Customer Retention Rate (CRR) is a metric used to measure the loyalty of customers and determine how many customers continue to stay with you over time. It is expressed as the percentage of customers that you retain during a certain period of time.
The customer retention rate is the opposite of the customer churn rate, meaning that CRR + Churn Rate = 100%. If a company has a 5% churn rate, they also have a 95% customer retention rate.
Free Online CRR Calculator
How to Use Customer Retention Rate
Once you start tracking your customer retention rate, or CRR, your business will be able to better understand your customer buying preferences. If you don’t know your CRR, you are in the dark about how satisfied your customers are.
Your business model should offer repeat buying opportunities to maximize the value of each customer. Even if you are in a niche with low repeat purchases, such as real estate or auto sales, you can still work to have previous customers come back for their second purchase. Or, offer other smaller services that are related, such a oil changes or home services.
Tracking your retention rate over time will show how many customers are willing to stay with you. A high customer retention rate indicates high satisfaction in your products, service, and overall experience. A low CRR indicates that there are areas that can be improved.
Tracking CRR Over Time
You customer retention rate is likely to change over time and will not stay static. Track your CRR on a regular basis, depending on the frequency that works best for your company. Some people prefer looking at it monthly while others use quarters. As you look back over several years, it is also helpful to have annual CRR data to compare to.
A change in retention rate throughout the year could be due to various factors but the data will help to pinpoint trends to dig into. Perhaps, you hire extra help during your busy season to keep up with demand but notice your CRR drops around the same time. That could indicate that there is an issue with how the new help impacts your overall customer experience.
A good way to get even more data is to pair your CRR with a customer feedback survey. A simple NPS survey will help to gather more specific information on what works and doesn’t. By pinpointing these areas, you’ll be able to come up with a strategy to improve operations.
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