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Five Ways to Increase Customer Retention

“A brand is determined by the customer’s experience,” according to an expert. Employees are in charge of delivering the experience.” This is a stunning remark that encapsulates the entire interaction between a company’s staff and its customers. Employees serve as a link between customers and a company. They help to connect the dots, aid in overcoming product flaws and communicate the message of management or customers to the counterpart. In fact, it highlights the critical role that employees play in attracting new clients and improving customer loyalty. There are two sides to the coin when it comes to client relationship management. Client conversion and customer retention are included.

Customer Retention

Capturing new leads, moving them through the sales cycle, and finally converting them to loyal clients are all part of customer conversion. Customer retention, on the other side, is concerned with keeping current customers from leaving. In other words, it reduces client churn. According to one research, 89 percent of businesses believe that providing good customer service is critical to increasing client retention. When opposed to the amount and time spent converting a lead, the funds required to keep an established customer are considerably less. Selling a product to an established customer is also easier than selling to a new consumer. They are more likely to say yes to purchasing a new product or service introduced by your organisation because they believe they can trust you.

This RisePath blog will introduce you to some of the most important customer retention metrics that may help businesses enhance customer retention and lifetime value. Let’s take a look at what customer retention rate is and how to enhance it before moving on to the top 5 techniques to boost your customer retention rate.

Calculation of Customer Retention Rate

Customer retention rate is an important indicator to consider when evaluating customer service metrics. It’s calculated as the percentage of existing consumers who stick around after a certain amount of time. It’s the rate at which you keep consumers for a set amount of time. If you’re wondering what the advantages of customer retention are, you should never underestimate the worth of customer retention because of its financial rewards and capacity to increase client lifetime value. RisePath CRM is a cloud-based CRM toolkit that helps organisations of all sizes improve client retention. RisePath CRM doesn’t stop there; it also assists organisations with rethinking their client retention strategy based on existing performance charts and statistics. RisePath CRM is a customer retention software with a variety of apps to satisfy the needs of various departments inside your company.

The Retention Rate Formula is computed by subtracting the total number of customers over a specific time period from the number of new customers who joined your company during that time. This is multiplied by the number of clients at the beginning of the period. To convert it to a percentage, multiply it by 100.

How Can You Increase Customer Retention?

Customer Retention Rate (CRR) is a more general term that encompasses a number of smaller aspects that influence overall customer retention value. In this section, we’ll look at a few customer service measures that have a direct impact on client retention and loyalty. Businesses can simply enhance their CRR by focusing on these customer retention KPIs and employing a robust customer retention software like RisePath CRM.

  • Rate of Revenue Churn
  • Customer Retention Rate
  • Rate of Product Returns
  • Purchases in Between
  • Customer Value Over Time

Decreased Revenue Churn Rate

The rate at which an organisation or a corporation loses income as a result of consumers leaving or downgrading their plan is known as the revenue churn rate. The MRR churn rate is another name for it. Businesses may simply keep their client retention rate in control by keeping track of their revenue churn rate.

Companies should make sure that their MRR churn rate is negative. This is because a lower revenue churn rate indicates that the percentage of consumers who cause your business to lose money is relatively low.

Monthly Revenue Churn Rate = [(MRR at the start of the month – MRR at the end of the month) – MRR in Monthly Plan Upgrades] / MRR at the start of the month

Consider the following scenario: Your company’s MRR in November was $40,000. The following month, you lost $10,000 due to churn and earned $3,000 from plan upgrades. Your revenue churn rate during December is 17.5 percent based on this.

Increased Customer Loyalty

Customer loyalty is a concept that you should never overlook when running a business. In truth, it is a critical aspect of your organisation, and it simply refers to clients’ readiness to acquire your products or services on a regular basis. The total number of customers who have made repeated transactions with your company over a period of time is known as the Loyal Customer Rate (LCR).

You can figure out how many loyal customers you have if you calculate the LCR. A positive LCR score indicates that your consumer base is more loyal. The number of purchases made by your existing customers, as well as the number of transactions made by new consumers, are included in the customer loyalty rate. You may simply enhance the retention rate by getting to know your regular clients. You can ask for testimonials from them and encourage them to keep doing business with your company.

Loyal Customer Rate = Number of Customers Making Repeat Purchases / Total Number of Customers  

Consider the following scenario: you have 50K consumers in a given month. 5K new consumers and 2K old customers made multiple purchases out of this total. As a result, the month’s loyal client rate is 14 percent.

Lesser Product Return Rate

Product Return Rate is better appropriate for businesses that offer products rather than services. This Product Return Rate is one of the factors used by companies that sell items to determine customer retention rates. The percentage of orders with a product return is known as the Product Return Rate. In a nutshell, it’s the percentage of products that customers have returned.

An increasing product return rate is not a good sign of a business’s overall health. It indicates that firms are dissatisfied with your offerings. Businesses should make it a priority to achieve a zero product return rate. A zero product return rate also indicates that your clients are pleased with your product and are more likely to keep their purchases with you.

Number of Sold Units Returned / Total Number of Units Sold = Product Return Rate

Consider the following scenario: During the month of January, you sold 10,000 units of your product. A total of 2,000 units were returned. Then you have a 20% Product Return Rate.

Purchases are made in less time.

While the concept of Loyal Customer Rate focuses on a customer’s quantity of repeat purchases over time, the concept of Time Between Purchases focuses on the time aspect. Time Between Purchases is a metric that measures how long it takes an average consumer to buy from you again. This is one of the customer retention metrics that can be used to determine how happy and satisfied your customers are with your products and services.

A shorter period between purchases indicates that your products are good and that your clients are willing to buy from you again and again. If your clients take longer between purchases, it suggests your product isn’t distinguishing itself from the competition. As a result, your workers should communicate with your customers to obtain accurate feedback on your products and take efforts to enhance them. Your customer retention rate will improve as a result of this.

Total Number of Individual Purchase Rates / Number of Repeat Customers = Time Between Purchases

Consider the following scenario: your company has 15 repeat clients. You can see that the average duration between purchases is 2 days by averaging the average time it takes each client to make a purchase again (30 days).

Customer Value Over Time

Another important customer service statistic that can help you increase client retention is Customer Lifetime Value. Customer lifetime value is the revenue created by a customer over the course of their relationship with your company. A higher Customer Lifetime Value indicates that your company is on the right route.

A lower Customer Lifetime Value is an early warning indicator that your customer is diminishing or regressing on some level. This could be because you’re bringing in consumers who aren’t a good fit for your firm, or because your customers are leaving your business sooner than expected owing to faulty items that don’t suit their needs. Maintaining a higher Lifetime Value is recommended for organisations to boost client retention.

Average Purchase Rate * Average Number of Purchases * Average Customer Lifespan Equals Customer Lifetime Value

Consider the following scenario: you’re calculating the CLTV to determine the SaaS retention rate. A CLTV of $20K is obtained by multiplying the average revenue of $5K by the average lifespan of four years.


We addressed some of the customer service metrics that you should examine in order to boost your customer retention rate. While the five measures listed above are critical, it is also recommended that you investigate other customer retention metrics in order to increase customer retention and decrease churn. You can easily track the performance of your sales, measure the conversion rate, calculate the client retention rate, and boost your productivity by integrating your business with RisePath CRM.

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