Your husband left you for another woman? Sad. Your cat ran away? Oh no. Your best mate got married and won’t come to the pub anymore? Heartbreaking. Anybody will tell you that abandonment is a lonely feeling. But the sales reps of this world feel it more than most; left out in the cold by supposedly ‘loyal’ customers.

Sound familiar? Probably. It’s time to develop a clear customer retention strategy. Logically, you should start by calculating your customer retention rate (CRR).

Why is CRR Important?

It’s easy for sales and customer support teams to underestimate the importance of building a customer retention strategy. It’s often pushed down the to-do list by ‘closing the deal’. As a result, the sales process becomes a vicious cycle, losing customers as fast as you’re acquiring them. Every time you return to the first stage of the sales funnel, you effectively lose

Business shouldn’t be solely about customer acquisition. Alas, bringing in customers is actually only half of the job; the other half is to keep them there. Customer retention needs to be a pillar that your company is built upon.

The stats tell us the same story. On average, every customer relationship that is lost costs a business $289. Furthermore, according to NG Data, it costs up to seven times more to acquire a new customer than it does to retain an existing one. Selling to customers with whom you already have a relationship is easy, when you consider there’s no need to attract, educate, and convert all over again.

What Influences CRR?

There are lots of factors that impact customer retention rate. We’ve compiled the most common ones to consider.

  1. Customer service. 68% of customers leave brands because of bad support (Source: U.S. Small Business Administration). Customer Service is the face of your company; one of the levers of influence to either boost or reduce customer retention. Strong customer service engages and reassures existing customers to continue buying products.
  2. Price. When products or services are competitively priced, customers are more likely to come back in the future. Obviously. Likewise, if prices are too high, they’ll happily and easily buy from a competitor.
  3. Loyalty programs. This is a great way of encouraging repeat business. In effect, a loyalty program rewards your customers for their patronage and offers an incentive for future purchases.

How do I Calculate CRR?

((CE-CN)/CS)) X 100 = Retention Rate

Well, that’s the short answer. Don’t worry if you're not a maths whiz (I'm definitely not), it's actually a simple two-step process.

  1. Specify the period for which you want to measure customer retention.
  2. Secondly, input the following data into the formula, where applicable:
    CE = number of customers at the end of the period
    CN = number of new customers acquired during the period
    CS = number of customers at the start of the period

For example, if you started the month with 70 customers, gained 30 new customers during that month but lost 10 customers by the month’s end, you’d finish the month with 90 customers. Do the maths:

((90 - 30) / 70) X 100 = 86%

86% is the percentage of customers that remain at the end of our hypothetical period, without counting the number of new customers that were acquired.

As a business, you’d ideally like to see CRR hit 100%, meaning you never lose a single customer. That’s a big ask. For your business to maintain scalability and market strength, you need to track your own rate and improve upon it every month. If you are realistic about maintaining a sustainable business model, you should be aiming for 85% - 90% CRR at least.

Okay, so a 90% retention rate seems awfully high. We’ve put together five simple steps towards boosting your CRR.

5 Simple Steps to Boost Your CRR

Be Reliable and Helpful

Customer retention is mostly managed by your customer service team; their service should be consistent. Consistency with customers builds trust. Customers should feel as though your business is approachable; reachable day and night. A consistent, valuable supply of content and comprehensive support is the key to retention success.

  1. Customer service, marketing, and sales alignment. Customer service is much more efficient when working in tandem with other teams with a common goal to improve the customer experience. Each team should put their heads together to route the right team member to the right customer by assessing the customer’s needs with the skills you have available.
  2. Teaching sells. Share educational content related to your product, such as tutorials, insights, product innovations, optimizations, email newsletters, webinars. With valuable, engaging content during the earlier stages of their journey, customers are more likely to stick around in the future.
  3. Key Performance Indicators (KPIs). KPIs help to objectively monitor and measure the effectiveness of your customer service. They help you visualise what the future holds for your business, and which direction you should be taking. By carefully studying key performance indicators, you also receive a clear understanding of what makes your customers both stick and twist.

Check out our blog post about how to engage your customers, here!


One of the best ways to foster customer loyalty and increase retention rates is to provide even more value to them through a customer loyalty programme. This involves giving away products, coupons, discount codes, early access to new products, and any other gorgeous free stuff you can spare.

According to Access Development, 86% of customers are more loyal to brands where they participate in rewards programs.

A loyalty programme effectively rewards customers for their dedication to your brand, be it expressed through purchase or feedback. Participants say that brand loyalty schemes make them feel special and recognised, so they spend more because they receive benefits in return for their business. When they already enjoy buying from your company so much, why not give them another reason to continue doing so?

Dedicated mobile apps help modern retailers manage their customer loyalty programmes. Coffee kings, Starbucks, were pioneers of this technology with My Starbucks Rewards.

With the Starbucks Rewards program, each purchase brings a customer closer to free food and drink. To earn Starbucks loyalty stars, you need to order or pay using the app.

The cherry on the cake of implementing a customer reward programme is that you can, with their consent, gather data regarding customer behaviour and preferences that is absolutely priceless for marketing teams.

In the process, you’ve empowered yourself with enough resources to retain customers en masse.

Check our article on how CRM helps with customer retention.

Create Memories

People remember negative events much more easily than positive ones. Even if there are more positive events overall, bad occurrences are the ones that stick. In terms of you and your business, this makes customers much more likely to share their negative experiences of your brand on social media, through word-of-mouth, and so on (Source: American Express).

It’s important to make a customer's experience with your company as relevant and personalised as possible. Again, access to customer data is absolutely essential here. With consent, gather details of the actions visitors take such as content they read, the products they add to their carts, and the things they share. Use this information to provide a highly-personalised experience.

With this data, it’s much easier to identify the points which push customers away and, consequently, lose them.

Be Interesting

Customer retention means maintaining a customer’s interest in your company. To achieve this goal, you need to build a personal and emotional connection with them through social media, taking your interaction to the next level.

Get your audience used to a weekly blog post on Instagram or Facebook; share interesting content daily through LinkedIn or Twitter. This helps build brand familiarity and loyalty. Have a carefully planned content calendar to help get you posting killer content at regular times.

Being interesting also builds trust between a brand and a customer. When a customer knows they can reach a brand online, and are kept up to date with the latest deals and company news, they’re more likely to engage and remain loyal.

For the sake of staying fresh in your customers’ minds, you should always have something in your back pocket to give them.

Create a Roadmap for Your Future Relationship

In many ways, a brand-customer relationship is very similar to a human-human one. At some point, somebody in the relationship needs to know “where we’re going” and “what comes next”. They need to know what the future looks like.

It’s easy for the brand-customer relationship to fall victim to routine. Everything is going great, you know what a customer wants; you understand what it takes to meet their needs and help them reach their goals… but too much. It’s easy to become too comfortable with a customer, and they wake up one day and realise how uninspired they feel with a brand or product.

Your customer success managers should create a relationship roadmap and revise it on a regular basis. Map out initiatives and projects that both parties can look forward to. Spice things up a little.

Things to remember...

Your retention strategy helps you maximise the profitability of each one of your customers.

According to Gartner Group, 80% of a company’s future revenue will come from 20% of their existing customers.

Calculating customer retention rates should be a priority for every business. These metrics affect your bottom line and provide real insight into where strengths and weaknesses lie. They help so you pave the way to sustainable growth and success.

A proper customer relationship management software, like NetHunt CRM, aims to increase customer satisfaction and loyalty, thus improving customer retention rate.

Looking for a CRM to enhance your small business? Sign up here and reap all the benefits that CRM has to offer with NetHunt CRM.

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