How to measure and increase customer retention.

You’ve poured your heart and soul into building your business, product or app. Spent months refining and perfecting it, getting it ready for market but you’re forgetting one thing… Customers. Without customers and users, you don’t have a business at all.

Before you start throwing money into a fancy growth marketing cup, make sure you’ve inspected it for cracks first. There is no point in spending money acquiring new customers if you can’t manage to keep the existing ones.

Remember the old marketing cliche “It’s more affordable to keep a customer than acquire a new one”? Well, it’s a cliche for a reason. Spending money on sealing the cracks with save you time and money in the long run. But, how do you know if your customer retention game is weak or strong?

CUSTOMER RETENTION
Fact: Retaining a user is 5x more cost effective than acquiring a new one. Which is why keeping track of your users and their journey is essential. To do this, and make better-informed decisions, you need accurate data.

Here is a helpful way to work out what your customer retention rate is. Once you have an idea, you can set goals for yourself to improve this.

[ (TC - NC ) / SC ] x 100

TC = Total Customers at the end of the period you’re measuringr
NC = New Customers during the period you’re measuringr
SC = Starting Customers at the start of the period you’re measuring

Let’s say you had 1200 customers on the 1st January. You acquired 300 users in January. At the end of January, you had 1400 customers.

[ (1400 - 300) / 1200] x 100 = 91.67 Retention Rate

Now that you have given your retention rate some thought it’s time to look at what a potential new customer retention curve could look like over time. This will help you identify if any alarm bells should be ringing.

Your business acquires 100 new customers each week. During week 1, only 30 people use your services/product again. This means your retention of week 1 is 30%. During week 2 only 20 people use your service/product, this means your retention rate is 20%.
Some things to consider when looking at your retention rate.

Firstly, a drastic drop indicates that customers are interacting with your service/product once and not again.

Secondly, depending on the nature of your business and the frequency of use, you should aim to have a continued steady stream of users interacting with your business.

WHAT HAPPENS NOW?
Once you’ve taken a deep dive into your retention rates and your retention curve, you can use this data to drive your decision making when determining the cause of the retention problems and how to solve them.

Here are four stepping stones to consider when your start patching up the cracks in your cup to increase retention rates:
AUDIENCE - You may be targeting the wrong people. audience with your product or your ads.
EXPERIENCE - New customers might not know what action you want them to take.o do straight off the bat.
COMMUNICATION - Customers might need a gentle nudge to return to your product/service.
MESSAGING - If you’ve used the wrong messaging, it means customers might not get what they’re expecting.
Analysing the data you gather correctly, in conjunction with taking a deeper look at the customer journey is one of the cornerstones to improving customer retention, business growth and ultimately, revenue.

Source: https://aerialscoop.com/blog/articles/how-to-measure-and-increase-customer-retention/