What is Retention?
Retention is defined in customer support as providing your existing customer with more customer services and support, and in addition special offers, they tend to remain your customers for a long period of time. This is what marketers define as loyal customers.
Loyal customers not only add to the profit of your organization and increase your revenue. Through the word of mouth, they advertise your company to their audience. There is also a familiar term when a customer uses their content to promote your product or service – User-generated content. As per research, it costs almost 10%-35% less to spend more on retained customers than to pursuit for new customers.
Learn more about User Generated Content.
Customer Retention Program
A lot of companies nowadays direct their attention on attracting new clients, instead of focusing on existing ones. And according to statistics, it is 5-6 times more expensive to find new customers and invest in them, then retaining a current one.
That’s why other companies implement these programs with one valuable reason. To retain customers as much as they can. These programs are specifically designed to increase customer value, to motivate customers to purchases. Which all leads to loyal and happy customers.
Also, by retaining a customer, companies can help them acquire more value from a product. And even more, encourage a customer to share their feedback, whether on social media or on their website. That will help to attract potential customers.
Customer Retention Rate
Retention rate measures these things:
- how many customers your company retains (in a period that is given)
- how many new customers you got
- the number of customers who left your company.
It is a very important metric as it reveals if your efforts will be worth it.
How to calculate the customer retention rate
Uscreen wrote the formula for calculating retention rate:
„Your customer retention rate is a measure of how many customers you have at the beginning of a period (you choose the period to measure), minus the number of new customers acquired during the period, then compared to the number of customers you have at the end of the period.“
Picture 1. Customer retention rate formula
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