it by 100 to get our percentage – 12.3%
(123 / 1,000) x 100 = 12.3% conversion rate.
3 Practical Ways to Improve Your Customer Conversion Rate
1.Deliver the Right Value Proposition
Your value proposition is a key component of your marketing activity and it needs to be consistent across your business. It should be reviewed regularly to ensure it accurately reflects what you can do for potential customers . Get it right and you will enjoy higher conversions both on and off line. Its worth spending time working on your value proposition as it will reward you generously for your efforts .
Why This Works
Your value proposition plays an important role in creating a strong first impression and conveys to potential customers that you have got exactly what they need.
2. Add Social Proof Across Your Business
Social proof is powerful because it plays a huge role in buying decisions of most of us. When someone is thinking over a purchase or trying to decide between two different brands, they’ll often turn to other people that have experience with the products for guidance.
70% of people say they trust consumer opinions posted online. That's why successful businesses take every opportunity to seek customer feedback which can then be used to increase buyer confidence. Social proof can be in the form of testimonials, reviews, star ratings, and real-time statistics. Businesses can help increase conversions by validating the buyer’s decision, which is why it’s essential to incorporate it into your marketing strategy. In the long run, it helps in building brand credibility.
Why This Works
In a few words: social proof gets your business more sales.
Imagine you’re shopping for a new bedside table. You’ve found three that you love, based on the pictures alone. One has over 500 reviews with an average rating of 4.8 stars. The second has 140 reviews and a 2 star rating. The third has no reviews. Which do you buy?
3. Make It Easy To Take Action Now
Customers take action for their personal gains and the best way to encourage prospects to take action immediately is to offer offers and incentives In fact 61 % of consumers rank discounts and incentives as their most important consideration when making buying decisions.Maximising your conversion performance means using incentives that motivate prospects to act immediately. They play on the potential customer’s emotional motivation by increasing the reward for action and reducing the emotion of regret.
Why This Works
By creating a sense of urgency and triggering Fear-of-Missing=Out [FOMO], limited time offers including discounts, extended free trials, bonuses for taking action can all motivate prospects to make quicker decisions. about a purchase..
Need Help or Have Questions ?
If you have any questions or require assistance, Contact Us
Your Fast Track Guide to Understanding, Calculating and Improving 5 Minute Read
Pillar # 4 - Your Customer Retention Rate [CRR] in 2023
What is the Customer Retention Rate ?
Here we want to take a look at the importance of retaining your best customers and how to measure your Customer Retention Rate [CRR]. `
What's better than acquiring one new customer? It's actually retaining an existing one because returning customers will provide you with a far higher ROI and costs between 5 to 25 x less.
The key to retaining your best customers is to provide them with personalised offers based on their buying behavior. Unsure? Consider the research carried out by Harvard Business School who proved that increasing your customer retention rate by just 5% can boost revenue by 25% to 95%.
So if growing your business is high on your wish list you need to keep a close eye on your Customer Retention Rate [CRR] because its a key indicator of the health of your business. Your CRR is the percentage of customers who remain customers over a certain period (weekly, monthly, quarterly). Identifying and understanding these reasons will help you optimise your promotional spend so you can take more informed decisions with greater confidence, enabling your business to grow faster
Many businesses put a lot of time, effort and money into trying to find new customers. But the reality is that, euro for euro it’s far cheaper to keep an existing customer happy (and keep selling to them) than to attract new ones.
Statistically, existing customers revisit your business more often and spend more money per visit. Its also relatively easy to motivate them to refer their friends and families—all at negligible cost to you. So, having a high customer retention rate should be a key part of your income generation strategy. While there’s nothing wrong with chasing new customers, having a healthy CRR also delivers some big benefits .Tracking this number can also highlight issues that you haven’t noticed, making it easier to predict realistic future revenue potential.
So, lets take a look at how to calculate your customer retention rate and several tried and tested strategies to give your CRR a boost - just in case it needs a little love.
How to Calculate Your Customer Retention Rate
Calculating your CRR is quite easy…
Or expressed another way ....
Let’s assume you’ve launched a new Facebook page. On October 1st, you have 1000 followers with an additional 500 followers by October 31st; however, 200 people unfollow your page. So, at the end of a given period (in this case, one month), you had 1300 followers.
Here’s the calculation for the retention rate
:
{(1300-500)/1000} times 100= 80
Interestingly, you were able to retain 80% of your followers. The goal of every business is to retain a higher percentage of its clients within a given period, so the business continues to grow.
If you 1000 customers at the beginning of Q1 and ended the quarter 1200 customers, after having won 300 new ones over the period of QI, Your CRR would be 90%
3 Practical Ways to Improve Your Customer Retention Rate
1.Loyalty Program
They’ve been around forever because they work. Importantly, they create an emotional connection between the business and the customer. The key to retaining your best customers is to provide them with personalised offers based on their buying behaviour and that's what characterises the top performing loyalty programs. Once customers engage with your business they may experience FOMO [Fear of Missing Out } .By joining your loyalty program they can automatically stay up to date with what's happening in your business.
Why It Works
Loyalty programs work because they make customers feel appreciated, privileged and highly valued. Typically, solid retention performance produce more referrals which convert into higher profits but above all else they reward certain customer behaviors which is beneficial to both parties.
2. Short Case Studies
Satisfied customers offer a great opportunity to write a case study about them . They are a great way to show other potential customers how your product or service worked for them and offer an insight into key areas of your customer journey.
Why It Works
By using case studies, your prospective clients can get to know your customers on a deeper, more personal level. And when you showcase how you helped past customers, you can help potential customers make more informed purchasing decisions.
3. Zoom in On Your Competition
Keeping your customers from going to your competition is a big part of running a business. This begins with understanding what you do well and focusing on it. But it’s also understanding what your competition is doing to win customers at your expense. Is their product better? Cheaper? Easier to use? Investigate from all sides. Buy their product. Go through their onboarding process. Call their help line. Sign up for their newsletter. You’re going to learn a lot— and it might even reveal things you can start doing yourself.
Why It Works
Its pretty easy to do. Competitive monitoring works because it enables you to identify, evaluate, and monitor of your competitors so you can stay one step ahead.
Need Help or Have Questions ?
If you have any questions or require assistance, Contact Us
Here we want to take a look at the importance of retaining your best customers and how to measure your Customer Retention Rate [CRR]. `
What's better than acquiring one new customer? It's actually retaining an existing one because returning customers will provide you with a far higher ROI and costs between 5 to 25 x less.
The key to retaining your best customers is to provide them with personalised offers based on their buying behavior. Unsure? Consider the research carried out by Harvard Business School who proved that increasing your customer retention rate by just 5% can boost revenue by 25% to 95%.
So if growing your business is high on your wish list you need to keep a close eye on your Customer Retention Rate [CRR] because its a key indicator of the health of your business. Your CRR is the percentage of customers who remain customers over a certain period (weekly, monthly, quarterly). Identifying and understanding these reasons will help you optimise your promotional spend so you can take more informed decisions with greater confidence, enabling your business to grow faster
Many businesses put a lot of time, effort and money into trying to find new customers. But the reality is that, euro for euro it’s far cheaper to keep an existing customer happy (and keep selling to them) than to attract new ones.
Statistically, existing customers revisit your business more often and spend more money per visit. Its also relatively easy to motivate them to refer their friends and families—all at negligible cost to you. So, having a high customer retention rate should be a key part of your income generation strategy. While there’s nothing wrong with chasing new customers, having a healthy CRR also delivers some big benefits .Tracking this number can also highlight issues that you haven’t noticed, making it easier to predict realistic future revenue potential.
So, lets take a look at how to calculate your customer retention rate and several tried and tested strategies to give your CRR a boost - just in case it needs a little love.
How to Calculate Your Customer Retention Rate
Calculating your CRR is quite easy…
- Find out how many customers you have at the end of a given period (week, month, or quarter).
- Subtract the number of new customers you’ve acquired over that time.
- Divide by the number of customers you had at the beginning of that period.
- Then, multiply that by one hundred.
Or expressed another way ....
- CRR = ((EC-NC)/SC) times 100, where:
- EC stands for the number of clients at the end of a given period.
- NC stands for the number of new clients during a given period.
- SC stands for the number of clients at the beginning of a given period.
Let’s assume you’ve launched a new Facebook page. On October 1st, you have 1000 followers with an additional 500 followers by October 31st; however, 200 people unfollow your page. So, at the end of a given period (in this case, one month), you had 1300 followers.
Here’s the calculation for the retention rate
:
{(1300-500)/1000} times 100= 80
Interestingly, you were able to retain 80% of your followers. The goal of every business is to retain a higher percentage of its clients within a given period, so the business continues to grow.
If you 1000 customers at the beginning of Q1 and ended the quarter 1200 customers, after having won 300 new ones over the period of QI, Your CRR would be 90%
3 Practical Ways to Improve Your Customer Retention Rate
1.Loyalty Program
They’ve been around forever because they work. Importantly, they create an emotional connection between the business and the customer. The key to retaining your best customers is to provide them with personalised offers based on their buying behaviour and that's what characterises the top performing loyalty programs. Once customers engage with your business they may experience FOMO [Fear of Missing Out } .By joining your loyalty program they can automatically stay up to date with what's happening in your business.
Why It Works
Loyalty programs work because they make customers feel appreciated, privileged and highly valued. Typically, solid retention performance produce more referrals which convert into higher profits but above all else they reward certain customer behaviors which is beneficial to both parties.
2. Short Case Studies
Satisfied customers offer a great opportunity to write a case study about them . They are a great way to show other potential customers how your product or service worked for them and offer an insight into key areas of your customer journey.
Why It Works
By using case studies, your prospective clients can get to know your customers on a deeper, more personal level. And when you showcase how you helped past customers, you can help potential customers make more informed purchasing decisions.
3. Zoom in On Your Competition
Keeping your customers from going to your competition is a big part of running a business. This begins with understanding what you do well and focusing on it. But it’s also understanding what your competition is doing to win customers at your expense. Is their product better? Cheaper? Easier to use? Investigate from all sides. Buy their product. Go through their onboarding process. Call their help line. Sign up for their newsletter. You’re going to learn a lot— and it might even reveal things you can start doing yourself.
Why It Works
Its pretty easy to do. Competitive monitoring works because it enables you to identify, evaluate, and monitor of your competitors so you can stay one step ahead.
Need Help or Have Questions ?
If you have any questions or require assistance, Contact Us
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