Increasing the Customer Retention Rate with Surveys

Increasing the Customer Retention Rate with Surveys

customer retention rate

The customer retention rate (CRR) is a crucial metric for virtually all industries. As its name suggests, it measures the percentage of customers that a business has retained over a given period of time.

This rate essentially spells out how successful companies are at satisfying and keeping their existing customers. It is therefore a measure of customer loyalty, helping businesses better understand why customers stay with a company.

In turn, businesses can improve their offerings and experiences to increase their customer retention. Retention is a key business concept to uphold, as increasing customer retention by just 5% can increase company revenue by 25-95%.

This article explains the customer retention rate, how to calculate it, its importance, the CRR across industries, and how surveys help increase it. 

Understanding the Customer Retention Rate 

Customer retention rate (CRR) is a metric that measures a company’s ability to retain its customers over time. A percentage-based metric, it measures how many customers a business retains at the end of a given time period.

For example, if a business has 100 customers at the beginning of the year and has 70 at the end of the year, its retention rate is 70%. (See the section on its calculator for the breakdown of its formula).

This rate is the opposite of churn rate, which gauges the percentage of customers that a business loses over a period of time.

The importance of the customer retention rate will vary based on its industry. For example, businesses that provide subscription-based services (from B2B SaaS to B2C magazine subscriptions) depend on higher customer retention, as it directly affects the profitability of the business.

However, a high customer retention rate is still crucial for all sorts of businesses, as existing customers are 31% more likely to spend more on their average order than new customers. Additionally, retained customers are 51% more likely to try a business’s new offerings. 

Thus, maintaining a high customer retention rate should be a top business priority. This involves going beyond measuring the rate alone, but establishing customer satisfaction

The Importance of the Customer Retention Rate

This metric is important to calculate, keep track of and most importantly, use to raise customer retention. It provides a simple data point for determining how many customers a business retains over time. 

It also carries considerable weight in other business matters.

Firstly, studying this rate is important given that it is a major KPI, but unlike many KPIs, this metric relays one of the most sought-after aspects for a business, that of customer retention, as its name implies. 

Customer retention, as explained above with statistical figures, offers a wealth of benefits. These include those of relationship-building with customers, forging loyalty and gaining more profits.

Another such benefit is the affordability factor. Given that customer retention is far more valuable for a business than acquisition, one would think it is more expensive to achieve. However, it is anywhere from five to 25 times cheaper to retain an existing customer than it is to acquire a new one. Thus, it is financially more practical and viable to implement customer retention methods. 

In order to form such methods, a business must know its standing when it comes to its customer retention, and that is the exact data point that this rate provides.

Additionally, studying this rate, businesses can increase customer lifetime value (CLV), which relays the total monetary value a customer brings to a business throughout the entirety of their relationship with the business. This helps businesses understand which customers and customer segments are the most useful for their business.

By studying your customer retention rate, businesses can improve their ROI and grow revenue, as retaining customers, as laid out in the above figures, is healthy and profitable for businesses. When customers trust a business with their patronage, they provide value, be it with regular purchases or online interactions, such as with social media posts and contributing their own positive reviews.

How to Calculate the Customer Retention Rate

customer retention rate

There are several formulas to calculate customer retention rate or CRR, but businesses only need to choose one to narrow down their retention rate. One of the most commonly used formulas uses the following variables and equations:

CRR Variables:

EC - number of customers at the end of a given period
NC - number of new customers during that period
SC - number of customers at the start of that period

Customer Retention Rate Formula

CRR = ((EC-NC)/SC) x 100,

CRR Formula Example:

Let's assume that a business released a new product. At the beginning of Q1, it had 1,200 customers and at the end of Q1, it had 1,400 customers, having acquired 300 new customers within Q1. The CRR is thus calculated as:

CRR= ((1,400- 300) / 1,200)) x 100

CRR= ((1,100) / 1,200)) x 100

CRR= 0.91666 x 100

CRR= 91.67%

Although this is a strong CRR, businesses should remember that it also signifies a percentage of customers lost (normal in business). In this case, the business lost close to 100 customers.

The Customer Retention Rate Across Industries

The average customer retention rate varies across industries. As such, there is no hard and fast rule designating a good or bad rate. 

A 100% retention rate is a patently good rate, as it is the highest possible one. Meanwhile, a rate closer to 0%, such as 20%, can objectively be determined as poor. Percentages that run in between these numbers will have different attitudes towards acceptability across industries

What may work for one industry or niche may be deemed poor for another, and vice versa.

The following provides a rundown of the average customer retention rate across industries:

  • Retail: 63%
  • Telecom: 75%
  • Banking: 78%
  • IT Services: 81%
  • Insurance: 83%
  • Professional services: 84%
  • Media: 84%

How Surveys Can Increase Customer Retention Rate

customer retention rate

Surveys, especially the online variety, provide a quick and practical means of conducting primary research.  While market research techniques include a host of other primary and secondary research techniques, surveys are by every measure, the most proper tools for not simply conducting market research, but to be used as vehicles for increasing the CRR.

Although conducting secondary research is a useful practice, secondary sources do not address specific topics, issues and least of all, inquiries that businesses have about their subjects. Therefore, conducting secondary research alone is insufficient for market research, let alone increasing the CRR. 

Companies must incorporate primary research into their market research campaigns, as this method allows businesses to scope out their particular topics and most importantly, their own target market. 

To reiterate, survey research is the solution for virtually any market research campaign. Surveys open up the minds of customers’ to market researchers and their respective businesses. 

As such, when survey research is carefully conducted and on a potent online survey platform, researchers gain a wealth of customer insights, the kinds that help brands improve their customer experience and overall standing in the eyes of their customers. 

When businesses understand their customers on an in-depth level, they can thereby market to and serve them more effectively. Customers appreciate when brands understand their unique grievances and needs, along with the marketing personalization efforts used to better cater to them. 

When businesses develop strong relationships with their customers, they build and reinforce customer loyalty, a major component of customer retention. But businesses can only build these kinds of relationships when they understand their customers on a deeper level.

Surveys provide a feasible solution for reaching these kinds of customer insights, allowing businesses to better understand and serve their customers, therefore raising the customer retention rate.

Making Strides in Retaining Customers

A high customer retention rate is an integral ingredient for business success. Businesses must prioritize their CRR over customer acquisition, as customer retention is more beneficial and practical for businesses.

Survey research, as explained above, helps increase the customer retention rate; however, not all surveys are viable for this pursuit. Businesses must choose their online survey platform wisely, in order to ensure they are extracting optimal data and using an agile platform. 

A strong online survey platform uses the random device engagement sampling method (RDE) to ensure randomization and obtain respondents in their natural digital environments, along with AI and machine learning for data quality checks, a vast system of survey employment and more. The Pollfish platform offers all of these abilities and far more.

Diving Into the Customer Retention Survey to Scale Your Business

Diving Into the Customer Retention Survey to Scale Your Business

The customer retention survey is a critical market research survey for business success. As its name implies, it allows businesses to both understand and boost their customer retention.

In today’s mobile-first world, in which experience is king and agile data is on-demand, customer retention takes precedence over customer acquisition — at least it should, in order to scale your business. As another term for growth, “scaling” may conjure up customer acquisition, when in fact, customer retention largely contributes to scaling.

Customer retention is more important as a long-term strategy for numerous reasons. A mere 5% increase in customer retention boosts profits by 25-95%. It costs 16 times more to build a long-term relationship with a new customer than it does to keep an existing customer. Thus, businesses ought to monitor this aspect of their business. 

The customer retention survey helps you do just that. This article delves into the customer retention survey, its chief types and illustrates how to create one so that you establish loyal customers to scale your business.

Defining Customer Retention

Customer retention is the process of building relationships with existing customers to ensure that they continue making purchases and patronizing a business

In opposition with customer acquisition and lead generation, customer retention involves engaging the same group of customers to strengthen business ties with them, as opposed to making efforts to capture new customers (who may not become repeat customers).

As such, customer retention involves strategies that retain the portion of your target market that has converted at least once. It is the driving force behind customer loyalty. As a matter of fact, customer loyalty and customer retention share a symbiotic relationship, as loyal customers will convert more (inciting retention) and customers you’ve retained become more loyal.

In this way, customer retention is also the key factor behind customer lifetime value or CLV, which refers to the total value a customer will contribute to a business during their lifetime relationship with that business. 

A business must forge customer retention, as 93% of customers are more likely to be retained by companies with excellent customer service. Customer retention is thus a vehicle for a continuous flow of revenue.

The Importance of Customer Retention for All Businesses

Dovetailing off of the previous section, customer retention is a necessity on several key fronts, such as building customer loyalty, bolstering customer lifetime value and maintaining a steady and sufficient flow of revenue

If the above section did not provide enough reasoning as to why businesses need customer retention, the following includes several more advantages of maintaining strong customer retention. 

  1. It’s cost-effective: The cost of acquiring a new customer is more expensive than retaining an existing one. 
    1. As aforesaid in the intro, building long-term relationships with new customers is 16 times more expensive than nurturing a relationship with an existing customer.
  2. It’s profitable: Businesses of all sizes can earn higher profits from fostering customer retention. 
    1. 65% of a business’s sales come from returning customers
  3. It creates long-term success: Too often, businesses focus their strategy on the here and now, as it forges faster sales. While this may appear profitable for the short term, it is not realistic for the long term.
    1. Customer retention results in lasting relationships between companies and their customers, which forecasts continuous business success.  
  4. Customers become business advocates: When a business forms sufficient customer retention, its customers go beyond the role of customers. Rather, they funnel their loyalty into marketing endeavors. These include:
    1. Writing positive reviews across forums, social media, review sites and more.
    2. Word-of-mouth referrals
  5. Retained customers are more forgiving: Although a whopping 17% of customers will leave a brand after just one bad experience, retained customers won’t, as they are more forgiving.
    1. Loyal customers are six times more likely to forgive companies for a bad experience. 
  6. Your business can experiment more: Whether it’s for innovation of a product or service, or simply a change in branding direction, businesses with higher customer retention are more secure to try new things on their customers.
    1. Loyal customers are more willing to explore new offerings from a company it trusts.
  7. A relief for employees: A loss of customers or a decline in retention can take a toll on employees, especially those that deal with customers directly (sales, customer success in a B2B company).
    1. With strong customer retention, employees have less to worry about and are more equipped to perform optimally.

Defining the Customer Retention Survey

Retaining customers should be an objective of priority for businesses, as explained in the above sections. But in order to do so, your business needs a solid customer retention strategy. The customer retention survey is the most apt tool to keep track of and achieve strong customer retention. 

Specifically, the customer retention survey is a kind of survey that provides customer intelligence so that businesses have a grasp of their own standing in their customer retention. 

Additionally, this survey monitors customer sentiment in relation to a business, so it can proactively build customer retention strategies. 

Because customer retention involves a variety of factors, from the product, to the customer experience (CX) to customer representative engagement and so much more, there are various ways to construct such a survey. Furthermore, there are several ways to categorize this survey type.

The Three Main Kinds of Customer Retention Surveys

Since there are several key factors and subfactors that form (or break) custom retention, businsineses should be aware that there is no single way to establish a customer retention survey. However, it can be classified into the smaller categories that build up its concept. 

The following explains the three main types of customer retention surveys: 

The Periodic Customer Satisfaction Survey

Being able to retain customers relies on maintaining their continued satisfaction with your company. As such, businesses ought to use the customer satisfaction survey. This kind of survey helps gauge customer satisfaction with a company at large.

It has various iterations. These include:

    1. The Net Promoter Score (NPS) Survey
      1. Allows customers to measure the likelihood of recommending your company to others, on a scale of 1 to 10.
    2. The Customer Satisfaction Score (CSAT) Survey
      1. Rates a customer’s fulfillment in a particular situation. This is where you can apply this survey to a wide range of applications, such as interactions with a salesperson or with a product feature.
    3. The Customer Effort Score (CES) Survey
      1. Measures the amount of effort a customer had to take in an action. It focuses mainly on the process of achieving an end result.
    4. Visual Rating Surveys
      1. Permits customers to express their satisfaction with graphics as opposed to word or numbers. 

Each of these surveys offers a different way to measure customer satisfaction. As such, they each apply their eponymous metrics, while visual ratings surveys use visual markers to rate satisfaction. These may include stars, hearts and emojis. 

As this category of survey dictates by its name, it should be fielded periodically. This is how to keep track of your customers in regard to retention. Since customer needs, opinions and desires tend to change, you need to be aware of these changes so that you always provide services that delight. 

The Post-Purchase Evaluation Survey

This kind of survey category involves gathering feedback from customers shortly after they convert. After all, to build customer retention, you need to monitor your customers at various points of their customer journey, even after they reached the bottom of the sales funnel and bought from your business. 

Usually, this kind of survey is conducted once a customer has either made a purchase, or received a product or service. Although this kind of survey is typically deployed via a CRM (Customer Relationship Management) system, there are other ways to launch it.

It can exist in a more stealthy manner, that is, across various websites and mobile apps. By using a screening question that asks whether a site user has recently made a purchase, an online survey tool can deploy this survey to the masses (if it serves a wide network).

The Customer Experience (CX) Survey

As aforesaid, experience is king. Gone are the days in which the product and service alone were the main points of competition among brands. In order to retain your customers, you must keep them regularly satisfied. 

A product or service alone won’t cut this, no matter how good your offering is. This is because it is not practical for customers to frequently make purchases, unless you offer products/services for everyday use and at reasonable prices, or, the customer persona is one with little buying pain.

The customer experience (CX) survey is a survey specifically used to obtain feedback on the CX or UX of customers. This can include intelligence on digital customer experience, such as on websites, mobile sites, apps and other digital properties, or physical experiences such as in-store or at an event. 

Fomenting Customer Retention With the Best Survey Platform

All brands and small businesses can measure and strengthen their customer retention by way of market research. When you understand your customers’ desires and needs, you are setting your business up for success, as you’ll understand how to serve them.

But to properly monitor and build your customer retention, you need a strong online survey tool, the kind that makes it effortless to create a customer retention survey. Such a survey can explore far beyond customer needs, as it can clearly paint their points of contention and areas of satisfaction that your business provides. 

Remember, while new customers increase your sales temporarily, loyal customers will continually frequent your business, giving way to a constant stream of revenue, thereby allowing you to scale. In order to foster customer retention, you need to monitor your customers on a periodic basis. To do this successfully, you need to use a reliable online survey platform. 

How Surveys Help Reduce Customer Churn Rate

How Surveys Help Reduce Customer Churn Rate

The customer churn rate can be a disappointing metric that businesses must contend with — that is, it measures a negative behavior, but when the rate is low, it signifies a positive business attribute.

This is because churn rate quantifies an aspect of financial health by way of a customer behavior; a low churn rate is indicative of favorable customer relations. Companies should strive for a low churn rate as it helps pave the way for a strong financial standing.

On the contrary, a high customer churn rate is bad news; it points to poor consumer loyalty, which all brands should avoid like the plague. Implementing market research, particularly surveys can help reduce churn.

This article explains what the customer churn rate is and how surveys are a proven antidote.

Defining the Customer Churn Rate

This is a financial metric that measures customer churn, which is a behavior defined by customers who stopped using a business’s products or services within a certain time frame

Also called customer attrition, this metric is especially relevant for businesses who offer subscriptions or contract-based services. In this case, the churn rate specifically refers to the number of subscribers who either cancel their subscription or don’t renew it. 

Customer churn rate is expressed as a percentage, in which the percentage refers to churned customers within a given time period. 

“Churn” also alludes to loss on a larger scale; this means it can describe losses beyond customers alone. Here are a few examples of matters that churn rate determines:

  • The number of customers (the most common measurement)
  • The value of lost recurring business 
  • The percentage of the loss of recurring value 

How to Calculate the Customer Churn Rate

Calculating churn rate is fairly simple; all you need is to consider two variables: the number of customers you lost within a time period and the number of customers you started off with previously. 

Divide the number of customers you lost, say, in the last quarter, as is the common variable, by the customers you started with in the last quarter. Move the decimal point twice to the right to get the percentage. This percent represents the churn rate.


Customers you lost last quarter: 50
Customers you started with at the beginning of last quarter: 900

50/900= 0.05555555
Churn rate = 5.55%

This standard calculation also represents the simplest kind, as there are 4 ways to calculate churn rate. You ought to consider which calculation is most needed for the unique situation of your business. 

It’s important to note that the simple method of calculating churn does not take newly acquired customers into consideration. For example, say you gained 40 new customers during the last quarter — these are not part of the formula, therefore do not count towards your quarterly churn rate.

It’s also critical to remember that the time period used above is just an example; you can quantify customer churn on a monthly or yearly basis if you so choose.

Why Churn Rate is Significant to Consider

You should be regularly checking your churn rate as it helps you gauge your customer loyalty. Loyal customers are unlikely to churn, so the ones that do are significantly less loyal. 

By understanding the disloyal customers, you can craft better experiences, messaging and even product innovations to ensure less churn and therefore greater customer retention. In today’s competitive digital landscape, customer retention is more important than customer retention

Not only is acquisition more expensive, as it costs 5 times more to acquire a new customer than to keep an existing one, but it also yields less profitable results. Customer retention, on the other hand, increases profits up to 95%, after a mere 5% increase in retention, as one study found. Therefore, it is key to a successful business.

Additionally, retention is critical, as existing customers don’t require as much persuasive efforts to stay with a business (they’re already doing so). They are also willing to spend more — up to 31% more, as well as being more inclined to try new products

The lower your churn rate is, the greater your customer retention is for a particular time. As such, it is in the best interest of any business to keep churn rates low, so they must be carefully observed. 

As far as customer retention is concerned, churn rate is also useful to study in comparison with Customer Lifetime Value (CLV), which measures a customer’s entire worth to a business during their lifetime relationship with one. 

All in all, the churn rate helps you keep track of your lost customers. In order to keep this rate to a minimum, you must at the very least calculate it. 

Customer Care: the Most Potent Way to Minimize Churn

Your product or service may be useful and necessary to your target market, but if you are disconnected from your customers, many of them are bound to churn. The strongest method to avoid churn or reduce it significantly is to provide the best care for your customer.

Caring for your customers involves a number of different actions, as it is not bound solely by friendly customer relations, as its name may suggest. Here are several ways to care for your customer to minimize churn rates:

  1. Offer multiple methods of communication, to ensure your customers that they are being listened to and heard. This will also allow you to understand what they seek and what they loathe. 
  2. Create incentives; these help your company stand out among competitors and grant your customers more value.
  3. Formulate a loyalty program; this incites multiple purchases, fostering retention and relationship-building with your customers.
  4. Implement a strong VoC (voice of the customer) program for customers to be able to express their grievances and desires.
  5. Practice social listening, the process of overseeing social media networks for mentions of your company and competitors. This will give you a firsthand glimpse into how your customers feel about you in relation to other businesses in your niche. 
  6. Personalize the customer experience, whether online or in-store, personalization shows customers that they’re not just another number making a purchase, but they are individuals you are being thoughtfully catered to.
  7. Reach out to customers yourself. Don’t wait for them to come to, as most often won’t unless they have a question or concern. Up your marketing ante via emails, social media and calls (especially if you provided free samples for the last method). This also shows customers that they are being heard and more personally served. 

Survey Research: Providing a Breeding Ground for Better Customer Relations

Surveys help you achieve all of the techniques aforementioned in the prior section. This is because in order to coax your customers into loyalty and out of churning, you need to be able to understand them

While plenty of software programs make promises of improving customer satisfaction and thereby relationships, surveys are the only alternative to get specific answers to both your own questions and those of your customers. 

Surveys have the power to capture more than merely your customers’ needs. These vehicles allow you to gain direct insight into your customers’ minds on virtually anything: opinions on current affairs, aversions, desires, small irritation factors, shopping preferences, etc. 

The better you understand your customers, the better you will serve them, whether it is through your marketing, branding, or product upgrade endeavors. 

With mail-in surveys becoming obsolete, an online survey platform is the most optimal method for conducting your survey research. 

Surveys help stamp out churn rate as they can be hyper-focused on one aspect of the customer experience. For example, you can create a survey to collect feedback on a recent order, an interaction with a salesperson or a chat representative, or you can gather opinions on current product updates, product glitches, ads and virtually anything else you can think of to avoid customer churn. 

The latter is especially useful if the survey platform you use allows you to insert visual elements (images, GIFs, etc) to your questionnaires. 

Surveys may appear to provide little depth as most have to be kept short to avoid survey attrition. However, you can design surveys with open-ended questions for a qualitative approach to your surveys. These allow customers to provide invaluable insights on why they churned or are thinking about doing so. 

Prioritizing the Correct Actions to Reduce Churn Rate

Once you’ve gathered and analyzed data from your survey research, you’ll be able to understand what causes your unique customer churn rate. This will equip you with the knowledge to move forward with meaningful changes.

You should prioritize on the strongest influences to your churn rate and create a plan of action to reduce them. Survey research can point to problems you’ve never thought were present.

For example, perhaps your product or offering is perfectly fine and even desirable among your customer base. Instead, your customers churn due to poor customer support. This should prompt your business to adopt more training within this particular department. 

Or, perhaps your product has no malfunctions; rather your customers want it to do something beyond its capabilities. It is possible that your competitors are already on to this and have adapted their product to this customer desire. Thus, it is easy to see why your customers churned. What’s most important is that with this insight in tow, you can inform your product team and prioritize on innovating. 

This will lessen your churn rate in turn. When your churn rate is in decline, it translates to added revenue. Surveys can detect frustration with specificity, allowing you to avoid issues that contribute to customer churn. 

Frequently asked questions

What is customer churn rate?

Customer churn rate is the percentage of customers who stopped using a company’s products or services during a certain period of time.

How is customer churn rate calculated?

In order to calculate customer churn rate, a company must first identify two figures for a certain time period: the number of customers who started off with the company and the number of customers who left. To calculate the customer churn rate for a certain period of time, divide the number of customers who left by the total number of customers during this time period.

Why is it important to track customer churn rate?

By understanding how your customer churn rate changes over time, a company can understand the factors that influence customers to stay or leave. The company can also work on creating a better customer experience to improve its churn rate.

What are some of the ways to minimize customer churn?

Customers are more likely to stay with a business if they feel a connection with the company, are easily able to contact the company, have an incentive to stay (i.e., via a loyalty program) and/or are satisfied with the customer experience in general.

How can survey research improve customer churn rate?

Surveys can provide direct and unique insights into the mindset of your customers so that you can enhance the customer experience, improve customer loyalty and reduce customer churn.