Customer retention is the ability of a customer to buy from you again. Either a particular product or from your business entirely within a specified period.
For instance you can say customer X buys certain amount of product or spends certain amount of dollars or comes to my premises X times a month.
Customer retention is a key metrics used to measure product, service or business performance as a whole. As an entrepreneur, you should keep a keen eye on changes to customer behavior in regards to how often they come to your business place.
If your customers keep buying from you at a good or high rate as a business or a particular product, they say that product or your business has a good or high customer retention rate.
If they buy and go somewhere or stop using a certain particular product, they say your customer retention rate is low for either that product or the entire business.
For a instance a customer can buy from you a certain product once and changes to another product or stops using that product, they say that product has a low customer retention.
Customer retention metric is easier to measure in some business lines or some particular products. Eg service line businesses. For instance a barber shop can tell a certain customer shaves after every week, or two weeks or after a month.
As a barber myself during my teen years to early 20s, I understand the value of repeat customers. I worked as barber and later owned a barbershop. In that business line, you usually know most if not all the regular customers by face, hair style and the shaving intervals.
You know after shaving a certain customer, he will come back after 2 weeks. And when he misses, it’s either he went to shave somewhere or he wasn’t around.
The same applies to products and other services like restaurants etc. If a consumer of a certain product or services maintains repeat purchases, you usually notice there frequency. When they stop coming or don’t come like before, it has something to do with them getting similar product or service somewhere.
Which means they’re being offered better value – quality and price, etc, somewhere. It’s upto you to find out what made them leave, is it your product or service quality or price? If possible reach out to them and ask.
Customer retention metrics tells you how particular service or product on your shelf or your whole business is performing as seen from the eyes of the customer.
How many times does particular products get repeat buys from same customers?
How many times does same customers keep coming to buy from you?
Having these metrics coupled with customer feedback helps you to decide what to improve, what to discontinue, what to stock more or less.
”Your repeat customers are one of your business’s most important assets. Selling to a first time customer is hard, but a repeat customer requires less efforts and resources” ~ Fahad Bruhan Jr
Every successful business knows the value of repeat customers and handles them with the most care. If they move away, they go with your repeat income.
Do you know your customer retention rate for particular products or the whole business?
If it high, what are you doing to maintain it? If it’s low, what could be the causes, what are you doing to improve it?
Next time will share some tips on how to improve customer retention rate for particular products and a business as a whole.
Thanks for reading, don’t forget to share your thoughts in the comments. You can as well share the post with someone who will benefit from it.
This writeup appeared on Afripreneur Nation website.
To know about Fahad Bruhan Jr, read the about page.
