Start improving customer retention

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customer retention

Customer experience

customer service

customer retention

Published on Thu May 15 2025

Updated on Fri Aug 08 2025

8 minute read

We like to say that there are few things better than a new customer. But one of those few things is a returning customer. Why? Because customer loyalty isn't just a nice-to-have, it's the lifeblood of any thriving business. But how do you ensure your customers stick around? By improving customer retention, that's how. It's not just about keeping them coming back, but also about ensuring they have a truly delightful experience. So, don’t be a stick-in-the-mud, let’s stick to improvement and see just how to make your customers stick around.

What improving customer retention entails.

Customer retention is the ability of a company to keep its existing customers over a period of time. It's a measure of how loyal customers are to a business and how successful the business is at satisfying their needs and providing value.

At its core, customer retention is about building long-term relationships with customers. It involves understanding their preferences, anticipating their needs, and exceeding their expectations. It's about creating a positive customer experience that encourages them to come back again and again.

For a mom-and-pop improving customer retention and maintaining it might mean simply greeting customers with a smile. A candy jar on the counter for the kids. Tossing in that little bit extra for loyal customers. A simple “Wait, let me get one fresh for you out the back.” followed by a coy wink. Easy, right? Where it gets tricky is with larger companies. A chain of shops means it’s hard to guarantee this type of interaction across all stores. That doesn’t mean it’s harder for bigger businesses, just more nuanced and complex, but don’t worry - we’ll get to that later.

What is Customer Retention Rate?

One of the great things about customer retention is that it has nice, measurable, objective metrics. Customer Retention Rate (CRR) is a key metric that tells you how many customers are sticking around for a specific period. It's like a popularity contest, but instead of votes, you're counting loyal customers. A high CRR means you're doing something right, and your customers are feeling your vibe.

And, yes, popularity isn’t everything, but being the belle of the ball sure does feel nice.

How to calculate it?

It’s time for math (boo). It’s simple math that can help you skyrocket your business (yay).
The formula for calculating CRR is this:

CRR = ((E - N) / S) * 100 Where:

E is the number of customers at the end of a specific period (E for end)
N is the number of new customers acquired during that period (N for new)

Why customer retention and improving it are so important.

We’re sure it’s plenty apparent why improving customer retention and maintaining a high level of retention is important, but, just in case, let’s go over some key benefits provided by investing in customer retention services and tools.

Boosting profitability.

It's considerably cheaper to retain existing customers than to acquire new ones. Studies show that acquiring a new customer can cost five to 25 times more than retaining an existing one. By focusing on retention, you can significantly reduce your customer acquisition costs and increase your profit margins.

Increasing customer loyalty.

Loyal customers tend to spend more over time than new customers. They are more likely to make repeat purchases, upgrade to premium products or services, and refer their friends and family. By nurturing your existing customer relationships, you can unlock their full potential and maximize their lifetime value.

Enhances your reputation.

Satisfied customers are more likely to become brand advocates, spreading positive word-of-mouth and attracting new customers organically. This can be a powerful form of marketing that costs you nothing and builds trust and credibility for your brand.

Better data input.

Loyal customers are more likely to provide honest feedback and insights about your products or services. This can help you identify areas for improvement, innovate, and stay ahead of the competition.

Steps to improving customer retention, services that influence it, and the processes around it.

Now that you know the all-you-need-to-know part, let’s get into the nitty gritty and the actual reason you’re here - how to actually go about improving customer retention. In this part we’ll have a look at how to do it through two lenses. The first one will be from a non-BPO perspective, that’s to say anything that isn’t customer service. The second perspective will be our bread and butter, and that is how to implement customer retention services through CX knowledge, processes, and tools. So without any further ado, here’s how to make your customers stick around.

Outside the BPO perspective.

There are some fairly obvious ways that you can improve your CRR. While they might be obvious they are no less important or difficult to implement. First things first, have a great core service/products. This one is pretty self explanatory. If your product, products, or services are no good then there will be no customers. But seeing as you’re actively seeking to improve, we’ll presume you have that one covered.

Secondly, focus on your customers as people, not just numbers. Small pieces of personalization that might seem trivial to you may just be the thing to make your customers feel important and valued, and keep them coming back. If they keep coming back, make sure you let them know you’re happy about it. Have a loyalty program, give out random little gifts, pamper your most loyal.

Lastly, make sure you ask and listen to their feedback. We all feel like our opinions are important, and they are. No one knows your service better than your customers so make sure you ask for their feedback and work on implementing it as best you can.

Inside the BPO perspective.

Let’s focus now on what Transcom does best - improving customer retention through amazing CX. Customers calling with issues at first glance might not seem like the best thing for your business, but it is actually a golden opportunity to drive their satisfaction through the roof. Mistakes happen, problems pop up. We all know that. The real source of frustration with customers is inefficient problem solving. If everything goes smoothly, maybe even better than expected, they will focus on the good aspects and you will have turned a bad situation into a great one. So, how does Transcom drive our clients’ CRR?

In conclusion.

Leading Voices: how CIO Sandra Kujundzic’s teams tame AI volatility and drive real value.

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Leading Voices: how CIO Sandra Kujundzic’s teams tame AI volatility and drive real value.

AI is accelerating faster than enterprise operating models were designed to handle. In every organization, transformation is underway. Roadmaps are expanding, budgets are shifting, and expectations from boards and customers are rising. But acceleration without structure creates volatility - and customer experience is no exception to the rule. While technology introduces possibility, leadership determines whether that possibility becomes measurable value or a mere disruption.

Navigating this ten

S is the number of customers at the start of that period (S for start)

Easy peasy. Hope everyone remembers their PEMDAS, but in case you don’t this means that we first subtract the number of new customers from the total number of customers at the end of a period. Secondly, we take that new number and divide it by the number of customers we had at the start of that period. Finally, just multiply what you just got by 100 to get a nicer, more easily understandable number.

This also means that we have some specific steps we need to take before calculating the CRR and improving customer retention:

Determine the time period: Decide on the time frame for which you want to calculate CRR (e.g., monthly, quarterly, annually).
Gather customer data: Collect the number of customers at the start of the period (S), the end of the period (E), and the number of new customers acquired during the period (N).
Apply the formula: Plug the values into the CRR formula: ((E - N) / S) * 100
Interpret the result: The resulting percentage represents your customer retention rate. A higher percentage indicates a better ability to retain customers.

Let’s go over that one last time by using an example.

A company has 100 customers at the start of the year (S), gains 20 new customers (N), and ends the year with 110 customers (E).

CRR = ((110 - 20) / 100) * 100 = 90%

This means the company retained 90% of its existing customers over the year. Much less daunting now, right?

What is a good retention rate?

While there's no one-size-fits-all answer when it comes to the perfect customer retention rate, as it can dance to the tune of different industries and business models, a sparkling 80% is often considered a golden benchmark to strive for.

If you find yourself hitting that magical mark, it's a telltale sign that your customers aren't just satisfied, they're head over heels for your brand, returning time and again for that special something you offer. The belle of the ball might just become prom queen.

Understanding other key metrics.

While CRR is a crucial indicator for customer retention services, other metrics provide a comprehensive picture of customer loyalty. Let's take a closer look at a few of them from the well-known Net Promoter Score to the dreaded Customer Churn Rate.

Net Promoter Score

Net Promoter Score (NPS) is a customer loyalty and satisfaction metric that measures how likely customers are to recommend a company's product or service to others. It's calculated based on responses to a single question using a 0-10 scale. NPS is considered important because it provides a simple yet powerful way to gauge customer sentiment and predict business growth.

Repeat Purchase Rate

Repeat Purchase Rate (RPR), also known as repurchase rate, is the percentage of customers who make more than one purchase from a company within a specific time period. It's a crucial metric for businesses as it indicates customer loyalty and the effectiveness of their products, marketing, and customer retention strategies. A higher RPR typically translates to increased revenue and profitability.

Repeat Customer Rate.

Repeat Customer Rate (RCR) is the percentage of customers who make more than one purchase from a business within a given period. RCR is a key indicator of customer loyalty and the effectiveness of retention strategies. It often signals higher customer lifetime value and profitability

Customer Churn Rate.

Customer churn rate measures the percentage of customers who stop using a product or service within a specific time frame. It's calculated by dividing the number of customers lost during a period by the total number of customers at the start of that period.

Churn rate is a crucial metric for businesses as it directly impacts revenue and growth. A high churn rate indicates dissatisfaction, potentially stemming from poor customer service, lackluster product features, or aggressive competition. Understanding and addressing churn drivers are essential for customer retention and long-term success.

Creating sustainable growth.

Customer retention is a key driver of long-term sustainable growth. By focusing on building strong relationships with your customers, you can create a loyal customer base that will support your business for years to come.

Give customers the freedom of choice.

None of us like to be forced to do anything. Why then force callers to use a specific channel of communication? Allowing your customers to contact you in any shape or form (barring carrier pigeon) and having it work seamlessly will ensure their satisfaction with you and your service.

All these systems and channels interconnecting, data coming from all sides. Sounds complicated, right? Not necessarily. Not with things like Transcom’s Omnichannel.

Our Omnichannel is a centralized customer service system that integrates all communication channels, providing agents with a 360-degree view of customers and their issues. This enables seamless communication across channels, ensuring customers have a consistent and personalized experience regardless of how they choose to interact with the company. It goes beyond simply offering multiple channels (multichannel) by connecting them, allowing agents to see the full history of customer interactions and providing context for more effective support. This leads to better prepared agents, a more efficient and meaningful customer service experience, and ultimately, a truly happy customer.

Meet them on their grounds.

While on the subject of going the extra mile for customers, let’s talk language. Ever had to phone a multinational company’s customer service and having to explain your problem in English? While that might not usually be a problem you now encounter more technical terms that you didn’t have to use before, your concentration is low because your emotions are high. You just want this to be over and done with, and to be over and done with easily.

Enter Automated Translation by Transcom - bringing the world’s languages to you.

Transcom's Automated Translation is an AI-powered solution that seamlessly translates voice and text communication in real time, eliminating language barriers between customers and agents. This means customers can interact with the company in their preferred language, enhancing their overall experience. By offering this personalized touch, Transcom's Automated Translation helps build stronger relationships with customers, making them feel understood and valued.

This increased satisfaction can lead to higher customer retention rates as customers are more likely to remain loyal to a company that caters to their individual needs and preferences, especially in a global market where language diversity is common. By breaking down language barriers and providing a more personalized experience, Transcom's Automated Translation can be a key factor in retaining customers and driving long-term business success.

Short calls are good calls.

The ease of call resolution doesn’t stop there. No siree. Apart from empowering customers to contact you in their way, in their language you can also empower agents. That’s why we like to call our agents superheroes - we give them superpowers through our solutions so that their natural talents are amplified, resolutions are lightning fast, and calls as short as can be.

Of course, a superhero is nothing without a trusty sidekick. And our superheroes’ sidekick is called Agent Assist.

Transcom's Agent Assist is an AI-powered tool that provides customer service agents with real-time insights and suggestions during interactions. This empowers agents to resolve customer issues more efficiently and accurately, improving their overall productivity. By enabling faster and more effective support, Agent Assist significantly enhances the customer experience, leading to increased satisfaction and loyalty.

Customers feel heard and valued when their problems are resolved quickly, and this positive experience fosters a stronger bond with the brand. Additionally, Agent Assist provides personalized support by utilizing customer data and interaction history, further increasing customer satisfaction and retention. In short, Agent Assist is a key tool for improving both agent performance and customer retention by providing efficient, effective, and personalized support

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