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1. 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?

2. 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.

3. 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.

4.  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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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:

10. CLV = (Avg order value X Repeat purchase rate) – Customer acquisition
cost
OR
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,
Net promoter score (NPS)

11. 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

12. 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

13. 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.

14. 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.

15. 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,

16. 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.
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