What is customer retention? Customer retention is an indicator of a company’s ability to retain acquired customers. Retention is measured by the CRR (Customer Retention Rate).
What is CRR?
CRR measures the percentage of customers who made a repeat purchase or used a service during the period under review and decided to continue working with the company.
How to calculate the CRR index?
The CRR index is calculated as follows:
CRR = (E – N)/S x 100%
where:
E – (End) total number of customers at the fgusion database end of the period
N – (New) number of new customers in the selected period
S – (Start) number of customers at the beginning of the selected period
Why is CRR so important for every company?
1. Customer acquisition and retention costs.
Acquiring a new customer is much more expensive than retaining an existing customer. It is often said that the cost of acquiring a new customer is 5 to 25 times higher than the cost of retaining a customer.
From our 30 years of experience, the cost of acquiring a new customer is 10 to even 44 times higher than the cost of retaining a customer.
Better understanding of the customer
By retaining customers, the company has more opportunities to understand their needs and preferences. This allows it to adapt its products, services and strategy. This leads to further increases in customer satisfaction and loyalty.
3. Positive word of mouth marketing.
Satisfied, loyal customers are more likely to recommend a company to friends and family. This in turn increases brand awareness and attracts new customers without the marketing costs. Word of mouth marketing can reduce the recruitment costs of acquiring a customer or employee by up to 90%!
4. Increase in the lifespan of the customer LVC (Lifetime Value Customer).
We know many companies, from the exchangeable card publishing industry (currently industry portals), where some companies, as a result of ill-considered actions, reduced the LVC value even 12 times.
During this time, other companies increased the LVC 3.3 times
Increase in the Customer Lifetime Value (CLV).
A high retention rate translates into higher CLV from several how to check the validity of an email to even a dozen times or more.
6. Financial stability.
High CRR provides a steady source of revenue. This allows the company to better plan its finances and development. The business of these companies is more resistant to market fluctuations and changes in consumer behavior.
Better competitive position.
Companies with high retention rates have a competitive advantage. Loyal customers are less susceptible to competition and are more bulk lead committed to the brand.
8. Building a company brand and personal brand.
Customer satisfaction index research and this is a very good opportunity to publish in the media about the actions taken and the increase in CRR. This translates into an increase in the value of the company brand and personal brand.