Valuing Customer Retention

When asked which measurement of customer data was the most valuable, the largest group of retailers, 86 percent, cited customer retention in a recent survey. Yet, just 69 percent of those polled were compiling that metric, according to the study by RSR Research LLC, a research and advisory firm. “In today’s economic environment, retailers have to do everything they can to drive sales,” said Nikki Baird, RSR managing partner and co author of the report. “Our research found that keeping up with shifting consumer behavior, and both attracting and retaining customers, are some of retailers’ biggest challenges for customer programs today.”

The report, “CRM and Loyalty 2009: Increasing Relevance to Drive Customer Demand,” which covers customer relationship management and customer loyalty strategies, also noted that 86 percent of retailers said customer data has become more important this year to their organizations, up from 80 percent last year. One fifth of respondents also said that customer data was more important than product specific data in tracking demand trends, which represents a decline from 26 percent a year ago.

Among other data in the study are the following points of measurement. The percentage of respondents who cited them as most valuable is followed by the percentage of respondents who said they use them:

  • Customer purchase frequency, 80 percent, 74 percent.
  • Average transaction/basket size, 77 percent, 83 percent.
  • New customer acquisition, 77 percent, 62 percent.
  • Customer profitability, 77 percent, 59 percent.
  • Promotion or loyalty offer response rates, 61 percent, 57 percent.
  • Projected customer lifetime value, 61 percent, 36 percent.
  • Promotion or loyalty offer profitability, 55 percent, 36 percent.
  • Movement between customer segments or tiers, 46 percent, 36 percent.