KPI for Measuring of Customer Retention Rate posted in category Sales

WinningKPI - Sales - KPI for Measuring of Customer Retention Rate posted in category Sales

This indicator is for measuring the ratio of loyal (retained) customers over total customer, per a given time period (e.g. quarterly or yearly).

More details:
The Customer Retention Rate KPI is very important to a company, as it measures the successful or failure rate of the company’s marketing and customer relationship management (CRM).
A company always aims to maximise its Customer Retention rate, for the reason that it costs approximately 5 times more to gain a new customer, than to sell to an existing customer.
Monitoring the Customer Retention rate quarterly (or yearly) can help the company to address its Marketing and CRM practices in order to maximise the ratio.

Formula:
Total number of retained customers/total number of customers x100

KPI Units: %

KPI Time Frame: update quarterly or yearly

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

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Here are comments:

The foundation for a business is loyal customers. Whether the business is a bar, a clothes shop, a supermarket, a pharmacy, the aim is to attract and retain customers. As mentioned above, it is 5 times more expensive to gain a new customer than to retain an existing one, and the higher the retention rate, the lower the costs, the higher the profit (ideally).
For example, a phone company will always try to retain their customers by calling them and offering contract extensions.
An important aspect of customer retention is to ‘keep on trying to sell’ to existing customers, and to find ways to attract and keep them. For example, supermarket point cards are a good tool to retain customers (customers tend to came back and purchase only to build up points).
Oana Boteanu | + | September 6, 2012 at 8:17 am

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