Custom retention is the ability of a company to turn customers into repeat buyers and prevent them from going to a competitor.
Retaining customers is crucial for every business. Customer retention can be measured by the percentage of customers a company retains over its total number of customers within a specific period.
Customer retention is different from lead generation or customer acquisition.
It focuses on customers that have already purchased your product or have subscribed to your service. In other words, customer retention is more than just a transaction.
Customer retention requires building a long-lasting relationship with your customers and gaining their loyalty.
Here are a few reasons why you need to focus on customer retention.
Acquiring a new customer is five times costlier than retaining an existing one. Moreover, a 5% increase in customer retention boosts your profits by up to 95%.
That’s why a customer retention strategy can drastically reduce your marketing costs.
You get the advantage of word-of-mouth promotion from your loyal and happy customers. 46% of consumers in the US get brand information from family members.
Existing customers are more likely to tell their family and friends about the brand they trust. And potential customers are more likely to buy if they get recommendations from their friends or family.
Existing customers are less bothered about the price of the product as compared to the new ones. This is because they have already used your product. If they are satisfied, they will pay a premium fee to use your product or service.
There are various ways to calculate the customer retention rate. It all depends on what period you are examining.
The most common customer retention rate formula is:
CRR = The number of customers at the end of the period (minus) the number of customers acquired by the business over the same period (divided by) the number of customers at the beginning of that period.
Generally, the ideal CRR value is at least 85%. But it can vary from industry to industry.
Email marketing can boost customer retention. EngageBay provides a professional email marketing platform where you can run targeted, personalized campaigns to delight your existing customers.
You can set up rules to automatically segment your customers based on their behaviors and various other factors. You can tag customers or save the segments and run smart, personalized campaigns.
A personalized touch in your email can help build a strong rapport with your customers. EngageBay’s email marketing tool lets you personalize every section of your email. Whether you are sending an email broadcast or drip emails, you can personalize plenty of email components, such as subject lines, preview text, and email body content, email images, CTAs, headers & footers, and more.