Customer Retention

5 Metrics To Improve (And Measure) Customer Retention

As per Harvard Business Review research, improving customer retention rates by 5% boosts profits by 25% to 95%.

In general, it costs 5X more to acquire new customers rather than retain existing customers. Customer retention adds lifetime value to your brand, which brings enormous benefits to your company.

Have a look at the key benefits of customer retention:

  1. Save money on marketing campaigns
  2. Earn word-of-mouth referrals
  3. Increase profitability
  4. Sustain market competition
  5. Loyal customers are more forgiving
  6. Earn wiggle room to try new things
  7. Empower your business growth

Loyal customers are the assets of your business. Increased customer retention helps you to improve sales.

However, it is imperative to measure customer retention and find out techniques to improve retention. This blog is a comprehensive guide that offers insights into measuring and improving customer retention.

Customer retention has immense benefits for your business. But, do you know how to measure customer retention? 

How to Improve Customer Retention

Now, let’s look at the essential ways to improve customer retention:

#1. Customer Feedback

Listening to your customers is one of the most compelling ways to increase customer retention. For instance, you can always send surveys to customers and get their feedback. The survey results will provide insights into understanding your customers about their preferences. Also, you can identify if they are unsatisfied with any services. Once you find the pain points, resolve them as soon as possible to retain them in your business.

#2. Build Trust

Transparency is to build customers’ trust. The more transparent services you offer to customers, the more they will remain loyal to your business. It helps to eliminate the suspicions or anxiety your customers might have about the services or products they are buying.

#3. Increase Customer engagement

It is an impactful way to get customers’ involvement in your business. Offer them add-on benefits, encourage them to get referrals or conduct a contest. Engaging them with such events helps them to interact with your business. And, once they get delighted with your offerings, they are more likely to stay loyal to your brand.

#4. Offer Rewards

A customer loyalty program is an efficient way to acquire brand-loyal customers. When customers make a purchase, you can offer various distinct perks such as reward points, coupons, special discounts, etc.

Moreover, you can create a loyalty program to encourage them to make frequent purchases. Actually, offering some kind of reward is a great way to keep them stay connected with your business.

#5. Value Proposition

When you are designing a loyalty program, think about offering value to your customers. Do not merely offer a free gift. Make them feel valuable with the rewards, and they will remain in your business. With the value proposition, your customers will emotionally connect to your brand. Thus, they will not turn to your competitors.

Hence, you need to identify what your customers want so that you can keep them in your business. Understand them and follow the above-mentioned ways to improve customer retention.

Further, according to a survey, more than 70% of loyal customers will recommend your product to their friends or family members. It means that once you have a large number of loyal customers, you can get more sales.

Hence, as mentioned earlier, it is beneficial to nurture current customers instead of getting new customers. But, in order to get more brand-loyal customers, you need to measure customer retention periodically. And, after finding the results, adopt the right strategies like creating a loyalty program to improve customer retention.

How to Measure Customer Retention

Here are the key methods to measure customer retention for your business:

#1. Customer Retention Rate (CRR)

Measuring a customer retention rate will give you insights into the ratio of brand loyal customers: whether they increased or decreased.
CRR = ((E-N/S) x 100
E = Number of the customer at the end of a certain period
N = Number of new customers obtained during that period
S = Number of customers at the beginning of that period
This formula will give you the exact number of retained customers. It is a good practice to measure CRR periodically. This practice will help you to get details on if you need to improve or change something to your offerings.

#2. Repeat Purchase Rate (RPR)

This prediction will help you to understand the brand’s loyal customers and their buying habits.

RPR = Number of customers who purchased more than once

Total number of customers

The results will give acumens to the customers who are actually brand loyal. You can measure RPR weekly, monthly, or quarterly as per convenience. But, measure it regularly to adopt important changes.

#3. Customer Lifetime Value (CLV)

It is one of the fundamental stats to track customer loyalty. CLV is a determination of how valuable a customer is to your brand with an unlimited period as opposed to just the first purchase.
This metric enables you to surmise a reasonable cost per acquisition.

CLV = Annual profit from the customers – Number of years that they are a customer of the brand 

Cost to acquire the customer

#4. Registration

Registration prompts anonymous visitors to sign up for your loyalty program or connect with your business. This is the most vital step to engage and develop meaningful relationships with your potential customers.

Persuading people to register with your company lets you track their demographics and behaviours. This entitles you to build personalized experiences for your customers and increase loyalty to your company. You can encourage your target audience to register through an email campaign, newsletter subscription, in-store visit, etc.

According to a study, over 30% of customers stop doing business with a brand if they have received a bad experience. These statistics are an indication that, when you want to improve the customer retention rate, your services should provide superior customer services. Try to solve their problem as soon as possible to avoid customer churn. Also, do not leave unsolved customer queries at any point.


Measuring and improving customer retention is vital for businesses seeking sustainable growth and long-term success. By implementing effective strategies and monitoring key metrics, businesses can gauge the loyalty and satisfaction of their customer base.

At LoyaltyXpert, we have helped all types of businesses around the world with our various types of loyalty programs. If you want to improve customer retention, call us today to know how we can help.