Important Metrics To Monitor Customer Retention
Customer retention gives your business stability. If you have a list of profitable customers, your business will flourish in the long run. Now, the question is- How to monitor customer retention effectively? The first step is to select the appropriate metrics. Monitoring and improving the correct metrics is essential for formulating an actionable plan for customer retention.
Net revenue retention (NRR) tells you how much you are earning from the existing customers over a specific period. It is significant because it indicates whether your retained customers are profitable or not. Often the customer retention rate for some companies is high, but few customers downgrade their plans. That means the number of existing customers is the same, but the revenue you earn from them has decreased. Your aim should be to increase the revenue and thus improve the NRR. For SMB, the ideal NRR is 90+%, and for big companies, NRR should be 100+% only.
The churn rate tells you how many people cancelled their subscriptions. It talks about the loss in terms of customers. As a SaaS business owner, you understand the pain of losing customers. Thus, you need to monitor the churn rate and take action. Find out why people are quitting and solve their problems by providing improvements. Strategize to lower your churn rate and build a solid and loyal customer base.
The number of repeat customers divided by the number of total customers gives you the loyal customer rate. It is necessary to identify your loyal customer base to target them during upselling or cross-selling. The Loyal Customer Rate is just a number. However, you can go beyond this and attempt to understand your customers. You can combine conversational data with these metrics and find out about the attributes of your loyal customers. It will help you define audiences for future marketing campaigns. Monitor the metrics and keep learning about the loyal customers to impress them.
Customer lifetime value is a crucial annual metric. It tells you how much your business gains from each customer in a year. You can calculate customer LTV by dividing the average revenue per customer by the average lifespan of the customer. It will give you insight into the behaviour of the retained customers. You can monitor this metric and improve the average revenue and average lifespan. The more a customer stays, and the more a customer pays, the more profitable it is for you.
NPS tells you if your existing customers will help you gain new customers. If you have succeeded in retaining a decent percentage, your NPR tends to be high. It is simple to calculate. Just send out feedback forms to the loyal customer base, asking them if they would recommend your services. The answer would be on a scale of 0-10. Once you get all the answers, sum up and divide with the total respondents. Your NPR reveals the strength of the relationship between the business and the customer. If they are willing to spread a good word, they will stay for long. It keeps you motivated to retain more customers.
If you combine multiple metrics, you can even forecast the trends. You will get a better picture of your business’s future. However, it is too much work for a businessperson. Furthermore, these are number-based analytics. To retain more customers, you will need conversational data as well. You need to monitor the stats and also understand the customer personas at the same time. Don’t Worry! We are here to take the burden off your shoulder. Let Adaptive Pulse deal with the analytics and present actionable data insights for better customer retention. You focus on the planning, and we will collect the data and prepare insightful reports for you.
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