Many companies emphasize the importance of customer acquisition, ignoring customer retention strategies entirely. Perhaps this is influenced by the prevailing point-of-view among c-suite executives that stability is actually stagnation. They focus on vanity metrics that help only in painting the picture they want to see—growth at all costs.

Calculating customer retention rate and dollar retention rate is a worthwhile exercise because it can help guide a renewed focus on customer satisfaction. Understand how effective, or ineffective, your retention strategies are and how subtle changes can have a lasting impact. Use the retention rate and dollar retention rate calculators from CleverTap to check the vital signs of your business.

The customer retention rate, however, is a business metric that can have ripple effects through the company’s financial well-being. If the retention rate began to decline, it would start negatively impacting the customer lifetime value, which would then compromise the sustainability of the acquisition strategy. Measuring customer retention rate is like taking a person’s vital signs, they establish a healthy baseline.

Interestingly, many people choose to represent customer retention rate in percentages, like what percent of customers repeat a purchase. What really speaks volumes is expressing, in dollars and cents, how much money will be gained or lost by a fluctuating retention rate.

It’s common knowledge that it costs more to acquire a new customer than it does to retain an existing customer. Perhaps you didn’t know it costs actually five times as much.