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Retention, the measurable loyalty of a customer to its service provider, is one of the main Key Performance Indicators. Within Retention you’re looking at the latest group of your active consuming customers in compare to previous periods. Describing it within a metaphor, a bucket with holes and poured with some fluid, the leftover is the so called Retention. The Churn is on its opposite side, depending on the way you look at a scenario.
Many managers associate a high Retention rate (low Churn rate) with high or increasing revenue. But this is not always the case, it depends on which business you run. Retention can be something different, depending on if you run a supermarket or an online casino. I call it Smart Retention (within Smart CRM), this is a Key Success Indicator.
If a customer returns a good or service, it decreases your revenue from man power up to the decrease of the value of the (virtual) product itself. The most important is a proper and smart segmentation of your customers. There are customers who take benefit of a given service within each business. These kind of customers could only decrease your revenue, this is why you have to exclude these customers or letting them (at least) not benefit from your service.
You cannot choose your own family members,but you can choose your customers.
Each customer with anger can easily create a sh*tstorm via its voice or fingers within the virtual world. Individual offers apart from the static offer to all customers is a simple solution for such situations. Breaking it down to the main point, a decreasing Retention (increasing Churn) can also lead to an increasing revenue!
This might sound contradictory, but it’s not! You cannot choose your own family members, but you can choose your customers.
Running Smart Retention within your service is just one important part which has to be taken into consideration. If you are not running a business by yourself, then you have to climb a next mountain, and that might be even a bigger than the previous one. You have to convince your manager or your business partner that Smart Retention is the proper way to increase your revenue even with less customers than in previous periods.
By Jakob Wegrzyk | Sliema, MT | 31/12/2019