www.blogbangboom.com - BlogBangBoom.com
Posted 03/20/2023 by WebMaxy

How customer retention makes your business invincible?

How customer retention makes your business invincible?

Meaning of customer retention is the measure of the number of people who stay with your business for a long period of time. It shows how well your business is doing and is able to keep up with the expectations of the customers. The more people are satisfied with your business the more likely they are to purchase from you again. 

  • To know more about your customer retention, ask yourself these questions:

  • What drives your users back to your brand at a sustainable frequency?
  • What value do people find in your offerings that they can’t find in other brands?
  • How do you retain your new users within their first week of usage?

Businesses need to be analytical about customer retention. The managers and digital marketing specialists should consistently find ways to make customers keep coming back. There are many reasons to focus on customer retention it increases customer lifetime value (LTV). Not only that, customer retention services help to maintain product revenue in the long term. 

Main Takeaways: Meaning of customer retention

  • Customer retention involves building the trust of customers over time. This is a long and continuous process. You need to be patient and focus on building strong relationships with your customers by constantly meeting their needs and expectations.
  • Most often the products that provide a good customer experience are likely to get more customers back. Therefore, you should emphasize creating the best customer experiences. Try to make your customers content at every stage of the buying journey.
  • Utilize the data to analyze and optimize your customer retention rates. Discover the key factors that are unique to your business that drives retention. Try to have more of first-party data to calculate customer retention metric accurately.

What is customer retention? 

Customer retention is a metric that measures the number of repeat customers of a product or service over a period of time. This metric is indicative of your business’s ability to keep the customers with your business and prevent them from going to your competitors. When a customer is retained with your business it also shows their habit of using your product. A higher customer retention rate contributes to the sustainable growth of the business. 

There are several factors that you need to know to measure customer retention like the critical event and the product usage interval. 

Critical event 

A critical event can be explained as an event or action that the users do within your product that shows they’ve been retained.

  • To decide on the critical event, ask the following questions:

  • What one action do you want your user to perform when using your product?
  • Which KPIs are you aiming to achieve as a company and what user action can help that?
  • Based on your product offerings, what are the business goals of each?

For example, for an online platform like Netflix, the critical event would be when a customer purchases a subscription. For Netflix to grow it’s important, that customers are retained and renew their subscriptions periodically. Users who just take the subscription once and don’t renew it don’t contribute to the further success of the business. Here, we mean that a subscription is a critical event for Netflix. 

Product usage interval 

The product usage interval refers to the time in which the user uses the product itself. Customer retention can be calculated by keeping the critical event for a period of time.

  • To identify the product usage time do the following

  • Determine the number of users who repeated the critical event at least twice in a decided time frame. We recommend considering at least 2 months or 60 days of a time period. This simply means that you expect a user to perform a critical event at least twice in two months.
  • Measure how long it takes for users to come back and perform the critical event for the second time.
  • Identify the number of users that execute the critical event for the second time.
  • Determine the time interval at which 80% of the users repeat the critical event. This is the product usage interval of your product.

Different products have distinct product usage intervals. Some products are made to be used daily like gaming or social networking apps. However, apps like grocery delivery or bank apps are used less frequently by people. You need to measure the time it takes for your users to repeat the critical event to know the product usage interval. 

Visual representation of customer retention 

There are three different ways of visually representing and measuring customer retention rates. We have explained them below with in-depth information. 

N-Day retention 

This graph exhibits the percentage of users that come back to your business on a particular day. For example, in the graph below,  8.5% of the users come back on day 14.

Unbounded retention 

It displays what percentage of users come back on a specific day or later. For instance, in the graph below, 40% of users come back on day 1 or later. This number indicates the percentage of users who come back on day 1 or any time after day 1. 


Bracketed retention

In this retention graph, you choose a specific time period and see the retention rate in that specific time period. For example, you can consider retention from day 1 to day 6. 

Calculating the retention depends on the type of your business. For instance, if you have a delivery service app, then looking at the N-day retention graph may not be helpful. Since people don’t use your app frequently. Therefore, using unbounded retention would be a better choice. It will help you to see what percentage of users return on a specific day after using your product. 

The importance of customer retention 

Customer retention provides long-term sustainability to a business by helping establish a stable source of revenue. As per the statistics, acquiring a new customer can be up to 25 times more expensive than keeping an existing one.

Existing customers already share a relationship with your business and you have built their trust over time. Customers who make repeated purchases from you and choose you over your competitors are loyal. Loyal customers are the ones who become your product advocates and spread the word about your product or service. 

Without customer retention, you can’t support your business in the long run. No matter how many customers you drive to your business if you aren’t able to retain them then it’s all useless. Customer retaining is crucial to ensure the long-term success of your product in the market. 

You need to provide value to your customers to ensure that they return to you. Once people become habitual users of your product it’s less likely that they turn to other products. 

Key customer retention metrics 

There are several metrics that you can track in order to measure your customer retention efforts. By evaluating these metrics you can alter your customer retention strategies accordingly and get better outcomes. 

In this section, we have mentioned some of the important key metrics that you must calculate. 

Customer retention rate 

Customer retention rate is the percentage of customers who remain loyal to your brand over a long period of time. 

Calculating the customer retention rate

You can calculate the customer retention rate by,

(E – N)/ S]    X   100 

Here, E is the total number of customers at the end of a time period, N is the number of new customers gained in the same time period, and S is the total number of customers at the start of the time period.

Customer churn rate 

Customer churn rate is the percentage of customers who stop purchasing from you after a specific period of time. The churn rate is the inverse of the customer retention rate. This metric is important as it tells you how effectively you are able to retain customers. 

If your customer churn rate is high it means many customers are leaving your business. You should try to discover the reasons that might be causing them to slip away. Once you know the reasons, you can make the alterations to reduce the churn rate. 

Calculating the churn rate 

You can calculate the churn rate by, 

[Y / X]  X  100

Here, X is the total number of customers at the beginning of the time period and Y is the number of customers lost during the considered time period. 

Customer lifetime value (CLV)

Customer lifetime value tells how much profit the customers provide to the company during their entire business relationship. CLV is a vital metric that lets you know if you need to motivate customers to make more purchases from you. If your CLV is high, you should focus on acquiring new customers. In the case of low CLV, you should focus on creating loyalty programs that encourage customers to make repeat purchases. 

Calculating the customer lifetime value

You can calculate the customer lifetime value in the following ways:

CLV = (Avg order value X Repeat purchase rate) – Customer acquisition cost   


CLV = Avg number of transactions in a time period X Avg order value X Avg gross margin X Avg Customer lifespan/ Total number of customers 

Revenue churn 

Revenue churn is the percentage of monthly recurring revenue you lose over a period of time. This metric lets you know how much monetary loss you have when a customer leaves your business. The total number of customers is nothing until you calculate the worth of each customer for your business. 

Calculating the Revenue churn 

You can calculate the revenue churn by,                      

customer retention examples

Net promoter score (NPS)

Net promoter score lets you know how many customers are likely to suggest or recommend your product or service to others. It is used to measure customer loyalty. This metric also helps you know how much the customers are satisfied with your products or service.

A low NPS indicates that your customers won’t recommend your product to others. It also points to the low customer satisfaction level which can be a potential risk for your business. By calculating this score, you can predict the churn priorly, and make alterations to prevent it altogether. 

There is no formula to calculate the NPS. You can measure NPS by considering the responses of your customers on a scale of one to ten. The percentage of their ratings can tell you how likely are they to suggest your product to anyone else. The simple way to get NPS is by conducting NPS surveys. 

Repeat purchase rate 

The repeat purchase rate is the percentage of customers who purchase from you again after the first purchase. This metric is helpful for businesses that have no contracts with customers like eCommerce websites. They can measure how many recurring customers they have and how many customers get churned out. This way they can optimize their strategies to encourage repeat purchases from customers. 

Calculating the repeat purchase rate                    

5 Best ways to improve customer retention 

The best way to retain customers for a long time is by providing them with an awesome user experience. According to a report, 77%  of customers are loyal to companies that offer a good customer experience. Also, 72% of customers say they’re willing to spend more money on a company that provides a good customer experience. To improve your customer retention you should focus on increasing customer loyalty and customer LTV. 

Focus on your existing customers more than the new ones

Retaining existing customers is easier than getting new users for your business. Since you already have a relationship with them, it’s simple to approach them. Focusing on your existing customers is the best way to boost your customer retention. You also have more data available to approach your existing customers. 

You can retarget your existing customers by creating their behavioral personas. Based on the data you can analyze your customers’ behaviors, purchasing patterns, and unique features that keep them purchasing from you. Accordingly, you can create strategies and tactics that make them come back to your business. 

For example, from the data, you infer that most of the customers make purchases when you offer some discount. Then, you can use this strategy when your sales drop and encourage existing customers to purchase from you again. 

Take customers’ feedback and implement changes accordingly 

You can get insights about your customers from the customer service team. But to get direct and accurate customer insights you can conduct surveys. You can also look up social media platforms and online forums where they talk about your business. 

You can learn more about your customers by analyzing how they interact with your business at different touchpoints. For example, you can know information like people prefers chatbots over calling customer support representatives. Then, you can focus on improving the chatbot responses so that people get the answers they want from there only. 

Knowing your customers’ needs, likes, dislikes, and preferences can help you to make significant product improvements. This way you can enhance customer experience and retain more customers.

Personalized and good customer support 

Your customer support team should be efficient and offer personalized interactions with customers. They should be able to comprehend what customers want to say and deliver answers accordingly. A customer support team acts as the human face of your brand and their positive customer interactions can aid in building customer relationships. 

When you offer good customer support, it improves customer experience and retention. You can invest in customer support technologies like chatbots. This way you can answer some of the customer queries easily and the complex ones can go to the representatives. 

According to a report, 73% of customers say that quick support resolutions are key to a good customer experience. You can make your customer support faster by optimizing your customer support workflows. You should also focus on providing good training to your representatives so that they can respond to customers effectively. 

To boost your customer support service speed, you can also offer omnichannel support. When customers have several options they can resolve their queries via mobile, website, or on-call at their convenience. 

Have customer loyalty programs

You should always make your customers feel important and valued. Create loyalty programs that motivate customers to make repeat purchases. You can also create personalized special offers for your long-term existing customers. 

By offering personalized offers you can increase your customer retention or reduce churn by 25%. You can target customers based on their purchase data and provide reward programs accordingly. Find ways to delight your customers and this will give them a reason to stick with your business. 

Social responsibility 

Nowadays, it’s important for brands to have an emotional connection with customers. As per the statistics, 70% of customers want brands to stand for social and political issues. A recent study states that 77% of consumers want to purchase from a company that envisages making the world a better place. When a brand supports a social cause, it becomes a preference of many customers and they tend to continue with the same brand.

Let’s take the example of Ben & Jerry’s. They created social justice-themed ice cream flavors to highlight issues like LGBTQ+ rights and criminal injustice. This gave customers a reason to choose these ice creams to support these causes. This also gave Ben & Jerry’s an edge over its competitors.

Customer Retention Examples 

Most companies have started putting their focus on customer retention to maintain a steady revenue flow. In this section, we will give customer retention examples of companies. 

Example 1: Showmax 

Showmax is a subscription video platform that targets underserved markets in Africa and Eastern Europe. With an aim of increasing retention, Showmax conducted in-depth data analysis. The data insights revealed that most of the users that were returning watched the content of a specific content director. 

Therefore, Showmax decided to make more content with that director. This resulted in Showmax getting more user engagement and retention. They continued to research and the data analysis helped them to drive growth in 70+ markets in three years. 

Example 2: Calm 

Calm is a meditation app that was able to amplify its retention rate by three times. They used customer behavior data and evaluated the behavioral differences that affected the retention rates. From the analysis, they got to know the number of users who were using the reminder feature used the meditation app frequently. Also, they had a high retention rate compared to the users whose reminder feature was disabled.

Later, Calm did some experiments to recognize the relationship between the reminders feature and retention rates. They deduced that the reminders feature and retention rates had a direct correlation. Then, Calm made the reminders feature more prominent and visible. This resulted in them getting three times higher retention rates. 

Tools for increasing customer retention

You can retain a maximum of your customers by understanding them better. There are many user behavior analytics tools that can help you to comprehend users’ behavior and patterns. We have mentioned some of the best analytics tools below.

  • WebMaxy Analyzer
  • Hotjar
  • SurveyMonkey
  • Lucky Orange
  • Crazy Egg

WebMaxy Analyzer is a user behavior analytics tool that can help you get a 360-degree view of customers. It includes several features like session replays, heatmaps, funnel view, form analytics, surveys & polls, feedback, segmentation & filtering, push notifications, and advanced integrations. For more information and details about WebMaxy Analyzer, schedule a call with our experts or email us at sales@webmaxy.com

Got stuck? Try Webmaxy to turn customer retention into success

Retain customers, retain profits: Unlock the secrets to customer retention today

Posted By


Contact Member See Phone Number View Listing
Our Family of FREE Listing Sites: