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Customer Retention

 


Customer Retention and Cohort Analysis:

For a successful business new customers are very important; but what about existing customers ? If you can’t keep the existing customers, then why do you need new customers ?

There is a study shows that, companies or business which retain their customers by as low as 5% get an increase in profit by 25-95%. Therefore, you need to retain your customers to grow your business.

But customers retention is not something which needs strategies or policies only, but it needs an aid of something else called Cohort Analysis. Many business people are forgetting this very important part in creating best customers retention strategies.

However, why one should retain his or her customers ? A Guide Market Metrics explains that, you only have a 5-20% chance of selling to new buyers but a 60-70% chance of selling to your existing customers.

As it was elaborated prior, cohort analysis is highly needed before having customer retention strategies.

In Cohort Analysis; customers grouped in groups of the same characteristics such as; you group your customers according to their month of subscription, then make a follow up of those customers and see if they are still existing or they are leaving.

Cohort Analysis will help you to identify when your customers leave, how do they leave ? and why do they leave ? Therefore, after having a clear picture of how your customers behaving, then you can be able to make good strategies of retaining your customers.

Also in Cohort Analysis will help you to determine the Customer Loyalty  Value (CLV) rates and then set programs to keep these customers.

A Cohort Analysis can be done on tools like MS Excel, BI dashboards etc.

 


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