Customer Retention

Customer retention refers to the ability of a business to prevent its customers from switching to a competitor. The primary method for retaining customers is 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.

The opposite of retention would be customer churn, which is a common metric used in business reviews and formal shareholder updates.

To drive retention rates, a company needs to clearly 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, and most importantly – continuously improving the user experience.

Companies that are able to retain their customers will generate a stable and predictable revenue stream from repeat buyers. A strong retention rate leads to a 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: