Customer Retention Explained In 2 minutes


Oct 2, 2019 • 4 min read


In this article, we will give you an informative crash course on customer retention in under 2 minutes, just enough knowledge for you to embark on your customer retention strategy journey!

For more in-depth knowledge about each of the sections, do visit our other articles too!

What is Customer Retention? 

It is the percentage of customers that come back to your company.

You can read more at our previous article What is customer retention, and why is it important?

Why do Companies Want to Increase Customer Retention? 

Customer retention is the lowest hanging fruit for company growth. Compared to customer acquisition, customer retention is more cost-savvy and is proven to have a higher-dollar payoff.

According to Bain & Company, a mere 5% increase in customer retention can lead to a 25 to 95% increase in revenue.

Now that you know why companies are jumping on the increase customer retention bandwagon, we will move to why is customer retention easier as compared to acquisition.

Why is Retention Easier As Compared to Acquisition? 

A simple way of explaining this is, Imagine strengthening bonds with someone that already likes you compared to trying to build a bond with a total stranger who knows nothing about you.

Which means that customers that you retained are more agreeable with you as they understand the service that you provide and genuinely like your brand. Which will also result in a shorter and simpler customer journey brief.

customer loyalty

Here's Why You May Just be Focusing on the WRONG Customer

Businesses are way too focused on generating new leads, adding brand new customers to their list, thinking that it is the best method to increase sales, additionally overestimating their customer service provided.

Whereas for certain companies, they award their employees for the number of leads they manage to hunt and reward them accordingly, thus encouraging employees to focus more on acquisition.

Forbes research has also proven: 

  • 80% of companies rated their customer service as superior 
  • 8% of customers rated companies' customer service as superior 

Companies that believe that their customer service is already excellent, tend to not spend much money and time investing in it, resulting in poor customer service and low retention rates. According to Forbes, businesses lose $75 Billion a year due to poor customer service.

Customer Retention Calculation

Now, before we go to how to retain your customers, we have to monitor customer retention rates in your company. Below is a simple formula to do so.



If you need practical examples, scoot on over to another article that we wrote, How to calculate customer retention rate.


Customer retention is easier with analytics and dashboards to monitor your customer's behaviors, here at TADA, we specialize in providing customer retention platforms and double your profit per customer!

If you are ready to fill your banks up to the brim or dying to know how to stop breaking your banks to retain your customers?

Reach out to us today and let's talk about skyrocketing revenues!

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Kerenjni is a writer from Singapore who writes articles...considering that you are reading this, it makes perfect sense, doesn't it? Other than writing, she is pretty much obsessed with bubble tea, just like any normal person would be...right?