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How to measure Customer Retention?


It has been found that customer retention has more impact on profits than market share, economies of scale and other variables that are considered to provide competitive advantage to a firm. In fact, it has been found that companies, which reduced customer defections by 5 per cent, could boost profits from 25 per cent to 85 per cent.

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Steps to Improve Customer retention

Step1: Define What Customer retention means to your business, market, or industry:  Frequency of purchase, Inquiries, Turn-around-time requirements on service, notification of success are a few of them.

Tip:  The definition of customer retention that is in terms of percentage share of customer savings, borrowings, spending, or purchases is more useful than just absolute numbers of customers.


Step2: Measuring Customer retention :  Without measuring customer retention it cannot be managed.

Tip:  Technology solutions can be used to measure and monitor the customer retention.  It can be by the number of times a customer logs into their self-service site, or could be the number of Quotes generated for the customer.


Step3:  Identify why your customer defect?  Most popular reasons are mis-aligned Price, Product, Service, market, Technology, organizational


Step4:  Monitor the defects, analyze data and fix pertinent issues


Step5:  Start with step1.  This is an ongoing process


SedTec can help you with solutions that will enhance customer retention

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