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…

1. Find out how many customers you have at the end of a given period (week, month, or quarter).
    
2. Subtract the number of new customers you’ve acquired over that time. 
   
   
3. Divide by the number of customers you had at the beginning of that period. 
   
   
4. 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 look at some simple examples.

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 

BOOK DEMO