{"id":48057,"date":"2020-06-22T22:04:51","date_gmt":"2020-06-23T02:04:51","guid":{"rendered":"https:\/\/www.sogolytics.com\/blog\/?p=48057"},"modified":"2023-01-16T05:23:36","modified_gmt":"2023-01-16T10:23:36","slug":"why-customer-retention-is-a-crucial-part-of-company-strategy","status":"publish","type":"post","link":"https:\/\/www.sogolytics.com\/blog\/why-customer-retention-is-a-crucial-part-of-company-strategy\/","title":{"rendered":"Why Customer Retention is a Crucial Part of Company Strategy"},"content":{"rendered":"

What is Customer Retention?\u00a0<\/strong><\/h2>\n

Losing clients is costly. It far outweighs the expense of earning new ones by up to twenty-five times. Therefore, it pays handsomely to hold on to customers that are faithful over a long time. The opposite of customer retention is <\/span>customer churn<\/span><\/a>, where businesses keep losing customers no matter how hard they try to keep them engaged. You know you have churn when customers don’t re-sign contracts<\/a>, cancel subscriptions, and noticeably fall off at touchpoints along their customer journey. In short, customer retention is a big part of management’s responsibility in the digital era.<\/span><\/p>\n

<\/div>\n

Calculating customer retention<\/strong><\/h2>\n

Managers can calculate their Customer retention rate using <\/span>a set formula<\/span><\/a> as follows:<\/span><\/p>\n

Customer Retention Rate = (# of customers at the end –<\/span> # of customers added during the period)\/the number of customers at the start of the period x 100.\u00a0 In so doing, you must decide:<\/p>\n

 <\/p>\n

    \n
  1. What a makes a period (e.g., three months,a year, maybe longer)<\/span><\/li>\n
  2. Work out the <\/span>customer retention <\/span>rate percentage for the period just past.<\/span><\/li>\n
  3. Use the set formula to calculate the same for periods going forward.<\/span><\/li>\n<\/ol>\n
    \"customer<\/div>\n

     <\/p>\n

    Why is customer retention so important and why is the customer retention formula crucial to marketing success?<\/strong><\/h2>\n

    Any percentage below 100% indicates some customer churn.<\/span><\/p>\n

    For example: If the bottom line is 50%, it means that half of the customers that you thought were long-term at the beginning of the period instead abandoned your brand. The big question is, why?<\/span><\/h3>\n

    Getting the answers is a priority because:<\/span><\/p>\n

     <\/p>\n