Did you know that increasing customer retention rates by just 5% can boost profits by 25% to 95%? It’s no surprise that retaining your customers is not just a strategy—it’s a necessity in today’s competitive retail landscape. While attracting new customers is important, the costs have increased significantly, therefore, fostering loyalty among your existing ones delivers more sustainable growth.
Digital tools like refive are revolutionising how retailers track and improve customer retention. With insights from in-store touchpoints like digital receipts, you can measure key retention metrics and create hyper-personalised experiences that keep customers coming back. Let’s dive into the metrics you should be tracking and how to optimise them.
Customer retention refers to the ability of a business to keep its customers over time. Unlike customer acquisition, which focuses on bringing in new customers, retention ensures that the existing ones frequently return for more purchases.
What is customer retention and why is it crucial?
Why does this matter? Because retaining customers is significantly more cost-effective than acquiring new ones. According to studies, it costs 5 to 7 times more to gain a new customer than to retain an existing one. Moreover, repeat customers tend to spend more and are more likely to refer others to your brand.
For instance, successful brands like Apple and Starbucks have mastered retention strategies, resulting in enviable customer loyalty and predictable revenue. By focusing on retention, you can achieve the same.
Key customer retention metrics to track
1. Customer retention rate (CRR)
Formula:
((E – N) / S) x 100
- E = Customers at the end of a period
- N = New customers acquired during the period
- S = Customers at the start of the period
CRR is the ultimate measure of how well you retain your customers over time. A high retention rate indicates strong customer loyalty and satisfaction. With refive, you can leverage digital receipts to connect with customers after each purchase and encourage them to return through tailored follow-ups.
Aim for a CRR of 60-70% in retail, though top-performing brands can achieve 80% or higher.
2. Repeat purchase rate (RPR)
Formula:
(Number of customers who purchased more than once / Total customers) x 100
RPR shows how many of your customers are coming back for additional purchases. A low RPR may indicate a gap in your retention strategy. Use digital receipts to deliver relevant product information, personalised recommendations and offers that cater to their demands to your customers, encouraging them to return to your store.
A good RPR in retail ranges from 20-40%, with higher percentages in sectors like grocery or beauty.
| Industry | Average Repeat Purchase Rate |
| Apparel | 30-40% |
| Beauty and Cosmetics | 40-50% |
| Food and Beverage | 20-30% |
| Electronics | 15-25% |
3. Customer lifetime value (CLV)
Formula:
Average purchase value x Purchase frequency x Customer lifespan
CLV helps you understand the total revenue you can expect from a single customer over the course of their relationship with your brand. refive’s digital receipts identify customers anonymously, create their profiles, and record purchase behaviour. By using insights collected from customers’ interactions with digital receipts, refive empowers you to improve CLV through targeted marketing campaigns and cross and upselling opportunities that drive repeat business and upselling opportunities.
Depending on the retail category, a strong CLV is typically 3-5 times the average customer acquisition cost (CAC).
4. Net promoter score (NPS)
Formula:
% Promoters – % Detractors
NPS measures how likely your customers are to recommend your brand to others. High NPS scores reflect strong customer satisfaction and loyalty. With refive’s digital receipts, you can easily collect feedback and identify areas for improvement, turning detractors into promoters.
An NPS of 50 or above is considered excellent, while scores above 70 are world-class.
5. Churn rate
Formula:
(Customers lost during a period / Total customers at the start of the period) x 100
The churn rate reveals how many customers are leaving your brand. A high churn rate signals the need for immediate action. By analysing customers’ purchase behaviour at checkout using digital receipts, refive helps you analyse behavioural patterns and identify opportunities to re-engage lapsed customers with personalised offers and communications.
In retail, a churn rate below 5% per month is considered good, though this can vary by industry.
Using digital receipts for better retention insights
Digital receipts are more than just an eco-friendly alternative to paper—they’re a powerful tool for understanding and engaging your customers. With refive, you can:
- Capture purchase data to create detailed customer profiles.
- Send personalised offers and recommendations based on shopping behaviour.
- Use feedback surveys to gauge customer satisfaction and improve loyalty strategies.
For example, retailers using refive have reported significant increases in repeat purchase rates and overall retention by integrating digital receipts into their marketing strategies. Check out how a leading retail brand is leveraging refive’s digital receipts to gather customer data in physical stores and increase retention.
Practical steps to improve retention
- Loyalty programmes: Reward customers for repeat purchases with discounts, exclusive perks, or points systems. For instance, you could offer a free item after a certain number of purchases or create a tiered loyalty system where higher spenders unlock better rewards.
- Exclusive experiences: Or even go a step further. Go beyond discounts by offering experiences that build emotional connections. Send your customers valuable information about the product and brand, invite them to in-store events, or early access to special sales, build up long-term relationships and trust, make them feel heard and seen, and therefore, create your own community of loyal customers.
- Feedback collection: Use post-purchase surveys to understand what’s working and what’s not. refive’s digital receipts make this easy to implement, allowing you to collect real-time feedback. You can also address negative feedback promptly, turning a potential detractor into a loyal customer.
- Personalised marketing: Tailor offers and recommendations to individual preferences using data captured through refive. For example, send customers discounts on products they’ve purchased before or suggest complementary items based on their buying habits. This makes the customer feel valued and understood.
- Engage through digital channels: Use email, SMS, and WhatsApp to keep your brand at the top of your mind. For instance, you can send reminders about upcoming sales, restocked items, or abandoned carts.
- Reactivation campaigns: Use targeted campaigns to win back lapsed customers. For example, send a special offer or personalised message reminding them of what they love about your brand. With refive, you can identify and segment these customers for more effective outreach.
- Data-driven insights: Regularly review retention metrics to identify trends and areas of improvement. refive’s analytics provide actionable insights to optimise your strategies and ensure continuous growth.
Customer retention is the foundation of sustainable growth for any retailer. By tracking and optimising key metrics like CRR, RPR, CLV, NPS, and churn rate, you can create a more loyal customer base and drive long-term profitability.
Ready to elevate your retention game? Discover how refive can help you unlock the full potential of your customer data and build lasting loyalty. Schedule a demo today!
