Title: 10 Customer Retention Metrics & How to Measure Them
Headings: 10 Customer Retention Metrics & How to Measure Them
10 Customer Retention Metrics & How to Measure Them
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Customer Retention Measurement
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Customer Retention Metrics
1. Customer Churn
Churn Rate vs. Retention Rate
How to Calculate Customer Churn
Annual Churn Rate = (Number of Customers at Start of Year - Number of Customers at End of Year) / Number of Customers at Start of Year
Example of Customer Churn
2. Revenue Churn Rate
How to Calculate Revenue Churn Rate
Monthly Revenue Churn Rate = [ (MRR at Start of Month - MRR at End of Month) - MRR in Upgrades during Month] / MRR at Start of Month
Example of Revenue Churn Rate
3. Existing Customer Revenue Growth Rate
How to Calculate Existing Customer Revenue Growth Rate
Monthly Revenue Growth Rate = (MRR at the End of Month - MRR at the Start of Month) / MRR at the Start of Month
Example of Existing Customer Revenue Growth Rate
4. Repeat Purchase Ratio
How to Calculate Repeat Purchase Ratio
Repeat Purchase Ratio = Number of Returning Customers / Number of Total Customers
Example of Repeat Purchase Ratio
5. Product Return Rate
How to Calculate Product Return Rate
Product Return Rate = Number of Units Sold That Were Later Returned / Total Number of Units Sold
Example of Product Return Rate
6. Days Sales Outstanding
How to Calculate Days Sales Outstanding
Annual Days Sales Outstanding = (Accounts Receivable / Annual Revenue) × 365 Days
Example of Days Sales Outstanding
7. Net Promoter Score ® (NPS)
How to Calculate Net Promoter Score
Net Promoter Score = % of Promoters - % of Detractors
Example of Net Promoter Score
8. Time Between Purchases
How to Calculate Time Between Purchases
Time Between Purchases = Sum of Individual Purchase Rates / Number of Repeat Customers
Example of Time Between Purchases
9. Loyal Customer Rate
How to Calculate Loyal Customer Rate
Loyal Customer Rate = Number of Repeat Customers / Total Customers
Example of Loyal Customer Rate
10. Customer Lifetime Value
How to Calculate Lifetime Value
Example of Customer Lifetime Value
More Customer Retention Metrics to Consider
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Content: Perhaps they're also overlooking chances to generate "easy money" with less effort and fewer resources. The irony is that those companies which haven't created a customer-specific marketing strategy or a customer success plan are inherently raising their opportunity costs -- and their risk of losing customers. Yet another reason for these missteps could be that the data needed to assess customer retention, as well as identify areas of improvement, isn't easily accessible. This post was written to help with that. Read on for an explanation of key customer retention metrics, including how to calculate them and why they're important to your customer success strategy. Customer Retention Measurement
Customer retention measurement refers to the steps taken to uncover and document how well a business is retaining customers and their revenue. This is done by looking at key customer retention metrics like customer lifetime value and churn rate. Organizations track success in this area to see how well they are meeting customer needs and if they are continuing to earn their business over time. Marketing, sales, customer service, and even product management teams can all benefit from customer retention data. This information helps each team fine-tune their contribution to the customer journey and create more delightful experiences for your user base.