What is customer retention rate? How to measure it practically (without going through all customers individually)? What can retention rate tell us? How can it improve our business?

1. MEASURE CUSTOMER
RETENTION RATE
USING SALES DATA YOU ALREADY HAVE
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2. CUSTOMER RETENTION RATE
• Calculated via a simple formula
• From sales data that you already have
• Helps you improve your business
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3. RETENTION RATE FORMULA
Retention
Rate
Number of Current Customers
Number of All Customers
transacted in the last X days
• Current Customers: we retain their business and
expect them to purchase in the future
• All Customers: includes current and former
customers, but only to a certain point in the past;
otherwise the rate will keep going down.
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4. DATA NEEDED TO CALCULATE RATE
• At least: Sales data linked to individual customers
• Needed to calculate basic rate
• Extra: customer geographic and demographic
data.
• Enables segmentation and helps find areas for
improvement.
• Where you can get this:
• Accounting software, such as MYOB and Quickbooks
• Almost any online shopping cart
• Your CRM
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5. DATA SAMPLE
Source:
Quickbooks
Transaction
Report
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6. RETENTION RATE ANALYSIS
Introducing
another
status - “At Risk”:
Customers who
have not
transacted so
long, we are not
sure they will
come back
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7. DRILL-DOWN TO FIND PROBLEM AREAS
Notice the
problem in
Queensland
What caused low retention rate in Queensland?
Long delivery time? Poor service? We cannot say from this data.
We can list all recently lost customers from that state and ask them.
It is good to know whom to ask!
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8. RETENTION RATE DRILL-DOWN BY:
Consumer
demographic:
• age and gender
• children?
Business profile:
• size
• industry
Behaviour:
• customer value
segment
• purchase frequency
• products sought
Communications
• complaints
• interests
• preferences
Geography:
• country
• state / province
• city
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9. ANALYSE YOUR DATA!
• Before you invest in CRM, Loyalty programs, “single
customer view” and so on.
• Start with the data you already have – sales!
• Extract data from Quickbooks, MYOB, shopping
carts, POS – we can help you read data from
anything that generates it!
• Immediate value – find problem areas quickly.
• Then drill-down and collect more information, but
only when and where it is needed
• Visit www.withIQ.biz and contact us
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