You may assume that your regular customers Leverage customer loyalty are likely to buy the same services and products or have much higher expectations. However, regular customers experiment with what they buy and have lower expectations. A regular customer is less likely to report things like support issues or shipping delays. According to Outbound Engine, they are also seven times more likely to try your new product line.
Increased order value : New customers tend to lower their order value, while repeat customers use larger shopping carts. Repeat customers spend 30% more than new customers.
Increase ROI : Since it’s easy to re-convert existing belarus phone number data customers, a good customer retention plan can increase your ROI. In fact, according to Harvard Business Review, increasing your retention rate by just 5% can increase your profits from 25% to 95%.
Reduce Costs : Depending on your strategy and the products your company offers, the cost of acquiring new customers may be prohibitive. The cost of acquiring new customers is 25 times higher than retaining customers who have already won once. If you don’t want to spend money on lead generation, try focusing on customer retention as it helps control your sales and marketing budgets.
Improved Sales Success Rates : When you customer focus: a complete guide to putting the customer at the center of your business convert new customers, it can be difficult, but when you sell to one of your existing customers, it tends to be much easier. According to Outbound Engine , the average success rate for converting new customers across various industries is around 5%-20%. In contrast, the success rate for upselling to existing customers is around 60%-70%.
Calculating Customer Retention Rate
Let’s say you want to understand how well your business is doing and how you can benefit from customer retention. Then you can take the time to calculate your customer retention rate. To calculate your company’s customer retention rate, gather the following data:
New Clients : How many new clients have you acquired during this time?
Time Period : Determine the time range, such south africa numbers as one month, quarter, or year. This formula applies to any time period. However, you will get more information if the sample size is larger. If you only get a couple of clients each month, you should use a longer period of time, such as every quarter or once a year, as your time frame.
End Customers : How many customers will you have by the end of the term?
Existing Customers : How many current customers do you have at the beginning of this period?
Once you have the above information, you can use this formula to calculate your customer retention rate:
For example, if your business started with 200 customers, you acquired 100 new customers, and ended the quarter with 250 customers. Your retention rate would be 75%.
Once you have calculated your company’s customer retention rate, you can compare it to industry standards. With a quick comparison, you can see whether your company’s performance has exceeded the average or whether you can benefit from significant improvements.
Overall, according to HubSpot , the average customer retention rate for most industries is less than 20%. However, the target tax rate for certain industries is significantly higher. For example, according to Profit Well , the IT services retention rate is 81%, while the insurance industry has a retention rate of only 83% of customers. The average retention rate for professional services companies is 84%, while the retention rate for retail businesses is 63%.