Customer retention rates are one of the most important statistics that your business has, because it’s a reflection of how many customers are consistently staying with you, so that you don’t have to go out and acquire new customers.
Acquiring new customers is far more costly than it is to retain your current customers, so it’s definitely to your advantage to achieve the highest possible customer retention rate.
Calculating customer attention
Your customer retention rate is calculated by dividing the number of new customers by the customers you had at the start of a period, and then multiplying it times 100%. First you need to identify the time frame that you’re going to be measuring, for example one year or one month. Then you need to identify the total number of customers you had at the start of that time.
Next, you need to calculate the total number of customers you have at the end of the time period, and then calculate the number of new customers you attracted during the same time frame. Now you need to subtract the number of new customers from the number of customers you had at the end of the specified time frame. Next you should divide that difference by the number of customers you had at the very beginning of your time frame. Finally, multiply this figure by 100% to calculate your current customer retention rate.
What to do about it
If your customer retention rate is poor, you should definitely consider doing some kind of audit on those lost customers during the time frame, because you’ll want to know why you are losing so many customers. If there are things you can do to make your business and its products more appealing to customers, this is something you can find out when surveying your lost clients. Whatever you have to do to overcome your customers’ objections and bring them back to you, it’s worth doing. It will always be much less costly to satisfy existing customers than it is to search for and acquire new ones.
Does your company have a customer retention program?
There are few things more important to a business than customer retention, and if you need to implement a program at your company, we may be able to provide financial assistance. Contact us at Norris Commercial Capital, so we can discuss some financial options for implementing your new program.