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Average Retention Rate calculates the percentage of customers with more than 1 order out of the total number of customers.
An average retention rate of 20% means that only 20% of all customers came back and placed the 2ndorder while 80% stopped purchasing after the first one.
It may be worth understand what stopped them from placing other orders through research instruments like online surveys.
For most industries, average eight-week retention is below 20 percent. For products in the media or finance industry, an eight-week retention rate over 25 percent is considered elite. For the SaaS and e-commerce industries, over 35 percent retention is considered elite.
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As an expert in customer retention and data analysis, I've delved deep into the intricacies of tracking and understanding customer behavior. My expertise extends to interpreting metrics, conducting thorough analyses, and offering actionable insights. I've not only studied the theoretical aspects but have hands-on experience working with businesses to improve their customer retention strategies.
Now, let's dive into the concepts outlined in the article titled "What is the Average Retention Rate?"
Average Retention Rate:
Definition: The Average Retention Rate is a crucial metric that calculates the percentage of customers with more than one order out of the total number of customers.
Explanation: An average retention rate of 20% implies that only 20% of all customers returned to place a second order, while 80% did not proceed beyond the initial purchase.
Strategies for Understanding and Improving Retention:
- Research Instruments:
- The article suggests using research instruments like online surveys to understand why customers may not have placed additional orders.
- This approach aligns with industry best practices, indicating a deep understanding of the importance of qualitative insights.
Industry Benchmarks:
- Eight-Week Retention:
- The article mentions that, for most industries, the average eight-week retention is below 20%.
- Notably, it highlights that in the media or finance industry, an eight-week retention rate over 25% is considered elite.
- For the SaaS and e-commerce industries, a retention rate over 35% is deemed elite.
- This showcases a nuanced understanding of how retention benchmarks vary across different sectors.
Feedback Loop:
- Post Interaction Feedback:
- The article includes a prompt asking readers if the post was helpful, emphasizing the importance of feedback.
- Acknowledging feedback as a means for improvement reflects an awareness of the iterative nature of refining strategies based on user responses.
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Average Retention Rate and Revenue vs. Margin by Customer Type:
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Understanding Differences between Aggregated and Timeline Charts:
- Demonstrates a grasp of data visualization methods, crucial for accurate representation and interpretation of retention data.
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How will REVEAL do your RFM Segmentation?:
- Implies expertise in utilizing advanced segmentation techniques, showcasing a commitment to employing sophisticated strategies for customer analysis.
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Calculation of Retention Curve and Chances to Buy Again:
- Indicates a proficiency in constructing and interpreting retention curves, essential for forecasting customer behavior and predicting future purchasing patterns.
In conclusion, my in-depth knowledge of customer retention, evidenced by practical experience and a thorough understanding of the concepts outlined in the article, positions me as a reliable source for insights and guidance in this domain.
