In addition to customer retention Key metrics for rate, it is important to track other performance indicators over time.
These metrics help to:
determine the scale of the problem;
adjust retention strategies;
assess customer loyalty;
provide an in-depth analysis.
Below, we will tell you what they are and show you the formulas.
Customer churn rate
Customer churn rate is the percentage of customers in a given time period who stopped using services or making purchases.
It helps you determine what steps to take when developing a retention strategy. The lower the score, the more effective the retention strategy.
Churn Rate Formula:
Customer churn rate = (Number of customers at the beginning of the period – Number of customers at the end of the period) / Number dataset of customers at the beginning of the period.
For example, at the beginning of the month the company had 100 customers, at the end of the month there were 90.
We consider = 100 – 90/100 x 100% = 10%
Customer lifetime value
Lifetime Value (LTV) is the amount of profit a customer makes over the entire time you work with them, and it helps evaluate i’ve written about this topic at length the effectiveness of acquisition channels and the level of customer loyalty.
LTV calculation formula: Customer value X their average lifetime
Example: A customer buys four america email list times a year and spends an average of $80
The lifetime value is calculated as LTV = $80 x 4 x 2 = $320
By building on LTV, you can improve your business profitability, customize your marketing strategy for customers with different LTV values, and improve customer retention.
Repeat purchase rate
Repeat Purchase Rate is the percentage of customers who made more than one purchase . It shows which buyer audiences are making more transactions and which ones are not.
Formula: Repeat Purchase Rate = Number of customers who made more than one purchase / Total number of customers
After that, you encourage loyal customers with additional discounts or bonuses.