You have an online business and you are getting monthly orders, why should you measure your customer retention?

Customer retention rate is the percentage of your customers that have bought from you in the past and still buying from you today.

You spent money to acquire your customers (advertising, content, influencers, customer support, etc)

And let’s say you got 1000 new customers today, sounds good?

Well not yet… because what’s important is how many of those customers come back to buy again.

Because remember you spent money to acquire those customers, and so far they only bought from you once — which means lower profit margins and slower growth.

It’s difficult to imagine the power of customer retention, so here is a graph to help you:

Here we can see 2 businesses, the red line is a business that retains 5% of their customers.

Which means out of 100 new customers, only 5 of them come back to buy again.

And in the blue line a business that retains 10% of their customers.

That doesn’t look like a lot more… but look at the difference in revenue over time.

Over the next 5 years, the 10% customer retention business will generate 1,400% more revenue.

That’s right: 1,400% more revenue.

Is your business more like the 5% or the 10%? the only way to know is to measure your customer retention.

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