More than just a post on how to track client retention or client churn rate…I want this post to be about WHY tracking your retention rate is so critical to the success or failing of your marketing agency.
- You can’t build a successful marketing agency if you don’t retain your clients.
- You won’t retain clients if you don’t provide great results (Return on Investment) and an outstanding customer experience.
- You won’t know how well you are performing in either of these areas if you don’t have a method for tracking and measuring client retention rates.
I’m a firm believer that if you provide great service and get your clients results (solid ROI) they will stay with you…and if you WOW them, they will refer you to their friends & colleagues. As I talk with other local agency owners I’ve come to the realization that many don’t really track their customer retention rates. Perhaps that’s because they don’t feel they have enough clients or maybe, they simply don’t know how.
In this post, I want to share a simple formula for tracking your client retention rate over time and would encourage you to run your retention numbers on a monthly, quarterly and annual basis. If you have a team be sure to share this number with them so everyone can get on-board with maximizing customer retention.
Formula for calculating client retention rate:
CRR = ((E-N)/S)*100
1. Number of clients at the end of a period – E
2. Number of new clients acquired during that period – N
3. Number of clients at the start of that period – S
You can set up a simple excel sheet that looks something like this:
|Number of clients at end of period||75||79||89||102|
|Number of new customers acquired during period||5||3||13||16|
|Number of customer at start of period||73||78||79||89|
** The Formula for the “Retention Rate” cell should read something like =((B2-B3)/B4*100)
Why Track Customer Retention Rates?
It’s very easy to focus on “new client acquisition” and set aggressive growth goals…but if you are loosing clients as fast as you are selling them then your not getting anywhere. Your like a hamster on a hamster wheel. You need to focus just as much (if not more) on retaining your existing clients as you do on getting new ones.
I’ve found the old axiom “what get’s measured get’s done” to be very true. If you and your team are measuring retention rates on a consistent basis then your overall client retention will improve.
Are you tracking client retention rates? Is this formula helpful? Please post your thoughts and comments below.