{"id":19782,"date":"2021-09-27T00:00:00","date_gmt":"2021-09-27T07:00:00","guid":{"rendered":"https:\/\/www.helpshift.com\/glossary-term\/what-is-customer-retention\/"},"modified":"2024-02-23T01:05:16","modified_gmt":"2024-02-23T09:05:16","slug":"what-is-customer-retention","status":"publish","type":"glossary","link":"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/","title":{"rendered":"Customer Retention"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#Why_is_Customer_Retention_Important\" title=\"Why is Customer Retention Important?&nbsp;\">Why is Customer Retention Important?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#How_to_Measure_Customer_Loyalty_Retention\" title=\"How to Measure Customer Loyalty &amp; Retention\">How to Measure Customer Loyalty &amp; Retention<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#Retention_rate\" title=\"Retention rate\">Retention rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#Churn_rate\" title=\"Churn rate\">Churn rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#Lifetime_value\" title=\"Lifetime value\">Lifetime value<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#How_to_Improve_Customer_Retention\" title=\"How to Improve Customer Retention\">How to Improve Customer Retention<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#Personalize_interactions\" title=\"Personalize interactions\">Personalize interactions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#Shorten_response_times\" title=\"Shorten response times\">Shorten response times<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#Simplify_customer_service\" title=\"Simplify customer service\">Simplify customer service<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#Multi-channel_support\" title=\"Multi-channel support\">Multi-channel support<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#How_Helpshift_Supports_Customer_Retention\" title=\"How Helpshift Supports Customer Retention\">How Helpshift Supports Customer Retention<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-retention\/#Additional_Resources_For_Customer_Retention\" title=\"Additional Resources For Customer Retention\">Additional Resources For Customer Retention<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<p>Understanding the fundamentals of customer retention and loyalty is critical. Customers have more choices than ever before, so companies need to take customer satisfaction seriously if they want to build up a loyal following.<\/p>\n\n\n\n<p>What does the term \u201ccustomer retention\u201d mean? Broadly speaking, it refers to the steps an organization takes to get existing customers to continue doing business with the company. To win at customer retention, brands also have to consider customer loyalty \u2013 achieved by creating a relationship with customers on a human level \u2013 and customer experience, which relates to designing a pleasant, easy, and frictionless user experience for customers.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_is_Customer_Retention_Important\"><\/span>Why is Customer Retention Important?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Experts estimate that enlisting a new customer is between 5 and 25 times more expensive than maintaining an existing relationship. So, from the financial standpoint alone, retaining loyal customers makes sense.<\/p>\n\n\n\n<p>It\u2019s also quite time- and labor-consuming to nurture new customers \u2013 especially if the lead qualification process isn\u2019t very effective. This isn\u2019t to say that companies shouldn\u2019t focus on new customers; instead, there should be a balance between acquiring new customers and building strong relationships with current customers.<\/p>\n\n\n\n<p>There\u2019s one more reason to invest in customer relationships: happy customers become loyal brand advocates. They\u2019ll choose their favorite brand over all alternatives, even if it means doing extra work or paying more money. They\u2019ll evangelize to friends, colleagues, and family members, which provides the company with valuable word-of-mouth advertising. And they\u2019ll stick with the company through any growing pains.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Measure_Customer_Loyalty_Retention\"><\/span>How to Measure Customer Loyalty &amp; Retention<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Customer retention and loyalty can be measured in two ways: via metrics and via behavioral evidence. Behavioral evidence is harder to find and measure; it involves things like social media listening (scanning and analyzing mentions of your brand in social media, which is often done by software). Brands also consider signals like how long the customer has been with the company and how often the customer makes purchases.<\/p>\n\n\n\n<p>The metrics involved in measuring customer loyalty are self-explanatory. They include:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Retention_rate\"><\/span>Retention rate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is basically the number of customers (as a percentage) that an organization has lost over a given time frame; the higher the retention rate, the better.<\/p>\n\n\n\n<p>To figure out a customer retention rate, the formula is:<\/p>\n\n\n\n<ol>\n<li>The number of customers at the start of the time period. We\u2019ll represent this as <em>S<\/em>.<\/li>\n\n\n\n<li>The total number of customers at the end of the time period (<em>E<\/em>).<\/li>\n\n\n\n<li>The number of new customers gained during the period (<em>N<\/em>).<\/li>\n\n\n\n<li>Subtract the new customers (<em>N<\/em>) from the ending total of customers (<em>E<\/em>).<\/li>\n\n\n\n<li>Divide the result by <em>S<\/em>.<\/li>\n\n\n\n<li>Multiply that result by 100. That\u2019s the customer retention rate.<\/li>\n<\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Churn_rate\"><\/span>Churn rate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Churn rate is the percentage of customers who stop doing business with a company for any reason. You can also think of it as the number of customers lost over a certain time. You can calculate a churn rate as follows:<\/p>\n\n\n\n<ol>\n<li>Find the number of customers at the start of the specified time period. We\u2019ll represent this as <em>S<\/em>.<\/li>\n\n\n\n<li>Find the number of customers lost over the specified time period (<em>L<\/em>).<\/li>\n\n\n\n<li>Divide <em>L<\/em> by <em>S<\/em>. That\u2019s the churn rate; lower is better.<\/li>\n<\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Lifetime_value\"><\/span>Lifetime value<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Lifetime value \u2013 also called customer lifetime value, CLV, CLTV, or LTV \u2013 is the amount of profit businesses can expect to generate from a customer over a given time. There are various ways to calculate CLV; the most basic is to:<\/p>\n\n\n\n<ol>\n<li>Find the average revenue for the customer.<\/li>\n\n\n\n<li>Multiply that by the time frame or the customer\u2019s projected lifespan with the company.<\/li>\n\n\n\n<li>Subtract customer acquisition costs from the result.<\/li>\n<\/ol>\n\n\n\n<p>The above customer loyalty metrics help companies gauge the effectiveness of their customer retention activities. They also help identify which customers provide the most value to the company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Improve_Customer_Retention\"><\/span>How to Improve Customer Retention<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Improving customer retention goes hand-in-hand with improving customer satisfaction and experience. There are many ways companies can do that; a few of the most universal include:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Personalize_interactions\"><\/span>Personalize interactions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Relationships are essential to customer satisfaction; the more a brand can show they understand the customer as an individual, the stronger that relationship will grow.&nbsp;<\/p>\n\n\n\n<p>Brands can achieve personalization by tailoring their messaging and outreach to each person\u2019s preferences. This can include the content, timing, and delivery channel of the message. It\u2019s also important to personalize direct interactions, e.g. by keeping accurate records of customer service issues. Whatever will make the customer feel seen and valued as a person will nudge them toward brand loyalty.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Shorten_response_times\"><\/span>Shorten response times<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>No one likes to wait. And in today\u2019s digital age, customers\u2019 tolerance of long wait times is becoming increasingly short. If customers are so important, why make them wait so long for help?<\/p>\n\n\n\n<p>You can mitigate much of this problem by adopting technologies like chatbots and live chat that shorten wait times. And while some waiting is inevitable, a stellar customer service experience can make up for it and leave clients very happy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Simplify_customer_service\"><\/span>Simplify customer service<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In a related vein, no one wants to jump through hoops to resolve a problem. As mentioned earlier, eliminating friction and pain points in the customer experience is part of building a good customer retention program. Businesses should examine their current customer service processes and identify any areas that can be combined or removed. The simpler and faster the customer service experience is, the less frustrated customers will be.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Multi-channel_support\"><\/span>Multi-channel support<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Today\u2019s customers have multiple devices \u2013 and what\u2019s more, they expect a seamless customer experience on any platform they use. Most brands use multiple methods (email, webchat, forums, various social media channels, phone, text, etc.) to connect with customers. Thus, it makes sense to ensure customers can get help through these channels instead of relying solely on a website support ticket, email, or phone call.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Helpshift_Supports_Customer_Retention\"><\/span>How Helpshift Supports Customer Retention<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Helpshift is helping teams improve their customer retention by enhancing the customer experience. No matter the channel of interaction or the stage of the customer journey, companies should deliver a seamless, unified experience.&nbsp;<\/p>\n\n\n\n<p>Helpshift provides the tools customer support teams need to create streamlined, non-siloed, and frustration-free experiences. By leveraging chatbots and help bots to route and solve common issues, customer service requests can be resolved even faster. Automatic issue categorization ensures queries are escalated to the right team member while leveraging help bots to direct towards useful resources and FAQs in the knowledge base empowers customers to self-serve.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Customer satisfaction is also increased with in-channel survey request capabilities. With CSAT, customers can rate their support experience and provide feedback while still actively engaged in messaging. This way, customer feedback can be conveniently and accurately captured in the moment, avoiding the need for follow-up requests.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Additional_Resources_For_Customer_Retention\"><\/span><strong>Additional Resources For Customer Retention<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Product: <a href=\"https:\/\/www.helpshift.com\/products\/help-bots-automation\/\">Help Bot Automation<\/a><\/p>\n\n\n\n<p>Product: <a href=\"https:\/\/www.helpshift.com\/products\/chat-conversational-help\/\">Chat and Conversational Help<\/a><\/p>\n\n\n\n<p>Glossary page: <a href=\"https:\/\/www.helpshift.com\/glossary\/churn-rate\/\">What is Churn Rate?<\/a><\/p>\n\n\n\n<p>Glossary page: <a href=\"https:\/\/www.helpshift.com\/glossary\/what-is-customer-satisfaction\/\">What is Customer Satisfaction?<\/a><\/p>\n","protected":false},"author":8,"featured_media":0,"template":"","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[1],"acf":[],"taxonomy_info":{"category":[{"value":1,"label":"Uncategorized"}]},"featured_image_src_large":false,"author_info":{"display_name":"Erik Ashby","author_link":"https:\/\/www.helpshift.com\/author\/erikhelpshift-com\/"},"comment_info":"","_links":{"self":[{"href":"https:\/\/www.helpshift.com\/wp-json\/wp\/v2\/glossary\/19782"}],"collection":[{"href":"https:\/\/www.helpshift.com\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/www.helpshift.com\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/www.helpshift.com\/wp-json\/wp\/v2\/users\/8"}],"version-history":[{"count":2,"href":"https:\/\/www.helpshift.com\/wp-json\/wp\/v2\/glossary\/19782\/revisions"}],"predecessor-version":[{"id":30292,"href":"https:\/\/www.helpshift.com\/wp-json\/wp\/v2\/glossary\/19782\/revisions\/30292"}],"wp:attachment":[{"href":"https:\/\/www.helpshift.com\/wp-json\/wp\/v2\/media?parent=19782"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.helpshift.com\/wp-json\/wp\/v2\/categories?post=19782"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}