As an ecommerce business owner, customer retention should be a top priority. It's no secret that acquiring new customers is costly and time-consuming. However, keeping your existing customers happy and coming back for more can be a game-changer for your bottom line. This is where Customer Retention Rate (CRR) comes into play. In this article, we’ll discuss how to calculate CRR in BigCommerce and the importance of this metric for your business.
Understanding Customer Retention Rate (CRR)
Before diving into how to calculate CRR in BigCommerce, let’s define what it is. Simply put, Customer Retention Rate (CRR) is the percentage of customers who continue to do business with your company over a specific period of time. Tracking this metric helps you understand how successful your business is at retaining customers.
What is Customer Retention Rate?
Customer Retention Rate is a metric that shows the percentage of customers who continue to do business with your company over a specific period of time. It helps you understand customer loyalty and the effectiveness of your retention strategies.
Why is CRR Important for Your Business?
CRR is important for many reasons. Firstly, it's a cost-effective way to increase revenue and profitability. Retaining current customers is less expensive than acquiring new ones. Repeat customers also tend to spend more money with your business as they are familiar with your products or services and trust your brand. Additionally, CRR is an indicator of customer satisfaction. High CRR rates mean that your customers are happy with their experience and are more likely to recommend your business to others.
Another reason why CRR is important is that it helps you identify areas where you need to improve your customer experience. If your CRR is low, it could be an indication that your customers are not satisfied with your products or services. This gives you an opportunity to make changes and improve your business.
Furthermore, CRR can help you make informed business decisions. By tracking this metric, you can see how changes in your business, such as product offerings or pricing, affect customer retention. This allows you to make data-driven decisions that can help you grow your business.
Finally, CRR is important because it can help you stay ahead of your competition. By focusing on customer retention, you can create a loyal customer base that is less likely to switch to your competitors. This gives you a competitive advantage and helps you stand out in a crowded market.
Setting Up BigCommerce for CRR Calculation
Integrating Customer Data
Before you can begin calculating CRR in BigCommerce, you need to integrate your customer data. This includes data such as order history, purchase frequency, and customer contact information. You can use a customer relationship management tool or ecommerce platform to collect this data.
Integrating customer data is an essential step in accurately calculating CRR. By collecting and organizing data related to customer behavior, you can gain valuable insights into their shopping habits and preferences. This information can be used to create targeted marketing campaigns and improve customer retention rates.
When integrating customer data, it's important to ensure that the data is accurate and up-to-date. This can be achieved by regularly syncing your customer data with your ecommerce platform or CRM tool.
Utilizing BigCommerce Analytics
Once you have all of your customer data integrated, you can begin to utilize BigCommerce Analytics. This tool provides detailed insights into your ecommerce business, including customer behavior, sales performance, and marketing effectiveness. You'll use this tool to analyze your CRR.
BigCommerce Analytics is a powerful tool that can help you make data-driven decisions about your ecommerce business. By analyzing customer behavior and sales performance, you can identify areas for improvement and make changes that will improve your CRR.
One of the key features of BigCommerce Analytics is the ability to segment your customer data. This allows you to analyze customer behavior based on specific criteria, such as purchase history or location. By segmenting your data, you can gain a deeper understanding of your customers and tailor your marketing efforts accordingly.
In addition to customer segmentation, BigCommerce Analytics also provides detailed reports on sales performance. These reports can help you identify trends and patterns in your sales data, allowing you to make informed decisions about pricing, promotions, and product offerings.
Overall, utilizing BigCommerce Analytics is an essential step in calculating and improving your CRR. By analyzing customer behavior and sales performance, you can identify areas for improvement and make data-driven decisions that will help you retain more customers over time.
Step-by-Step Guide to Calculate CRR in BigCommerce
Calculating customer retention rate (CRR) is an important metric for any business. It helps you understand how many customers are returning to your store and making repeat purchases. In this step-by-step guide, we will show you how to calculate CRR using BigCommerce Analytics.
Step 1: Identify the Time Period for Analysis
The first step in calculating CRR is identifying the time period you want to analyze. This could be a week, month, quarter, or year. The period you choose depends on your business goals and industry. It's important to choose a consistent time period for accurate results.
For example, if you're a seasonal business, you may want to analyze your CRR on a quarterly basis to see how your customer retention changes throughout the year. Alternatively, if you're a subscription-based business, you may want to analyze your CRR on a monthly basis to see how many customers are renewing their subscriptions.
Step 2: Determine the Number of Customers at the Start and End of the Period
Next, you need to determine the number of customers you had at the start and end of the period you're analyzing. This is easily done using BigCommerce Analytics. Simply filter your customer data to show the number of unique customers who made a purchase during the chosen time period.
For example, if you're analyzing your CRR for the month of January, you would filter your customer data to show the number of unique customers who made a purchase in January.
It's important to note that you should only count customers who made a purchase during the period you're analyzing. If a customer made a purchase in December and then again in January, they should only be counted once for the January analysis.
Step 3: Calculate the Number of New Customers Acquired
After determining your total number of customers for the period, it's time to calculate the number of new customers acquired. This can also be done using BigCommerce Analytics. Filter your customer data to show the number of unique customers who made their first purchase within the chosen time period.
For example, if you're analyzing your CRR for the month of January, you would filter your customer data to show the number of unique customers who made their first purchase in January.
Calculating the number of new customers acquired is important because it helps you understand how many customers are returning versus how many are new to your store.
Step 4: Calculate Customer Retention Rate
Finally, it's time to calculate CRR. The formula for CRR is:
CRR = ((E-N)/S) x 100
Where:
- E = Total number of customers at the end of the period
- N = Total number of new customers acquired during the period
- S = Total number of customers at the start of the period
For example, if you had 1,000 customers at the start of January, acquired 200 new customers in January, and ended January with 900 customers, your CRR would be:
CRR = ((900-200)/1000) x 100 = 70%
A CRR of 70% means that 70% of your customers from January returned to make a purchase in February.
CRR is an important metric to track because it helps you understand how effective your customer retention strategies are. If your CRR is low, it may be a sign that you need to improve your customer experience or offer more incentives for customers to return.
Analyzing Your CRR Results
What is a Good Customer Retention Rate?
The average CRR for ecommerce businesses is around 20%. However, what is considered a "good" CRR varies by industry and business goals. Generally, a higher CRR indicates that your business has a strong customer retention strategy in place.
Identifying Areas for Improvement
If your CRR is lower than you’d like, it's time to identify areas for improvement. BigCommerce Analytics can help you pinpoint areas where you might be losing customers. Common reasons for customer churn include poor customer service, lack of product variety, and high prices. Once you identify areas for improvement, you can adjust your retention strategy to improve your CRR.
Setting CRR Goals and Benchmarks
Finally, it's important to set CRR goals and benchmarks for your business. This allows you to track your progress and ensure that your retention strategy is working effectively. Use your industry's average CRR as a benchmark and aim to exceed it. Set specific goals for each time period and adjust your strategy as necessary to meet them.
Conclusion
In conclusion, calculating CRR is an essential part of any ecommerce business strategy. BigCommerce Analytics is an incredibly effective tool for tracking CRR and identifying areas for improvement in your retention strategy. By following the steps outlined in this article and analyzing your CRR, you'll be well on your way to increasing revenue and profitability while keeping your customers happy and loyal to your brand.