What is Customer Retention Rate

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Finding ways to increase revenue is an eternal problem for marketers. The most obvious solution is to attract new customers. In the pursuit of leads, many forget that you need to continue to take care of the customers you already know. Price Intelligently conducted a study and found that a 1% increase in new customer acquisition increases revenue by 3.3%, and the same increase in retention gives a result of 7%. It is worth understanding what retention is and what to do with it.

Customer Retention is the ability of a company to maintain long-term relationships with a client. A high rate means that your clients are happy to return for more and recommend you to their friends. Retention starts with the first contact between you and your client and never ends, at best. To always have an idea of ​​how your company is doing with the customer retention rate, you need to track certain metrics.

Customer Retention Rate and other key customer retention metrics
Calculating Customer Retention Rate
A metric that directly demonstrates retention efficiency. It is list of spain cell phone number necessary to calculate it in order to understand how effectively your tools work. The higher the indicator, the better your retention strategy works. To calculate CRR, you need to subtract the number of new customers during the period from the number of customers at the end of the period, and then divide this difference by the number of customers at the beginning of the period .

Formula customer retention rate (crr)
Retention rate is closely related to churn rate: if you add these two together, you get 100%.

Download a template for calculating key product metrics
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Download a template for calculating key product metrics
Calculating Customer Retention Rate Using an Example
Let's say that at the beginning of the month the company had 150 clients, and at the end of the month there were 162, 18 clients stopped using the services, but 30 new clients appeared. We calculate CRR: (162-30) / 150 = 0.88 or 88%.

Churn rate formula
Probably all marketers know about the existence of this metric. Churn rate is the number of people who stop interacting with your company. We have already talked about how to calculate churn and what it affects.

If your company's client list contains hundreds or even thousands of names, it makes sense to analyze churn monthly. A small business can afford to calculate it once every six months or a year. To calculate churn, you need to divide the number of customers you lost by the total number of customers .

Churn depends on customer satisfaction with your business. Collect feedback, analyze your customers’ behavior, develop a loyalty program — make your marketing strategy more customer-oriented.

Churn rate formula
Sergey Glukhov, Head of Customer Support&Success at Carrot quest, told us why it is necessary to count Churn and how to work with it .

Calculating Churn Rate Using an Example
Let's say you've decided to calculate the churn for the month. Let's remember: at the beginning of the month you had 150 clients, by the end there were 162. At the same time, 18 clients stopped using your services, and 30 new clients appeared. Let's calculate: 18 / 150 = 0.12. If we convert it to a percentage, the churn is 12%. CRR, as we found out, is 88%. Churn and retention together give 100% - we retained some, and lost others.

We have collected 13 tips on how to reduce customer churn in global crisis situations. We hope that some of them will help you right now.
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