When a company starts losing customers, that’s bad, and it’s time for action. A loss of customers can mean fast-declining revenues that may be the death knell for your business if not addressed immediately. But what should you do? To “just hire someone new” isn’t as simple as it sounds. Strategic recruitment is a complex process that involves time, energy, and a lot of pre-planning that many companies don’t have the bandwidth to pursue. Unfortunately, this isn’t something you can ignore.

In this article, we give you the low-down on customer retention—what it is, how it impacts business revenue, and the best customer retention strategies. Hiring a customer success professional can quickly turn things around, but what is it and how can you find one? CulverCareers can help! 

Before you hire a traditional sales recruitment agency, learn more about CulverCareers’ retention consulting and additional services. 

What is Customer Retention?

Also called churn rate, it’s a measure of how many customers stick with a company over a certain period. The customer retention rate (CRR) is expressed as a percentage, and it’s driven by perceived value. Many factors are involved, from convenience, personalization, and product quality to price, support, omnichannel engagement, and customer experience (CX). 

How to Calculate Customer Retention Rate

The CRR is calculated with the following formula: CRR = [(# of Customers at End of Period – # of Customers Added in That Period) / # of Customer at the Start]  x 100. For example, if you start with 100 customers, gain 20 customers during that time, and end up with 70 customers, your CRR would be [(70-20)/100) or 50%. That isn’t good. However, each industry has a different baseline for what a good retention rate is. While the average customer retention rate for media and professional services is 84%, for financial and cable industries, it drops down to 25%. 

How Does Customer Retention Impact Revenue?

Research by Frederick Reichheld of Bain & Company (who invented the Net Promoter Score, a key CX and business growth metric), found that a 5% improvement in customer retention increased a company’s profits by 25% to 95%. The retention rate shows how successful your business is—not just at bringing in new customers but also satisfying the existing ones. Studies have shown that it’s five to 25 times more expensive to acquire a new customer than it is to keep an existing customer, depending on the industry. Bringing in new customers will cost money and cut into your profits.

How to Calculate Profitability

There are several metrics used to calculate profitability. The simplest is net income, which is total revenue minus expenses for a particular period. This is also known as a company’s bottom line. In addition to CRR, there are other customer retention metrics, such as customer lifetime value, Net Promoter Score, and existing customer revenue growth rate. These measure your customers’ engagement with your products or services. And they will have a strong bearing on profitability.  

How to Improve Customer Retention

To improve your company’s retention rates, you must optimize the customer experience, focusing on what your customers need and want. Today’s savvy customers expect businesses to cater to their needs. In their 2023 State of Customer Engagement Report, Twilio found that 66% of the 6,000 customers surveyed would ditch a brand that didn’t provide a personalized user experience. Among Gen Z consumers, that number rose to 75%.

There are many ways to do this, but here are the top methods.

Offer a Personalized Experience

Create targeted email campaigns that engage customers on a personal level. Use information about buying habits and interests to serve them the products, services, and content they want.

Incentivize Customers with Loyalty Programs

Use points and rewards to encourage consumers to engage with your company and brand. Reward them for referring new customers.

Collect and Respond to Customer Feedback

Encourage customers to send questions, requests, and complaints. Answer inquiries and make changes to your offerings to better meet their needs. Encourage reviews and testimonials.

Provide Omnichannel Customer Service

Meet customers where they are, whether it’s by phone or through text messaging, email, social media, or your company website. Ensure a seamless experience across devices.

Educate and Inform Your Customers

Establish a company blog with subject matter expertise (SME) articles and detailed information about your business and its offerings. Consider a knowledge base and a community forum.

Hire a Top-Performing Customer Success Specialist

Bring a professional on board whose sole job is to cater to the needs of your customers. A customer success specialist (CSS) helps customers understand your company and its products and services.

What is a Customer Success Specialist?

This type of professional is devoted to the customer’s satisfaction and retention, and, as the title suggests, their success. Customer success jobs involve more than just customer service. A CSS manages the entire customer lifecycle, from acquisition through retention, so their ‘area of expertise’ is everything that your customers want and need! They’re proactive, helping customers achieve their goals. A customer support person helps the customer when they have a problem. 

How Does Customer Success Affect Retention?

Simply put, customer success enhances customer satisfaction by attending to their individual needs, which often leads to higher retention. Having proactive, rather than reactive, engagement with your customers makes all the difference in the customer experience. 

CulverCareers Streamlines Customer Success Recruitment

Now that you see how important customer retention is for your business, and how a customer success specialist is singularly focused on customer satisfaction, how do you find one of these mythical beings? You can try to write a job description and post it to job boards, fielding dozens or hundreds of inquiries—or you can hire an expert in customer success recruitment. 

At CulverCareers, we’re more than a sales recruitment agency. We offer knowledgeable consulting services and have a network of highly vetted professionals who understand your industry and are attuned to your customers’ needs. We understand the special requirements of customer success jobs and can save you the time of pouring over resumés from people who aren’t the right fit. We’ll quickly find the perfect candidates, streamlining the hiring process so your new customer success specialist can get to work making your customers happy and boosting your profits. 

Take the next step in your business strategy by incorporating customer retention and CulverCareers into your recipe for success.