M49GrowCustomers & Sales· Module 5
Customer Retention
The business works hard to win customers and loses them quietly. Nobody notices until revenue dips.
- Grow
- Manage
- Fix
- Customers
- Operations
- ~5 min · Calculation
The business problem
Most businesses measure new sales but not lost customers. Customers stop buying without complaining, and the business only notices through falling revenue months later. Winning a new customer usually costs far more than keeping an existing one.
Why it matters
Retention compounds. Small improvements in the share of customers who return have a large effect on revenue and profit over time.
What you will learn
- Measure retention and repeat purchase rates
- Identify early signs that a customer is leaving
- Understand why customers leave
- Design retention actions for valuable customers
Core questions
- What share of last year's customers bought again this year?
- How long before we notice a customer has stopped buying?
- Why do customers leave?
- What would make our best customers stay longer and buy more?
Work through the module
CaseWhat is happening?
Veterinary clinic, 12 staff · Illustrative teaching case
A vet clinic's new client numbers are healthy, but revenue stagnates. Analysis shows many pet owners never return after their first vaccination. The clinic introduces reminder schedules for vaccinations and check-ups, and a follow-up call after treatment. Repeat visits increase.
DecisionWhat does the leader need to decide?
Spend more to acquire new customers, or invest in keeping the ones you have?
FrameworkHow should they think about the problem?
The retention funnel
First purchase → second purchase → regular customer → advocate. Measure how many move to each step, identify where they drop, and design actions at those points.
ToolWhat can they use?
Retention analysisCalculation
- Customers last year vs customers who bought again
- Time since last purchase for top customers
- Top reasons for leaving from calls or surveys
- Retention actions by customer value
ApplicationHow does it apply to their business?
Apply it to your own business:
- Calculate your repeat purchase rate
- List top customers who have not bought in 90 days
- Call five former customers and ask why they left
ImplementationWhat changes?
What should change in the business:
- Set up alerts for inactive valuable customers
- Assign account owners for top customers
- Fix the most common reason customers leave
ReviewDid it work?
How to tell whether the change worked:
- Has the repeat purchase rate improved?
- Are inactive customers contacted promptly?
- Has revenue from existing customers grown?
After this module you should be able to decide
Spend more to acquire new customers, or invest in keeping the ones you have?
And leave with: A retention measure and a plan for your most valuable customers.
Sequence · Customers & Sales