Loyal and happy customers are the bedrock for any successful business. This is not only because customers who are loyal mostly become repeat customers, but also since they are generally most likely to the business they like on social media or tend to report the highest levels on any customer satisfaction surveys, have the lowest churn rate, and last but not the least help in boosting any company’s NPS (Net Promoter Score).
Hence retention of the existing customers is extremely critical for all businesses.
However, keeping the customers happy and satisfied for a long time is much easier said than done. Therefore brands and businesses that want to find an interest in creating loyalty programs or they are willing to understand what does make their existing customers happy, must also consider customer retention as one of their core strategies for finding success in their business.
Now this aforesaid statement often starts with two key metrics that they can view using an easy to use CRM software, which includes:
• CCR (Customer Retention Rate) and
• CCR (Customer Churn Rate)
These two juxtaposing metrics help businesses come to grips with the most decisive measure of customer satisfaction and customer service- irrespective of whether the customer continues or does not want to do business with the company.91% of businesses with 10 or more employees now use CRM software. Click To Tweet
These two intertwining metrics also can provide any business with actionable insights into the good and bad news when it comes to evaluating metrics surrounding customer loyalty and satisfaction scores.
Let us begin with the tough news.
Now customer churn which is the downside of retention represents the pace at which a customer stops doing business with any company.
Churn metrics, in general, are illustrated as a percentage of the company’s or brand’s total customers, or can also show the percentage of the number of customers that have left, over a specific period of time.
Even though this metric is often lumped in among the negative metrics in any business CRM software, understanding churn is a very effective way for a business to find what is working and what needs improvement when it comes to everything that starts from the onboarding process to its support services and customer loyalty programs.
Hence businesses should not run from its churn rates but rather use it as a critical metric to guide its retention strategy and thereby boost its CRR (Customer Retention Rate).
And of course, on another hand, the good news on the flip side is that metrics about a company’s customer retention offer a golden insight into demystifying retention and creating healthy and loyal customer experiences.
What is Customer Retention Rate?
Simply speaking CRR is a metric that measures the number of customers that a company continues to do business with over a specific period of time.
Hence CCR is represented as a percentage of the company’s current customers that are maintaining loyalty to the company in that window.
Now monitoring and evaluating CCR is inverse of churn metrics and is needed for understanding CLV (Customer Lifetime Value) in an easy to use CRM and even for quantifying the efficacy of any company’s customer support programs, social media channels, and many more customer retention strategies.
One most important reason as to why businesses focus on their retention rate, customer retention and churn rate metrics is because it is far inexpensive to retain an existing customer than to find a new one.
We all know that customer acquisition campaigns are mostly expensive and slow while a strategy that can be made to work for increasing customer retention and loyalty can have an immediate effect on the CLV and thereby even on the company’s bottom line.
Data You Need To Calculate CRR
Once the company identifies the time window that it wants to measure to find out its CRR, it needs to collect three simple pieces of information which one can find in all easy to use CRM software platforms:
• The number of customers at the beginning of that period (S)
• The total number of customers at the end of that period (E)
• The number of new customers added during that period (N)
While some companies evaluate their CRR on an annual, quarterly, or monthly basis, fast-moving SaaS organizations can even do it on a weekly or daily basis for finding business growth.
The formula for measuring CRR is ((E – N) / S) * 100 = Customer Retention Rate
Results Of Improving Customer Retention Rates
As a final statement, we as one of the leading vendors of Salesforce Alternative CRM tools would like to say that the very first step for any business that is willing to improve customer retention, decrease churn, and reduce the cost of acquiring new customers is to get a handle on their CRR.
This is because once businesses are capable of understanding the right metrics in an easy to use CRM they can easily measure, social media, marketing, and customer service campaign results to fit into a customer retention program which can benefit the customer journey and help guard against a lost customer.