Retention Rate

The opposite of a churn rate, your retention rate is the percentage of customers you’re able to retain over a given period of time.

Why is it important to have a high retention rate?

Business gurus worldwide preach the benefits of increasing your retention rates. And massive research firms stand behind claims that retention is one of the most profitable activities you can focus on in your business. Here’s what they’ve discovered:

  • It costs 5x more to acquire a new customer than it does to retain an existing customer.

  • Existing customers are up to 14x more likely to buy from you than new customers.

  • Customers who’ve bought from you in the past spend 31% more with your brand when compared to new customers.

So when you dedicate your resources to retention, you’re drastically increasing your profitability.

How can I increase my retention rate?

The most common reasons for customer churn are low perceived value from your products or services, no brand loyalty, and poor customer service. By implementing strategies to counteract these pitfalls, you can increase customer retention. Here are a few examples:

  • Overdeliver on the quality of your products and services.

  • Reach out to customers to ask for feedback, then implement their suggestions.

  • Improve the quality of your customer service.

  • Start a loyalty program.

  • Keep in touch with customers through email marketing, retargeting ads, and phone calls.

  • Create a roadmap so your customers stay excited for things to come.

  • Use personalization on your website or app to deliver a relevant experience to customers.

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