The Metrics That Matter for Customer Retention
Customer retention is critical for the success of any business today. And marketers agree that it’s 5 times more expensive to acquire a new customer than to retain an existing one. In fact, a business can be completely unsustainable without a loyal case of customers who stick around for the long haul. Many brands don’t know where to start when it comes to finding who their loyal customers are, let alone better retain them, yet this is key to reducing churn and making sure your best customers (aka, your most profitable customers) stay engaged.
It’s not necessarily important to measure all customers. What matters is retaining the best customers, and the customers with the most potential to become your best customers. So it’s important for all retention-focused businesses to gain a deep understanding of who these customers are. Some easy ways to do this are by looking at Customer Lifetime Value of your entire customer base, and finding that spend the most. Another important metric to look at is purchase frequency – customers who purchase often, even if not in large quantities, are incredibly engaged and produce predictable revenue. Of course, the metrics that matter for your business may look quite different.
Traditionally, marketing metrics were focused on clickthrough rates and time customers spent onsite, but today we know that these “vanity” metrics don’t often shed light on a company’s bottom line. By focusing on key metrics like Customer Lifetime Value, marketers will be better equipped to both identify their top customers, and focus on engagement with those high-value customers in order to retain them.
In order to grow a healthy customer retention-marketing program, there are 3 key strategies that are tried-and-true at increasing customer lifetime value, and decreasing churn. Any brand can adopt and adapt these strategies for their own marketing unit, and start achieving lift on the customer retention metrics that matter.
Looking for more insights on how to retain customers? Download our Definitive Guide to Predictive Marketing.