Customer Retention
Definition
Customer retention is the percentage of customers who continue doing business with a company over a defined time period, usually measured annually.
What Customer Retention Means for Your Business
What it means
If you had 1,000 customers last year and 780 of them called again this year, retention is 78%. It is the mirror of customer churn and the foundation of recurring revenue.
Why it matters
Retained customers cost 5 to 7 times less to serve than new ones. They also upsell, cross-sell, and refer at far higher rates. Retention is where profit hides in field service.
How contractors use it
Shops drive retention with maintenance plans, follow-up communication, review requests, and white-glove customer service. The best track retention by cohort and segment to spot leaks.
Real-World Example
An HVAC company lifted annual retention from 58% to 72% with a membership plan and follow-up SMS. That kept 280 additional customers over 2 years and generated an extra $890,000 in service revenue.
Related Terms
Customer Churn
Customer churn is the percentage of customers who stop doing business with a company over a given period, usually measured annually.
Customer Lifetime Value
Customer lifetime value, or CLV, is the total amount of revenue a customer is expected to generate for a business over the entire duration of the relationship.
Membership Plan
A membership plan gives customers priority service, discounts, and perks in exchange for a monthly or annual fee.
Review Velocity
Review velocity is the rate at which a business earns new online reviews, typically measured as reviews per week or per month.
Maintenance Plan
A maintenance plan is a customer-facing product that bundles routine inspections, discounts, and priority scheduling into a single recurring purchase.
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