retention metrics

Picture this: our friend Bob, a savvy business owner, was once like a hamster on a wheel, constantly chasing new customers and watching his acquisition costs skyrocket.

Sounds familiar?

Well, you’re not alone! Retaining your existing customers in the bustling business bazaar is crucial and far more cost-effective than acquiring new ones.

So, let’s dive into the top 10 retention metrics and the magic of the Customer Value Journey (CVJ) that can transform your customer relationships.

Imagine a world where your customers aren’t just transactional figures but loyal fans of your brand, spreading your business far and wide.

So, strap in as we unravel the secrets to cutting customer acquisition costs and boosting your bottom line.

Which Costs More: Customer Acquisition or Retention?

If you answered the former, you’re correct!

Yes, focusing on customer acquisition can help you consistently grow your number of clients. However, while doubling down on customer acquisition increases your customers, customer retention efforts will allow you to make as much use of the value of the customers that are already buying from you.

Below are data that show how customer acquisition is more expensive than retaining customers that your business already has:

  • 5-7x More Costly: Depending on the industry, acquiring a new customer can cost five to seven times more than retaining an existing one (Forbes).
  • 5x the Cost: It costs five times more to attract a new customer than to keep customers already supporting your business (Invesp).
  • 60% Selling Success Rate: Selling to customers who already know your brand is seen to be 60-70% more successful than the rate of success of selling to new customers, which is only 5-20% (Invesp).
  • Costs 6x Less: Compared to acquiring new clients, customer retention is six times faster and less expensive (ExpressAnalytics).

These data clearly show one common thing: retaining customers is cheaper. The statistics above reveal some eye-opening facts about customer acquisition and retention costs.

While it’s generally accepted that retention is cheaper, the extent to which it is more cost-effective is staggering. The takeaway? Do not overlook your customer retention efforts.

10 Key Retention Metrics You Should Monitor

The following are the ten crucial measurements businesses need to track to understand customer retention performance. These metrics provide valuable insights into how well a company maintains its customer base and what strategies it can employ to improve.

1. Customer Retention Rate

This metric shows the percentage of customers a company retains over a specific period. It’s calculated by dividing the number of customers at the end of the period (minus new customers) by the number of customers at the start, then multiplying by 100.


CPR = ((customers at the end of the period – customer acquired during the period you’re measuring) / customers you have at the start of the period) X 100

2. Customer Churn

This is the opposite of the retention rate. It measures the percentage of customers who stop doing business with a company over a certain period.


CCR = (lost customers/total customers at the start of the period) x 100

3. Revenue Churn

Revenue churn is the amount of recurring revenue lost due to customer churn. It addresses not just losing customers but also downgrades in a subscription plan.


RCR = ((MRR beginning of month – MRR end of month) – MRR in upgrades during month) / MRR beginning of month

*MRR – Monthly Revenue Rate

4. Existing Customer Growth Rate

This metric indicates how much your existing customers’ value is growing. This could be due to upselling or cross-selling.


ECGR = ((current number of customers – previous number of customers) / previous number of customers) x 100

5. Repeat Purchase Ratio

This measures the number of customers who have made more than one purchase compared to those who have made only one purchase.


RPR = number of repeat purchase customers/total number of customers

6. Product Return Rate

This metric tracks the percentage of products that customers return. High return rates might indicate dissatisfaction.


PRR = (number of units returned/number of units sold) x 100

7. Days Sales Outstanding (DSO)

DSO measures the average number of days a company takes to collect payment after a sale has been made. A high DSO can indicate issues with cash flow or customer satisfaction.


DSO = (average accounts receivable/revenue) x 365

8. Net Promoter Score (NPS)

NPS measures customer loyalty and satisfaction. It’s based on the question: “On a scale of 0-10, how likely are you to recommend our company to a friend or colleague?”


NPS = number of promoters – number of detractors

9. Time Between Purchases

This metric calculates the average time between purchases for each customer. Shorter times can indicate higher customer loyalty.

10. Loyal Customer Rate

This tracks the percentage of your customer base that makes repeat purchases. It’s a good indicator of customer loyalty.

Benefits of Addressing Customer Retention Through The CVJ

The Customer Value Journey (CVJ) is a marketing framework that outlines the path customers follow from discovery to conversion and beyond. It can be applied to retention metrics in several ways:

  1. Understanding Customer Behavior: The CVJ provides valuable insight into how customers interact with your brand. This understanding can help you identify key points in the journey where customers are likely to churn, allowing you to address these issues proactively.
  2. Improving Customer Experience: By mapping out the CVJ, you can identify areas where the customer experience may be lacking and make improvements. A better customer experience often leads to higher retention.
  3. Creating Personalized Experiences: With the CVJ, you can segment your customers based on their stage in the journey and tailor your communications accordingly. Personalization can increase engagement and loyalty, thereby improving retention.
  4. Measuring Success: The CVJ allows you to track specific metrics at each journey stage. These metrics can help you measure the success of your retention strategies and make data-driven decisions.
  5. Identifying Opportunities for Upselling and Cross-selling: The CVJ can help you identify when a customer might be ready for an upsell or cross-sell opportunity, which can increase customer lifetime value and improve retention.

In conclusion, the CVJ is a powerful tool for improving customer retention. It enables you to understand your customers better, personalize their experiences, measure your strategies’ success, and identify growth opportunities.

Supercharge Customer Retention with the Customer Value Journey

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When it comes to customer retention, the Customer Value Journey (CVJ) provides a clear roadmap for keeping customers engaged and moving forward.

The CVJ consists of eight phases, each with specific strategies for guiding customers toward becoming loyal brand advocates. The stages of Engage, Subscribe, Convert, Excite, Ascend, and Advocate all play a critical role in retaining customers and building long-term relationships with them.

By providing engaging content, valuable offerings, unforgettable experiences, and other tactics supporting retaining customers, businesses can keep their customers returning for more.

However, it’s important to remember that each business and audience is unique, and the CVJ should be adapted accordingly to achieve the best results.

Let’s say that you run a brand that helps people with self-development.

Here’s what you can do for each stage, from ENGAGE to ADVOCATE, to make sure that you keep your existing customers wanting more:

ENGAGE Stage: Foster meaningful interactions with your audience.

  • Write high-quality blog posts or articles about self-improvement, mental health, motivation, etc.
  • Send engaging emails or newsletters packed with practical tips and inspirational stories.
  • Create interactive tools on your website, like a personal growth quiz or a goal-setting calculator.

SUBSCRIBE Stage: Encourage potential customers to subscribe for more value.

  • Offer a free ebook or guide on a relevant personal development topic in exchange for their email.
  • Promote an exclusive newsletter that offers subscribers early access to new content or products.
  • Provide a free premium service trial like one-on-one coaching or an online course.

CONVERT Stage: Turn your subscribers into paying customers.

  • Promote time-limited deals on your personal development courses or products.
  • Offer a discounted or bundled package of your services for first-time customers.
  • Provide a free consultation or demo of your coaching service.

EXCITE Stage: Make sure your new customers are excited about their purchase.

  • Start a welcome email series for new customers, introducing them to different resources or services they might find useful.
  • Offer personalized recommendations based on their interests or past purchases.

ASCEND Stage: Encourage repeat business and higher-value purchases.

ADVOCATE Stage: Turn your happy customers into advocates.

  • Encourage customers to leave online reviews or testimonials about their positive experiences.
  • Start a referral program, offering discounts or other perks when they refer friends.
  • Launch a user-generated content campaign, like a social media contest where customers share their personal development stories.

In Summary

In a tough market, retaining customers is more cost-effective than constantly seeking new ones. The Customer Value Journey (CVJ) framework offers a comprehensive roadmap to enhance customer retention.

By understanding and mapping out each phase of the CVJ, businesses can pinpoint areas of improvement, personalize customer experiences, and foster long-term loyalty. This approach not only reduces acquisition costs but also boosts overall profits.

Furthermore, the CVJ’s adaptability ensures it caters to the unique needs of every business and audience. In essence, leveraging the CVJ is a strategic move for any business aiming to build a kingdom of loyal customers.

Embracing this journey can truly transform customer relationships and elevate business success.