One of the best ways to keep growing your business is to not lose the customers you have.  Understanding the key behaviors that drive customer retention in your company is critical if you hope to be successful with this effort.  In this article, we are going to explore customer retention examples.   These examples might help spark some thought about what you can do to retain customers.

Number of Accounts Sold Per Month

How many of your customers are buying something from you each month?  Is this number trending up or down?  I have seen cases where, even in a case where sales are increasing, customers are leaving.  I remember in one company I worked with, they had a record sales year yet lost over 15% of their customer base.   How did this happen?  It was a perfect storm.  A large customer had a record year and just happened to buy products with a high unit cost.  In their effort to make sure they were taking care of that customer, many others became upset with getting products late, and as such, they left.  Sales backslid the following year when the big customer didn’t have another record year, and the other customers were gone.

So how do you track it?  This one of the simpler customer retention examples to implement.  I recommend to clients that they track the number of accounts who bought something each month.  I also recommend looking at a 12 month moving average of that data.  It is helpful to look at this over a 3-5 year period so you get a clear view into the direction that your business is heading.

New and Existing Account Growth

Where is your growth coming from?  Are you selling more to your current customers, or are you selling more to new customers?  The next two customer retention examples focus on awareness of how revenue is moving.  To do this, we split the customers into 2 segments.  For existing accounts, we look at the sales trends for customers whose account was open for 12 or more months when the measurement was taken.  For new account growth, we look at sales dollars for customers who were not yet open for 12 months.

These customer retention examples are a little tougher to measure.  It takes a little bit of extra programming work since you have to consider whether or not the customer was new or existing for each month that is being looked at.  It is not impossible, and once you get it figured out, the results can be very insightful.

I recommend you track these 2 metrics and compare them to each other on a regular basis.  This can help you quickly understand if you are both growing your existing accounts.  It also helps you see if you are getting meaningful growth from your new accounts.

Annual Churn Rate

How many customers bought from you last year, but not this year?  The last of the customer retention examples will answer this question.  Churn is a percentage that tells you how much of your customer base is leaving your each year.  For example, if you have 1,000 customers one year, and of those, 850 buy from you in the next year, then your churn rate for that year is 85%.

Measure this stat by counting the number of customers you sold to in a given year.  Then count the number of customers you sold to the next year, but you have to remove the customers whose account was opened in that year.  Then divide the year two number by the year one number and then you have a simple churn rate.

Last Thoughts on Customer Retention Examples

To sum up, sales revenue alone will not always tell you what is happening.  Looking deeper into your customers’ behavior can help you understand what is really going on.  We recommend looking at metrics that measure these key behaviors.  The customer retention examples we focus or are:

• Number of accounts sold per month
• Existing Account Growth
• New Account Growth
• Customer Churn Rate

Whenever possible, be sure to look at the trends.  A 12 month moving average of these numbers can help you see what track you are on.  Don’t be fooled by thing everything is going swimmingly, when the reality could be something quite different.  Atlas Precision can help you develop these metrics in your business.  Feel free to contact us for help if you are struggling to get this in place.