While learning about ways to keep the businesses ahead of their competitors, it is essential to know customer retention metrics. 

Firstly, we will briefly learn what exactly customer retention means and why it is important for a business even in years to come.

Customer Retention

Finding ways of customer retention through analytics

The word customer retention is self-explanatory. In simple words, it means the ability of a business or a brand to keep its customers. 

One-time sales are not that hard, but businesses’ real success is to keep the customers satisfied to buy again and again. This is known as customer loyalty.

There is a saturation of businesses and brands, and the customer can switch to other competitors who offer the same products and services. 

Therefore the importance of retaining and maintaining customer loyalty is essential. 

The cost of gaining a new customer is much more than the profit. On the other hand, the brands maintain their name and reputation because of the existing customers. Every business goes through the following stages: 

  • Acquiring  Customer
  • Engaging Customer
  • Retaining Customer


Many companies do not focus on customer satisfaction intensely. Their marketing and sales strategies are more revenue-focused or cost-efficient.
Though retaining customers is not easy, around 5% of loyal customers can boost 80% of a business. Therefore it is worth the effort in the long run. 

During such activities, the first-time sale can be easy, but the customers will quickly switch to other brands, which is not appropriate for any business. The chances are that the brand will eventually run out of business. 

Read more about customer retention
Customer Acquisition cost – The Metric that Determines your Company’s Fate

Metrics of Customer Retention

The numerical score and variables that help a business to analyze customer feedback statistically are customer metrics.  

You can easily calculate these with the help of ratings, stars, and numerical scores from 1 to 10. It is not just about the scores that a customer gives to a business; it is about the deeper meanings behind those scores that will make or break a brand image. 

The need to analyze this data is to see customers’ opinions for a particular product or a service. There are many ways by which the responses and customer feedback are investigated and monitored. Each business has its own way of measuring customer metrics. 

Following are the general steps and tips in general that will provide the necessary guidelines required for customer retention: 

Calculate Churn Rate

First and foremost, figure out how many customers make a purchase only once. Figure out why the customers are not coming back. This is known as the churn rate; that is why the customer stops purchasing from your brand. 

No one has a perfect and ideal churn rate, but the approximately 8-10% is considered well enough for a business. 

Churn rate is calculated by;

Churn Rate%= The number of customers a business lost/The number of customers they had at the beginning of a specified period.

It is evident that a business will lose its customers over time, but it is also essential that new customers keep coming and stay. 

Hence, it is important to know the churn rate so that a business, with the help of data and analysis of past mistakes, can retain existing as well as new customers. 

Read more about customer retention
Customer acquisition vs Customer retention: Which is best for growth?

Potential Loyal Customers 

Secondly, segregate the customers who buy from your brand more than once. It will help in many ways because these customers are potential loyal customers. Also, they will be highly responsible for ‘word of mouth’ marketing. When customers recommend the brand to others, sales and revenue are likely to increase to the maximum extent. 

Then the business needs to figure out how much the majority of the customers spend while buying from your brand. This helps the brand in pricing according to the brand image and majority demand. All these factors will maintain the attractiveness of the brand. 

Already Existing Customer Management 

Monitor how many customers are already retained and value them further provide these customers with discount cards and memberships to remain loyal to your brand.

Optimize the Response Time 

The frontline responsiveness of a business is very crucial. Especially now, in the coming years, the companies are shifted towards digital platforms. It is effortless for a customer to switch to some other brand. 

Hence, the response time now is around 16 seconds. If a business responds to a query or even acknowledges the customer for choosing them within seconds, the customer will most probably stay and buy; therefore, unless the product or service is delivered, every minute counts. 

Survey For Customer Feedback

There are many ways in which businesses can have customer feedback. 5-star ratings can do this. Each star from a customer means something and helps analyze the customer retention rate. 4 and 5-star ratings indicate that the customer will come back.  

Another method is the NPS( Net Promoter Score). This is the score from 1 to 10. If the customers are scoring 1 to 5, that means they are not satisfied, and the retention rate will be less. 

If they give 7 or 8, it means they are satisfied but might not suggest others. The customers giving 9 or 10 to a brand are real promoters and loyal customers.

Read more about customer retention
Customer Acquisition Strategies for All Business Types including Startups

Customer Success Management(CSM)

The criteria for monitoring and analyzing the feedback varies according to the businesses. If a business or a brand will only compare its past performance with the current then and not with the external competitors, then it will not improve to the maximum extent. 

The whole service and performance will compromise if the variables and monetization are not well calculated. The business should continuously work on the competitive advantage to retain its customers. 

Adaptations Of Customer Retention Metrics In 2021

We have gone through some best customer retention metrics, and now we will briefly conclude how these strategies adapt in 2021. Due to pandemic, businesses have shifted more to digital platforms. Therefore each step of customer retention is to be monitored digitally. 

Google Analytics is a tool that can help in this regard. With the help of artificial intelligence, new customers, existing and loyal customers are easy to segregate. 

Brand engagement in 2021 is also digital. Video and content that interest the target audience are used for engaging customers. There are uncountable small startups and online businesses everywhere, due to which the competition is extreme.

If these startups will avoid the importance of retaining the customers, those businesses’ life-line is most probably smaller than others.

Even if brands provide certain products or services, the key to becoming a successful brand is by keeping the customers satisfied every time due to pandemics and loss of jobs throughout the world. 

The buying power of most of the population has decreased. That is why the pricing and quality at the same time, be fair.

Any business that manages to keep the customer is successful. To do our part for the business community during this time of crisis, we’re offering a Free Digital Marketing Review. Check it out here