Customer retention
Customer retention is the ability to keep existing clients buying over time, usually measured as the share of clients who are still active after a set period.
How it is measured
Take the clients who were active at the start of a period, ignore the new ones and count how many of the original group are still buying at the end. If 300 of 400 remain, retention for that period is 75%. This is a made-up example. Retention and churn are two sides of the same number.
Many companies also look at cohorts: clients who first bought in the same month, tracked over time. Cohorts show whether retention is improving or getting worse.
Why it matters
Keeping a client is usually cheaper than finding a new one. A retained client buys again, often spends more and recommends the company to others. Over years, retention decides whether the business grows on a solid base or keeps refilling a leaking bucket.
Retention also reflects the whole company, not just sales: delivery, service, response speed and whether promises are kept.
Typical mistake
Thinking about retention only when clients start leaving. By then the reasons are already in place. Another mistake is relying on discounts alone. Price helps for a while, but clients who stay only because of a discount leave at the first better offer.
A quiet risk is a client base that lives in reps’ personal phones. When a rep leaves, clients drift away with them, and retention drops for reasons no one sees in reports.
What to do
Measure retention by cohort and segment. Keep regular, useful contact with existing clients, not only sales offers. Make sure every client relationship belongs to the company, and that a change of rep does not break it.
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