Customer Retention Analysis: What is it and How to do it? - SmartKarrot

Customer Retention Analysis: What is it and How to do it?

What is a customer retention analysis? And, how does it help a business in the right direction? Read on the blog to get valuable insights of the same.

Customer Retention Analysis

While it is your customers that the success of your business thrives on, it makes perfect sense to retain them and do whatever it takes to fulfill their satisfaction. On that note, a well-planned customer retention analysis helps you to know what glues your customers in and what rips off the glue. If that is what you have been wondering off-late, this blog will surely bring you some solace. In this blog, we will uncover what is customer retention analysis and how to do it the right away.

What is Customer Retention Analysis?

Customer Retention Analysis is the process of studying metrics to understand how and why customers leave your business or churn. It helps to gain insights on a couple of notes which are pertinent to your business, this includes:

  1. How many customers have churned?
  2. Why did they churn?
  3. When are they most likely to churn?
  4. How has churn affected your business?
  5. How to implement customer retention strategies?

Let us now look at the most fundamental question here, how does customer retention analysis actually work? Is it any cakewalk or will it be a synonym to rocket science? Let’s find out.

How does Customer Retention Analysis work?

To have a great grasp of studying customer behavior and their associated churn rates, we will have to start with the basics first. A recent report states that as much as 52% of the customers believe that retention is the key driver for revenue. Here are some strategies that will do the needful.

  1. Identify where and why customers churned
  2. Pick your Retention Key Performance Indicators (KPIs)
  3. Ascertain Retention Behaviors
  4. Flag Red-alert Behaviors that indicate at-risk Customers
  5. Get Direct Feedback from Clients
Customer retention drives revenue
Source: SuperOffice

Identify where and why customers churned

Analyzing and studying your customer behavior will reveal a lot about the likelihood of a customer churn. If you are starting to see retention rate fluctuations, you may have a big reason to worry. A well-defined client retention analysis will show you the path to augment the retention rates at the most vulnerable part of the client’s lifecycle. By streamlining your business strategies to tackle the common churn reasons, you pave the way to enhanced client retention rates efficiently.

Pick your Retention Key Performance Indicators (KPIs)

It is time to know which metrics work in your favor and which don’t. Some of the most common customer retention KPIs include:

  1. Customer Churn Rate
  2. Net Promoter Score
  3. Customer Lifetime Value
  4. Customer Engagement Score

Each of these metrics will immensely help you in figuring out why your customer wants to leave your business, will they recommend your business to others or not and how well involved or engaged are they with your product. When you are starting to see the red light already, gear up and reach out to those clients at the earliest. It could be your caring and serious attitude that will let the customers have a second thought in their heads before churning out – who knows?

Ascertain Retention Behaviors

You want to track the clients who have stayed with you and used your products for a long time now. One good thing here is whichever retention metrics you have deployed till now has worked in your favor. That explains the retention, right? Kudos to you for that. Now, all you need to do is compare their patterns with the ones who churn out. Soon, you will start to see what glues your customers and revs up the customer stickiness score. Additionally, you can also conduct feedback surveys and know where is the gap. And when you finally know where the gap is, you have solved half the mystery there itself.

Flag Red-alert Behaviors that indicate at-risk Customers

By tracking customer behavior and reviewing certain patterns, you can develop an idea of what indicates future churn and build better customer segmentation. When you sit to study the already churned customer behavior with a magnifying lens, you stand a chance to stop more churn from happening. You may also deploy early warning systems that can tell you when a customer is at-risk of churning away. This way, you can channel your efforts into retaining the ones who might churn away any instant.

Get Direct Feedback from Clients

As mentioned, feedbacks are a good way to find out where is the gap. With feedbacks and surveys, you can get valuable insights into what you are doing right or wrong. Also, it could be possible that their suggestions will work in your favor and can bring out the unseen advantages of your product that you had not explored before. It is proven that unhappy clients offer more realistic feedback than satisfied ones – so leverage that. By directly asking your clients, you get to know what can be improved as well.

Parting Thoughts

Customer retention analysis is an integral half of your marketing strategies and client retention. When you learn to take complete advantage of this by tracking customer behavior, delving into the key metrics, soliciting feedback, you actually pave the way to reduced churn rates, enhance customer satisfaction and rev up the revenue graph in no time. You can see a flourishing business only when you have your beloved customers to back that up. Remember, they are the backbone of your business and you need them no matter what. Follow these strategies as mentioned above and you will soon start to see the good results at the earliest.

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