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Not sure what customer retention metrics actually help you ensure your retention is on the right track? We're sure you must have come across people asking you to track as many as 18 to 20 KPIs.
Don't worry - all you need to track are 5 customer retention metrics or KPIs.
While Media and Professional Services industries top the charts with retention rates as high as 84%, Retail is struggling at just 63% (source: exploding topics).
If you’re not tracking these numbers, you’re flying blind - and that’s no way to scale. At Propel, our certified retention marketing agency, we see it all the time - businesses that actively track their customer retention metrics are the ones who spot issues quickly and fix them before they become bigger problems.
In this guide, we’ll give you the lowdown on the 5 must-track metrics, show you how to measure them, and provide proven strategies to turn your retention game around. Let’s dive in and make those numbers work for you!
Tracking your customer retention metrics is the secret to knowing how well you're keeping customers around. Without it, you're just guessing - and who has time for that? These metrics show you exactly how well you're doing at holding onto your customers, and that’s the key to growing your business.
Retention metrics tell you how many of your customers are sticking around over time. It’s not about how many new customers you get, it’s about how many customers you KEEP.
Whether you're tracking them at the start of the period or the end of the period, these numbers reveal how well you’re maintaining those relationships.
Customer retention metric = how well you're keeping your customers. Simple!
What do retention metrics really mean? It’s the rate of customer retention - the percentage of customers you manage to retain over a specific period of time.
The higher the number, the better you’re doing at building loyalty. If you’re looking at the rate at the end of the period, you’ll know if your strategies are working or if it’s time to shake things up.
Let's say a company tracks customer retention metrics: They maintain 85% retention rate, with a 15% churn rate. Their CLV is $800, showing high customer value. With these insights, the company optimizes retention strategies and boosts growth.
When it comes to customer retention, KPIs are the "key performance indicators" - essential for measuring how well you're keeping your customers over time.
Key retention metrics like customer retention rate (CRR), customer churn rate, and customer lifetime value (CLV) provide insights into your customer loyalty and satisfaction.
These KPIs give a clear picture of your retention efforts and help refine strategies for sustained growth. By regularly monitoring these metrics, businesses can proactively address retention challenges and optimize their customer experience.
When it comes to customer retention, there are five key factors that drive loyalty and reduce churn.
Tracking customer retention metrics is essential for understanding how well you're holding onto your customers. Below, we’ll walk through the most important metrics, with easy steps to calculate them. Let’s dive in!
To calculate your customer retention rate, simply track the number of customers at the start of the period versus the end of the period, adjusting for any new customers acquired. Here’s the formula:
Retention Rate = (Customers at end of period - New customers acquired) / Customers at start of period x 100
Example: If you start with 200 customers, acquire 10 new customers, and end with 195 customers, the calculation would be:
(195 - 10) / 200 x 100 = 92.5%
This tells you that 92.5% of your customers stayed with you during that specific period of time.
If you want check Retention Impact on your business - check Propel's Retention Calculator
To track customer churn, you need to calculate the percentage of customers lost during a specific period. Here’s the formula:
Churn Rate = Customers lost during period / Customers at start of period x 100
Example: If you lose 20 customers out of 200, the calculation would be:
20 / 200 x 100 = 10%
A high churn rate signals a need for improvement in customer retention strategies.
Customer Lifetime Value (CLV) helps determine how much revenue a single customer generates over their entire customer lifespan. Here's the formula:
CLV = Average purchase value x Average purchase frequency x Average customer lifespan
Example: If the average purchase value is $50, the customer buys 2 times per year, and stays for 5 years, the calculation would be:
50 x 2 x 5 = $500
This means a single customer generates $500 over their lifetime with your business.
To measure repeat purchase rate, calculate how many of your customers return for additional purchases. Here’s the formula:
Repeat Purchase Rate = Returning customers / Total customers x 100
Example: If 50 out of 200 customers make repeat purchases, the calculation would be:
50 / 200 x 100 = 25%
A higher repeat purchase rate indicates strong customer loyalty and satisfaction.
Customer satisfaction score (CSAT) is a key metric for retention. To measure it, use the formula:
CSAT = Positive responses / Total responses x 100
Example: If you get 80 positive responses out of 100, the calculation would be:
80 / 100 x 100 = 80%
This score shows how happy your customers are with your product or service and is a great indicator of customer retention.
If your retention metrics are performing low - time to get a MarTech Audit done and find out how you can improve your customer retention strategies.
Customer retention metrics are essential for understanding how well you’re keeping customers. These metrics reveal the effectiveness of your customer retention strategies and are vital for long-term growth. Without them, you're guessing how well you're doing.
Even 5% boost in Retention leads to 95% boost in revenue [Data source: ReConvert].
And hence - here are the key benefits of tracking retention metrics:
Tracking customer retention metrics boosts your customer revenue growth rate by focusing on loyal customers. These customers buy more and stay longer, driving higher revenue. Improving customer retention by even 5% can increase profits by up to 75%.
Focusing on retention lowers your customer acquisition cost. When you retain more customers, you don’t need to spend as much acquiring new ones. Your existing customer revenue growth rate increases, and you can reinvest those savings into other areas, improving your overall business.
Building a loyal customer base is key. By tracking customer retention metrics, you nurture customer relationships and turn new buyers into repeat customers. Happy, loyal customers become advocates, boosting your brand’s reputation and driving organic growth.
Customer retention strategies are more effective when informed by metrics to track, as they help identify high-value customers and areas for improvement. Tracking your loyal customer base and repeat purchase rates shows how successful you are at building long-term relationships.
And here you with the key retention strategies we practice at Propel:
Improving customer engagement starts with personalizing the experience. Use customer data to tailor your messages, offers, and services. When you improve retention by making customers feel special, they stick around longer. A personalized customer experience wins every time!
But here's the thing - personalization at scale can be tough to pull off alone. That's where a strategic lifecycle marketing can step in. They bring expertise in using data-driven strategies to optimize your customer interactions and fine-tune your customer experience, ensuring you hit the mark every time. You’ll save time, improve your efforts, and see stronger results with the help of the right agency!
Loyalty programs are a game-changer. By offering rewards for repeat purchases, you improve customer loyalty and boost your retention efforts. Make it easy for customers to earn perks, and watch them return again and again.
Don’t just guess how your customers feel - ask them! Customer feedback gives you direct insights into what’s working and what’s not. Use this to fine-tune your customer support and improve their overall experience. It’s a win-win.
Map out the customer journey to create smooth experiences from start to finish. By optimizing each touchpoint, you’re ensuring that customer retention using effective strategies is easier and more natural. The easier you make it for customers, the more they’ll stick with you.
To effectively track customer retention, businesses need specialized retention marketing tools to measure success.
CRM tools like Salesforce or HubSpot help manage your customer base and track customer retention metrics and KPIs. These platforms centralize customer data, making it easier to analyze retention trends over time.
Tools like Google Analytics or Mixpanel provide insights into key customer retention metrics, such as customer satisfaction score and behavior, helping track metrics over time to optimize retention strategies.
Tracking retention metrics is key to customer loyalty, but some common mistakes can skew your data and lead to high subscription churn. Let’s avoid them!
A good customer retention rate depends on your industry, but a good retention rate is typically above 80%.
For example, SaaS companies may see retention rates of 85% or higher, while retail stores often hover around 60%.
If you’re seeing your customer churn rate spike, it’s time to reassess your strategies. Keep tracking customer retention metrics and optimizing your approach.
A good retention rate is a sign of strong customer relationships when you’re able to keep most of your customers. Retention rate measures how well you're doing at maintaining customers. Aim for a low customer churn rate and track the number of customers retained over time.
The 3 R’s of customer retention are: Relationships, Retention strategies, and Rewards. Building strong customer relationships and offering relevant retention strategies with rewards or incentives help ensure your loyal customer base stays intact.
The 8 C’s of customer retention are essential principles to keep your customers loyal and engaged throughout their journey. By focusing on these 8 C’s, businesses can improve their retention strategies, enhance the customer journey, and ensure long-lasting customer loyalty. Here’s a breakdown:
Want to improve retention fast? Skip the guesswork - go with Propel’s lifecycle marketing. Our data-driven approach supercharges retention efforts, turning one-time buyers into a loyal customer base.
Don't take out words for it - the customer retention case studies say it all!
We target the right customers with personalized strategies that drive long-term loyalty. It’s simple: Propel makes retention happen, and it happens fast.
Don’t waste time with outdated tactics - trust us to boost your retention scores and keep customers coming back.
To measure customer satisfaction score (CSAT), gather customer feedback via surveys or direct reviews. The higher the score, the better your retention efforts are working. It’s simple: happy customers stick around longer.
You can measure customer retention by tracking retention rates, analyzing customer satisfaction, and assessing repeat purchases. These metrics give you a complete picture of how well you're keeping customers engaged.
The key to customer retention strategies is consistently delivering value and building customer loyalty. When customers feel valued, they stick around and keep coming back for more.
A healthy customer retention rate depends on your industry, but aiming for 80% or higher is a solid goal. This retention metric shows how well you're doing at keeping your customers happy and loyal.
To calculate customer retention rate, track how many customers you’ve retained over a specific period. Use this formula: Retention Rate = (Customers at end of period - New customers acquired) / Customers at start of period x 100 This gives you a clear picture of how well you’re holding onto your customers.
Use our free Retention Impact Calculator to see how much revenue you’re leaving on the table — and how much you could unlock by improving retention.
👉 Calculate My Impact