Did you know that it’s easier (and often less expensive) to keep a client, than it is to find a new one? Customer loyalty is all about bridging that gap between what a client expects from your business, and what your company is actually doing to meet those expectations – or better yet, exceed them! A lack of customer retention is like a leaky bucket: there’s not much point filling your business up with new clients if the current ones keep dropping out the other end. A well-rounded marketing strategy includes paying close attention to customer retention metrics – and the best way to retain a customer is to make sure that they’re happy.
Taking Client Pulse-ChecksBefore we delve into how to measure customer retention rates, we need to take a look at some methods for understanding and improving customer satisfaction. After all, if they’re not satisfied, your customers aren’t going to stick around to be measured! There are a number of customer satisfaction metrics you can use to help determine just how happy your buyers are; and faithfully engaging in customer surveys – whether they’re in-app, post-service, or strictly email-based – is a great way to get this exploration started. Some of the key elements you should try to uncover with your surveys include:
- how well you’ve lived up to your customers’ expectations overall,
- how likely they are to buy from you again, and
- whether or not they’d recommend your company to someone they know
How to Measure SatisfactionUsing the established customer service metrics below in conjunction with your client surveys, will give you a valuable opportunity to improve both your customer relations and potentially, your sales. Customer Satisfaction Score (CSAT): As the most basic of the satisfaction metrics, the CSAT involves asking your customers to rate their overall satisfaction with your product, service, or business, based on a range of numbers. Ideally, the smaller a range you provide, from 1 to 3 or from 1 to 5 for example (dissatisfied through very satisfied), the easier the question will be for your clients to answer. Your company’s CSAT score is the average of these rankings. Customer Effort Score (CES): When it comes to helping your company generate repeat business, the CES can be a handy tool. This score is based on how easy or difficult your customer found it to deal with your company, or to have a problem fixed. Research shows that the more effort a client has to invest in getting an issue resolved, the less likely they are to remain loyal to your business. The metric generally involves a series of numbers from 1 to 7, ranging from very low effort, to very high. Net Promoter Score (NPS): Online or off, a bad review can be toxic. In a world that revolves around customer promotion, your ideal goal should be to not only keep your customers coming back, but to have them bring their friends. The NPS measures how likely a client is to recommend your business to someone they know, and it’s usually based on a scale from 1 to 10. Your score is derived from subtracting the percentage of fault-finders from the percentage of promoters.
Customer Retention MetricsOne potential way to reveal weak points in your overall marketing scheme is to track the hard results of your direct mail campaign. Another is to measure how many of the customers your campaign brought in are continuing to buy from you. Calculating customer retention relies on two important metrics:
- Customer retention rate (CRR)
- Dollar retention rate (DRR)