The plan to increase client retention focuses on critical metrics that offer comprehensive insights into customer loyalty and satisfaction. Customer Retention Rate is a primary metric, reflecting the percentage of customers retained over time, with a target benchmark of 70-85%. By enhancing customer service and implementing feedback systems, we aim to improve client loyalty. High retention directly correlates with long-term business success.
Net Promoter Score (NPS) evaluates customer loyalty through their likelihood to recommend the company, aiming for a score between 30-70. Engaging with promoters and addressing detractors is essential for increasing referrals and enhancing customer experience. Meanwhile, Customer Lifetime Value (CLV) emphasizes the importance of customer profitability, with a benchmark of $5,000 - $20,000, by optimizing engagement and targeting strategies.
Churn Rate, standing at a 5-10% benchmark, helps identify customers who cease using services. By analyzing churn reasons and improving onboarding, we aim to reduce customer loss. Lastly, the Customer Satisfaction Score (CSAT), with its 80-90% benchmark, gauges product/service satisfaction, guiding improvements in service quality and interactions to boost customer satisfaction rates.
Top 5 metrics for Improve client retention
1. Customer Retention Rate
The percentage of customers a company retains over a specific period, calculated by dividing the number of customers at the end of a period by the number at the beginning, minus new customers acquired during the period.
What good looks like for this metric: 70-85%
How to improve this metric:- Enhance customer service and support
- Implement a customer feedback system
- Develop a loyalty rewards program
- Regularly update customers with relevant information
- Personalise communication and offers
2. Net Promoter Score (NPS)
Measures customer loyalty by asking how likely they are to recommend the company to others on a scale of 0-10.
What good looks like for this metric: 30-70
How to improve this metric:- Gather detailed feedback from detractors
- Address customer complaints promptly
- Enhance the customer experience
- Engage with promoters to boost referrals
- Regularly survey and track changes in scores
3. Customer Lifetime Value (CLV)
The total revenue expected from a customer over the entire future relationship, calculated by multiplying the average purchase value by the purchase frequency and average customer lifespan.
What good looks like for this metric: $5,000 - $20,000
How to improve this metric:- Increase average order value with upselling
- Improve repeat purchase rates
- Extend customer lifespan through engagement
- Refine targeting for profitable customers
- Optimise pricing strategy
4. Churn Rate
The percentage of customers who stop using a company's products or services during a specific period.
What good looks like for this metric: 5-10%
How to improve this metric:- Identify and analyse reasons for churn
- Enhance onboarding processes
- Increase engagement with targeted campaigns
- Offer special incentives to at-risk customers
- Provide proactive and personalised support
5. Customer Satisfaction Score (CSAT)
A measure of customer satisfaction with a product or service, often determined through surveys where customers rate their satisfaction on a scale from 1 to 5.
What good looks like for this metric: 80-90%
How to improve this metric:- Seek feedback regularly and act on it
- Train staff for better customer interactions
- Enhance product or service quality
- Implement a clear and efficient complaint resolution process
- Provide value-added services or products
How to track Improve client retention metrics
It's one thing to have a plan, it's another to stick to it. We hope that the examples above will help you get started with your own strategy, but we also know that it's easy to get lost in the day-to-day effort.
That's why we built Tability: to help you track your progress, keep your team aligned, and make sure you're always moving in the right direction.
Give it a try and see how it can help you bring accountability to your metrics.
