Measuring of Customer Retention | KPI in CRM category

WinningKPI - CRM - KPI for Measuring of Customer Retention posted in category CRM

KPI details:

This indicator is for measuring the customer retention rate. In other words, it measures the company’s ability to retain customers. This is calculated by dividing the total number of customers retained, by the total number of customers, over a given time period.

This KPI is the opposite of the Customer Attrition KPI, which measures customer loss.

The well known business norm is that a retained customer is much cheaper to the company than a newly acquired customer. Hence, companies aim to maximize this KPI, especially through CRM efforts.

However, some research advises on measuring cost of retained customer rather than number of retained customer. In the formula below we will use number of retained customers, however, the figures can be interchanged with cost, to obtained both measurements.

Formula:

Total number of retained customers / Total number of customers x 100

KPI Unit: %

KPI Time Frame: update annually

Posted by Oana Boteanu | Help to protect community: Flag for moderation

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Here are comments:

Example (hypothetical values):

Company A measures the customer retention rate over one year period:
Total number of customers: 50 000
Total number of customers retained (repeat purchases) : 15 000

Customer Retention Rate:
15 000/50 000 x 100 = 30 %

Therefore, the customer retention rate is of 30%. Hence, on average, 1 in 3 customers is retained.
Oana Boteanu | October 1, 2012 at 5:10 pm

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