Marketing
Customer retention rate
Helps managers answer: To what extent are we keeping the customers we have acquired?
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Customer retention rate vs Customer turnover rate
These models cover closely related ground. Compare their purpose, scope, practical guidance, and supporting resources to choose the better fit.
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Marketing
Customer turnover rate
Helps managers answer: How well are we retaining customers?
Read articleChoice logic
Use this when.
Answer the key performance question: “To what extent are we keeping the customers we have acquired?”
Answer the key performance question: “How well are we retaining customers?”
Extracted signals
Strengths, limits, and pitfalls.
Customer retention rate
- Define and count the customer consistently before calculating the rate. A telecom provider must decide whether one person with phone, tablet, mobile and broadband contracts is one customer or several, and whether a family contract represents one relationship or multiple people.
Watch for
- Never treat retention as a complete customer health measure. Pair it with customer profitability and customer satisfaction so that high retention caused by switching friction is not mistaken for a healthy, valuable relationship.
Customer turnover rate
- Create a clear save and win back process for customers shown to be vulnerable, but connect every offer to the reason the relationship is at risk. A discount cannot repair recurring service failure, and a retention team cannot compensate indefinitely for a broken product or policy.
Watch for
- Separate voluntary churn, where a customer chooses to leave, from involuntary churn caused by events such as relocation or death, and from forced churn initiated by the company for reasons such as non payment. The organisation can influence these categories in very different ways.
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