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Customer Retention: Statistics, Strategies, and Calculations (CRR vs DRR)

We share quite a bit about acquisition but not enough about customer retention. Great marketing strategies aren’t as simple as driving more and more leads, it’s also about driving the right leads. Retaining customers is always a fraction of the cost of acquiring new ones.

With the pandemic, companies hunkered down and weren’t as aggressive at acquiring new products and services. Additionally, in-person sales meetings and marketing conferences severely hampered acquisition strategies at most companies. While we turned to virtual meetings and events, many companies’ ability to drive new sales was frozen solid. This meant that strengthening relationships or even upselling current customers was critical to keeping revenues going and their company afloat.

Leadership in high-growth organizations were forced to pay closer attention to customer retention if acquisition opportunities were diminished. I’d hesitate to say that was good news… it did become a painfully obvious lesson to many organizations that they had to shore up and strengthen their customer retention strategies.

Customer Retention Statistics

There are many invisible costs that come with poor customer retention. Here are some stand-out statistics that should increase your focus on customer retention:

  • 67% of returning customers spend more in their third year of buying from a business than in their first six months.
  • By increasing your customer retention rate by 5%, companies can increase profits by 25 to 95%.
  • 82% of companies agree that customer retention costs less than customer acquisition.
  • 68% of customers will not return to a business after having a bad experience with them.
  • 62% of customers feel the brands they are most loyal to are not doing enough to reward customer loyalty.
  • 62% of US customers have moved to a different brand in the last year due to a poor customer experience.

Calculating Retention Rate (Customer and Dollar)

Not all customers spend the same amount of money with your company, so there are two means of calculating retention rates:

  • Customer Retention Rate (CRR) – the percentage of customers you keep relative to the number you had at the beginning of the period (not counting new customers).
  • Dollar Retention Rate (DRR) – the percentage of revenue you keep relative to the revenue you had at the beginning of the period (not counting new revenue). A means of calculating this is to segment your customers by a revenue range, then calculating the CRR for each range.

Many companies that are highly profitable can actually have low customer retention but high dollar retention as they shift from smaller contracts to larger contracts. Overall, the company is healthier and more profitable despite losing many small customers.

The Ultimate Guide to Customer Retention

This infographic from M2 On Hold details customer retention statistics, why companies lose customers, how to calculate customer retention rate (CRR), how to calculate dollar retention rate (DRR), as well as detailing ways to retain your customers:

  • Surprises – surprise customers with unexpected offerings or even a handwritten note.
  • Expectations – disappointed customers often come from setting unrealistic expectations.
  • Satisfaction – monitor key performance indicators that provide insight on how satisfied your customers are.
  • Feedback – ask for feedback on how your customer experience could be improved and implement those solutions that have the greatest impact.
  • Communicate – continuously communicate your improvements and the value that you bring your customers over time.

Merely satisfying customers will not be enough to earn their loyalty. Instead, they must experience exceptional service worthy of their repeat business and referral. Understand the factors that drive this customer revolution.

Rick Tate, Author of The Service Pro: Creating Better, Faster, and Different Customer
Customer Retention Infographic

Disclosure: I’m using my Amazon affiliate link for Rick Tate’s book.

Douglas Karr

Douglas Karr is the founder of the Martech Zone and a recognized expert on digital transformation. Douglas has helped start several successful MarTech startups, has assisted in the due diligence of over $5 bil in Martech acquisitions and investments, and continues to launch his own platforms and services. He's a co-founder of Highbridge, a digital transformation consulting firm. Douglas is also a published author of a Dummie's guide and a business leadership book.


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