Saturday Brain Storming Thought (170) 06/05/2023


Customer Retention Cost is how much you spend on customer retention over a specific period

Retention cost refers to marketing costs (or investments) that help you increase customer loyalty

Example of Retention Cost

Firm spend Rs 10 lakhs during year and retains 500 customers, then it has spent an average of Rs 2000 per customer retention and up-selling during the year

Customer Cost Retention measure

1) take the number of customers at the end of the time frame

2) Subtract the number of customers gained within the time frame

3) divide the resultant figure by the number of customers at the beginning of the period

4) multiply by 100 to get a percentage

Importance of customer retention

1) affordability – it is 6 to 7 times more expensive to acquire a new customer than it is to retain an existing customer

2) ROI – a 5% increase in customer retention can increase company revenue by +25%

3) Loyalty – retained customers by more often and spend more than the newer customers

4) existing customers learned the value of product or service and keep coming back, again and again

5) Referrals – satisfied loyal customers are more likely to sing a company’s praises and refer their friends and family

6) bringing in new customers, free of charge

Customer Retention Rate by Industry for year 2020

1) Retail – 63%

2) Banking – 75%

3) Telecom – 78%

4) IT – 81%

5) Insurance – 83%

6) Professional services – 84%

7) Media – 84%

Ways to improve customer retention rates

1) highlight case studies during the sales process

2) set expectations early and often

3) communicate results on a regular basis

4) create a roadmap for the future of the relationship

5) make memories around your shared successes

6) ask for feedback and act on the information

7) map out a consistent customer experience

8) create a customer relationship marketing strategy

9) keep a record of communication and any past problem

10) make sure that the customer has a relationship with the entire team

11) use reciprocity to increase loyalty

12) build a customer loyalty program

13) empower customers with the tools they need to succeed

Meaning of 20% retention rate

1) only 20% of all customers came back and placed the second order

2) 80% stopped purchasing after the first one

Average Retention Rate

It calculates the percentage of customers with more than 1 order out of the total number of customers

100% customer retention rate

It means company didn’t loose a single customer

0% customer retention rate

It means company lost all of customers

Factors influencing employees retention

1) onboarding and training

2) people and culture

3) recognition

4) work-life balance

5) relevant benefits

6) career development

Key customer retention metrics

1) churn rate – this is the opposite of your retention rate

2) existing customer revenue growth rate

3) repeat purpose ratio

KPI for customer retention rate

The customer retention KPI measures the ability of your organisation to retain customers over the long term and to generate recurring revenue from existing customers

Key factors of customer retention

1) client satisfaction

2) client delight

3) client switching costs

4) client relationship

5) client service standards

Customer Retention models

1) it is a framework for predicting whether a customer will stay with your business

2) it helps you identify which customers are most – or least – likely to buy your product or use your service again

3) you can use retention modelling to predict the impact of marketing activities on retention and churn

Customer Retention for social app per year for year 2015

1) Facebook – 69.60%

2) Instagram – 39.10%

3) Snapchat – 30.20%

4) Twitter – 22.90%

Key finding of E – Commerce Customer Retention Benchmarks for year 2019

1) 82% of tge total face high and brutal competition in their industries

2) only 34% of the total monitor their customer retention rate

3) less than 20% dedicate resources (budget and human resources) to customer retention

4) 30% don’t know their retention rate and 42% are satisfied with their current retention rate

5) NPS, customer lifetime value and customer retention rate are among the least monitored KPls

Statistics of customer retention (trends + data) for year 2023

1) customer experience will not automatically convert into brand loyalty

2) data privacy will be a key factor in consumer trust

3) employee experience will play a key role

4) conversational experience is a defining factor

5) the rise of omnichannel commerce -. Transaction may be online or offline

Ways to increase customer retention rate

1) offer return shopping discount

2) give your customers incentives by giving them discount coupons and various offers

3) reward points per transaction

4) give free gifts and exclusive offers to create a good first impression

DAU (daily active users) and MAU (monthly active users)

1) these are customer stikiness score

2) stikiness is an addede dimension of customer retention

3) it describes the depth of engagement customers have with your product or service

4) sticky customer believes your product offers best value, convenience and usability compared to similar products

5) letting customers know about new features, offering for feedback and live training

Cohort Analysis

It is a technique used in data analytics to group and study sets of users in your customer base who share a common characteristics or experience within a specific time frame


Compiled by:

Er. Avinash Kulkarni

Chartered Engineer, Govt Regd Valuer, IBBI Regd Valuer

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