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Learn customer retention


Published on February 16, 2022

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Creating a customer retention strategy might be tricky. Especially when you don’t have much knowledge about retention. Do you know what is best to do here? Learn customer retention. To make it easier for you, let’s see what retention marketing is and examine how it works through metrics.

Beginning with customer retention, it is the term referring to the retention of customers, as opposed to the acquisition. Customer retention marketing focuses on existing or former customers to make them repeat their purchase. It also aims to create a loyal customer base by keeping current customers. If you notice inactivity in customers, you can retarget them through various means.

Learning customer retention is crucial in designing a good customer retention strategy. To get started, consider some points we’ve listed below:

Your customer experience

How do you rate your own customer experience? Is it good? Are there any areas you need to develop? Or is it your weakest point? Examine how smooth it is for your customers to buy something from you. Rate the experience and see if you can make any changes to make the purchase experience better. It’s also about the connection your customer feels to your brand. This depends on the personalization of your interactions. Do you feel like it’s too much for you to handle? Partner up with Cloodot to deliver a seamless omnichannel customer experience, made effortless with customized inbox and customer interaction tools.

Personalization and emotional connection

As we’ve seen before, customers must feel a personal connection to your brand which will motivate them to purchase more from you. Personalized interactions will make the overall customer experience more intimate. This will also help you in building long term relationships with your customers. Connect with customers wherever they are. You can make use of social media to strengthen such relationships.

Website experience

Is there any difference between the on-site experience of returning customers and new customers?  What changes will an already logged in customer see on your website? Artificial intelligence is so advanced that you can design your website according to the person visiting the site. You can display recommendations to customers based on their previous actions and preferences in the website. This will make the experience richer.

Other than these factors, examine the customers leaving your website or deciding not to purchase. Are there a lot of customers leaving your brand like this? They might have switched to another company. If you’re losing customers, see if there are any improvements to be made in your business. Brush up your customer services and interact with your customers regularly. You can also use customer feedback to figure out what’s needed. If you want to know more about that, this article might be of some help to you.

Customer retention metrics

To learn about customer retention and to venture designing an effective customer retention strategy, you might need the help of customer retention metrics. Don’t be afraid to see the mathematical formulas and variables. We’ll break these concepts down to make it easier for you to understand. Even if you find the numbers threatening, keep in mind that these are just some markers which will help you in further improvement. Focus on your customer retention rate and design the strategies according to the requirements. Let’s see some key metrics which will give us an idea about customer retention.

Customer churn rate

This is a crucial factor in customer retention. This is the percentage of customers lost during a period. If you have a high churn rate, that means you’re losing a lot of customers.

How to calculate customer churn rate?

To calculate the churn rate of a period of time (say, a year), subtract the number of customers at the end of the year from the number of customers at the beginning. Divide the result by the number of customers from the beginning of the year. If the result is too high, there might be some changes you have to make in the customer experience or service.

Don’t worry. Just focus on customer retention and get going. You’ll soon be able to reduce the rate.

Revenue churn rate

Just like customer churn rate, you can calculate revenue churn rate to know how much revenue you lost during a period of time. This will indirectly tell you the loss of customers as well. What you need to know before calculating revenue churn rate is your MRR or monthly recurring revenue. It is the predictable revenue of your company that you can expect to receive at the end of a month. This includes the income from all the subscriptions and other sources.

To calculate the churn rate of a month, all you have to do is to subtract the MRR of the end of the month with that of the beginning of the month, subtract the upgrade MRR of that month and finally divide the result with the MRR of the start of the month (now read that again).

Customer lifetime value

As the name indicates, this is the overall revenue you can expect from a customer. This indicates the loyalty of the customer and can help you in calculating the amount of loyal customers you have.

Customer retention rate

Finally, customer retention rate indicates the amount of loyal customers you have. It is the percentage of repeat customers who purchased from you repeatedly and stayed with you over a period of time. If you’re planning to design customer retention programs, check this to see where you are right now. Decide what time period to choose before calculation and estimate the following:

  • The number of customers at the beginning of the period (A)

  • The number of customers at the end of the period (B)

  • The number of customers acquired during the period (N)

If we take them as A, B and N respectively, the formula to calculate customer retention rate will look like this:


By calculating these metrics and analyzing them, you can get started with customer retention and design strategies to improve your retention rate. Want to learn more about customer retention strategies? Read our article to see what more you can do.

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