{"id":32166,"date":"2020-06-24T00:00:00","date_gmt":"2020-06-24T00:00:00","guid":{"rendered":"https:\/\/hyken.com\/how-to-measure-customer-retention\/"},"modified":"2024-01-18T09:26:00","modified_gmt":"2024-01-18T09:26:00","slug":"how-to-measure-customer-retention","status":"publish","type":"post","link":"https:\/\/hyken.com\/customer-service-training\/how-to-measure-customer-retention\/","title":{"rendered":"How to Measure Customer Retention"},"content":{"rendered":"\"Complicated<\/a>\r\n\r\nGet ready to do a little math. While not my typical lesson, this is very important. It\u2019s about customer retention\u2014which can lead to customer loyalty.\r\n\r\n\r\n\r\nLoyal customers<\/a> are important to all businesses regardless of industry or size\u2014large, small, B2B or B2C. Most businesses know their numbers, but do they know the right numbers? It\u2019s easy to measure customer satisfaction at different levels. We find out how they liked our experience. We know that if they liked the experience, that is the first step in getting them to come back. The \u201cgetting them to come back\u201d number is different than the \u201cwere you happy with us?\u201d number. I\u2019d love for customers to rate our business as a five out of five every time, but the number that is almost as important\u2014maybe even more so\u2014is the one that proves to us that the customer came back. That\u2019s your customer retention number.\r\n\r\nIf this is of interest to you\u2014and it should be\u2014then get out a pad of paper and a pencil. It probably wouldn\u2019t hurt to have a calculator, either. Let\u2019s get started.\r\n\r\nAccording to Zendesk<\/a>, the customer retention rate measures the number of customers a company continues to do business with over a given period of time. It\u2019s a percentage of existing customers that maintain loyalty to the business within that window of time.\r\n\r\nThe formula for calculating customer retention is pretty simple. First, you need three pieces of information:\r\n
    \r\n \t
  1. \u201cS\u201d \u2013 the number of existing customers at the S<\/u>tart<\/em> of the period of time.<\/li>\r\n \t
  2. \u201cN\u201d \u2013 the number of N<\/u>ew<\/em> customers added in the period of time.<\/li>\r\n \t
  3. \u201cE\u201d \u2013 the total number of customers at the E<\/u>nd<\/em> of the period of time.<\/li>\r\n<\/ol>\r\nSubtract the number of new customers added over a period of time (N) from the total number of customers at the end of that same period of time (E). That\u2019s E minus N. Divide the resulting number by the number of customers at the start of the time period (S). Finally, multiply that number by 100 and you\u2019ll have the percentage of customers who stay.\r\n\r\nIn other words: [(E – N) \u00f7 S] \u00d7 100 = customer retention rate.\r\n\r\nObviously, the closer you are to 100% the better. Very few companies can say, \u201cWe retain 100% of our customers!\u201d But if you\u2019re close, you\u2019re in the zone. When you continue to bring in new customers and get existing ones to return, that\u2019s a recipe for success and growth!\r\n\r\n\r\n
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