How to Improve Your Customer Retention Rate - Salesforce.com

Customer retention rate is the percentage of existing customers who remain customers after a given period. Your customer retention rate can help you better ... Skiptocontent     RESOURCECENTER BROWSEBYCATEGORY       HowtoCalculateandImproveYourCustomerRetentionRate Knowingyourcustomerretentionrateisthefirststeptotaketoreducechurnandincreaseloyalty. May2021-5minutes Doyouknowyourcustomerretentionrate? Customerretentionrateisthepercentageofexistingcustomerswhoremaincustomersafteragivenperiod.Yourcustomerretentionratecanhelpyoubetterunderstandwhatkeepscustomerswithyourcompany,andcanalsosignalopportunitiestoimprovecustomerservice.Onceyouunderstandhowwellorpoorlyyourcompanyretainscustomers,youcanworktoimproveyourcustomerretentionrate.Getstartedwiththesetips. Calculateyourcustomerretentionrate Customerretentionbeginswiththefirstinteraction.Thecustomermay“like”yourFacebookpageorsubscribetoyouremaillist.Therelationshipwillcontinueunlessthecustomertakesclearactionslikeunfollowingyourpageorremovingthemselvesfromyouremailsubscriberlist. Todetermineyourcustomerretentionrate,youjustneedthreenumbers: Customersatthestartofagivenperiod Customersattheendofthatperiod Newcustomersacquiredduringthatperiod Tocalculateyourcustomerretentionrate,takethenumberofcustomersyouhaveattheendoftheperiodandremovethenumberofnewcustomersacquiredduringthatperiod.Thendividethatnumberbythecustomersyoustartedwith.Forexample,ifyoustartamonthwith100customers,and85ofthemarestillcustomersattheendofthemonth,yourcustomerretentionrateis85%.Here’sasimpleformula: (Customersyouendwith-newcustomers)/customersyoustartedwith Toexpressitasapercentage,simplymultiplyyouranswerby100.) Let’ssayyouhave107customersatthestartofaone-monthperiod.Duringthatperiod,youlosteightcustomersbutgained21newones.Thismeansyouhave99ofyouroriginalcustomersand21newcustomersattheendoftheperiod.Younowhave120customersattheendoftheperiod.Inputthosenumbersintotheformula: Customerretentionrate=((120-21)/107)x100 Yourretentionrateforthatperiodwas92.5%. Acustomerretentionrateof100%meansthatyoudidn'tloseasinglecustomer.Aretentionrateofzeromeansyoulostthemall.Whatevernumberyoustartwith,youcanimproveitwithcustomer-centricbestpractices. 5waystoimproveyourcustomerretentionrate Thebestexperiencefromonecompanyraisesthebarforallothercompanies.JustthinkabouthowmuchAmazonmeetscustomerexpectationsforfast,easydeliveryandself-serviceoptions.   80%ofcustomerssaytheexperienceacompanyprovidesisasimportantasitsproductsorservices. Source:“StateofService,”Salesforce,December2020. Thispresentsanopportunityforyoutolookatyourcurrentcustomerexperienceandfindnewwaystomeetandexceedexpectations.Considerthesebestpractices:   Setrealisticexpectations It’salwaysagoodideatoover-deliveronthepromisesyoumaketocustomers.Beclearaboutwhatthey'regettingandwhattheycanexpectfromyourcompany.Beasrealisticaspossibleandthenworktogoaboveandbeyond. Onceyou'veestablishedclearexpectations,alignyourteamstomeetthesegoals.Iseverydepartmentdoingwhattheycantoprovideabettercustomerexperience?Don'truntheriskoffallingshort—itcandoalotofharmtoyourcompanysincecustomersoftenrecallnegativesbeforepositives.Evenonemistakecouldbeenoughforacustomertoleave.   Proactivelyengagecustomers Remindcustomersaboutupcomingpayments,sharedetailsaboutevents,andinformthemofproblemsassoonaspossible.Thisbuildstrust:Customerswillknowyouhavetheirback.Communicateregularlytohelpthemavoidlatechargesorotherunwantedsurprises.Whileyoucansimplysendanalerttoyourcustomerwhenaninvoiceisdue,considercreative,anticipatorystrategiesusingartificialintelligence(AI)forapersonalizedapproach.   61%ofcustomerssayit’sdifficultforacompanytoearntheirtrust. Source:“StateoftheConnectedCustomer,”Salesforce,October2020.     Establishclearsuccessmetrics Keyperformanceindicators(KPIs)aroundcustomerserviceletemployeesknowthatyouareevaluatingperformanceobjectively.Ensureagentsareuptospeedoncustomerservicebestpractices.Besureyoumeasurecustomersatisfaction.Reviewcustomerfeedbackafteragentsresolvetheircases.Checkcallresolutiontime.Usethesemetricstorewardemployeeswhodeliverthebestcustomerexperiences.   Connectonsocialmedia Socialmediaallowsyoutoconnectdirectlywithcustomers.Showcaseyourvaluesandbrandpersonality.Deepenrelationshipswithexistingcustomersbysharingpromotionsandcompanynews.Engageintimelyconversations.Listentowhatcustomersaresayingtomonitorsentimentandaddressissuesassoonastheyarise.   Gathercustomerfeedback Deploysimplesurveysfollowingservicecalls,onlineinteractions,orcommunicationsmadebyemail,text,orsocialmedia.Gathercustomerfeedbackandcommentstodetermineyournetpromoterscore(NPS),customersatisfaction,andcustomereffort.Usethisfeedbacktoinformimprovementstoyourserviceexperiencethatwillboostretentionwhilesatisfyingnewcustomers. Takeyournextsteps Nowthatyouknowhowtocalculateyourcustomerretentionrate,youcanputaplaninplacetoimproveyourcustomerexperience.Ensurethateveryteammemberisonboardbycenteringaroundyourcustomerwiththe righttoolsandtechnology. RelatedContent Blog CustomerEffortScoreCrackstheTop5Most-MeasuredServiceMetrics Blog TransformServiceWithaFive-LayerApproachtoCustomerExperienceMeasurement Blog HowNewYorkLife’sRetailAnnuitiesTeamIsRethinkingCallCenterMetrics       Improveyourcustomerexperience   Seehowto: Shiftmindsetsinyourorganization Connecttechnologyanddatasilos Buildoneteamaroundthecustomer Discoverhow       Improveyourcustomerexperience   Seehowto: Shiftmindsetsinyourorganization Connecttechnologyanddatasilos Buildoneteamaroundthecustomer Discoverhow   MoreResources   HowtoDevelopChallenging(YetRealistic)CustomerServiceGoals Article HowtoDevelopChallenging(YetRealistic)CustomerServiceGoals HowtoDevelopChallenging(YetRealistic)CustomerServiceGoals 7BestPracticesforTop-NotchCustomerService Article 7BestPracticesforTop-NotchCustomerService 7BestPracticesforTop-NotchCustomerService HowtoImproveCustomerService Article HowtoImproveCustomerService HowtoImproveCustomerService     Gettimelyupdatesandfreshideasdeliveredtoyourinbox. Signupnow   Gettimelyupdatesandfreshideasdeliveredtoyourinbox. Signupnow