Customer Retention
Customer retention refers to the ability of a company to prevent its customers from switching to a competitor by keeping them engaged and satisfied. Retention can be quantified as a measure of how well a company is able to retain its customer base over time. Retention is considered to be the opposite of customer churn.
A company must understand the needs and wants of their customers and strive to meet or exceed them. That’s a broad statement but can include providing excellent customer service, delivering innovative product features, or continuously improving the user experience.
Companies that are able to retain their customers can generate a stable and predictable revenue stream from repeat buyers, which can be more cost-effective than acquiring new customers. An effective retention strategy can significantly reduce sales & marketing expenses and in effect, improve customer acquisition costs (CAC).
Customer retention is most often measured by calculating Net Dollar Retention.
Customer Retention Strategies for Increasing Lifetime Value:
Customer Retention FAQs
What is customer retention?
Customer retention refers to the ability of a brand to retain its existing customers over time by providing value, building strong relationships, and delivering excellent products or services.
Why is customer retention important for brands?
Retention leads to increased customer lifetime value, reduces churn and customer acquisition costs, generates positive word-of-mouth referrals, and contributes to long-term business sustainability.
How is customer retention measured?
Customer retention is most often measured by calculating Net Dollar Retention, which measures how well a business retains its existing revenue from current customers, accounting for upgrades, downgrades, and churn.