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Customer Retention Rate

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Table of Contents

What is Customer Retention Rate?

Customer Retention Rate is a key performance indicator for contact centers and it measures the number of customers a company retains over a given period of time. Customer Retention Rate is the reverse side of Customer Churn Rate which measures the percentage of customers a company has lost over a given period of time.

In contact centers, customer retention is generally defined as any activity the center undertakes to keep customers from leaving.

Customer Retention Rate1

01

Why is it Important to Track Customer Retention Rate?

When asked about the effect of customer service on the customer’s loyalty to a brand, 50% responded saying it was very important, and 40% responded saying it was somewhat important. This reflects that contact center performance can have a significant effect on a company’s customer retention rate.

Contact centers, especially inbound contact centers, are made dedicated to improving an organization’s customer service. One KPI that can reflect whether a contact center has good customer service or not is Customer Retention Rate. Tracking customer retention is the first step organizations can take in order to maintain a good customer retention rate.

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02

How is Customer Retention Rate Calculated?

There are many ways to calculate customer retention rate but the most commonly used formula is:

Customer Retention Rate = ((EC-NC)/SC)*100

Where,

EC denotes the number of customers at the end of the period,

NC denotes the number of new customers during that period,

and SC denotes the number of customers at the start of the period.

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03

What is a Good Customer Retention Rate?

According to American Express (2017), 33% of Americans will consider switching companies after just one instance of poor customer service. 

The higher the customer retention rate, the better it is for an organization/contact center as it reflects that customers are satisfied with its service. Though companies will always aim for a 100% rate, there are benchmarks set based on “industry standard”. For instance the American Banking industry has an average customer retention of 75% whereas in retail it is 63%. For a company in the American Retail Industry, a 70% retention rate may be considered an achievement, however for a bank, it won’t be considered to be good as it is worse than their competitors.

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04

How can Contact Centers Improve their Customer Retention Rate?

These are a few strategies contact centers can use to improve their customer retention rate:

Create Customer Follow Up Programs

It is cheaper to retain existing customers than to acquire new customers. Creating customer follow up programs can help you identify customer satisfaction levels and ensure unhappy customers are tended to.

Offer a mix of Channels Choices

According to Invesp (2019), 89% of customers are retained by companies with strong omnichannel customer engagement. By providing customers with a variety of channels they can reach you through, it is easier for them to get in touch with your contact center.

Don’t keep Customer in a Call Queue for too long

Contact centers should ensure they’re appropriately staffed to avoid long call queues that frustrate customers. Additionally, contact centers should set a maximum wait time and offer customers with a “call-back” option so that they aren’t kept waiting on call for long instead.

According to Hubspot (2020), when they have a service question, 90% of customers rate an “immediate” response as important or very important. 60% of them define “immediate” as 10 minutes or less. 

Conduct Exit Surveys

It is important to ask customers why they want to leave in order to identify flaws in customer service. This can help avoid losing more customers in the future by helping identify problems before they can be rectified.

Create Proactive Outbound Campaigns

Contact centers should take a proactive approach through outbound calls investigating potential service problems. These will bring light to smaller issues customers may be facing before they escalate.

Improve Advisor/Agent Knowledge

Calling a contact center and being routed to an agent who sounds clueless and is unable to help can really frustrate customers. This is a common problem within contact centers where there is a lack of consistency in knowledge among contact center teams and agents. It is very important that contact centers ensure that their agents are capable of addressing any issues and concerns that customers may call with.

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FAQs

It is a metric which specifies whether or not your contact center agents are adhering to the schedules they have been assigned

Schedule adherence can be measured by taking the total time an agent in your call center is available and dividing it by the time they are scheduled to work for. It is expressed as a percentage.

Yes it does. Adhering to a schedule ensures that your research projects stay on course, and that your interviewers are using their time productively.

Voxco provides a large range of telephony solutions which help monitor and improve agent productivity, and helps them adhere to their schedules.

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