While the calculation is simple, there are many factors that contribute to achieving customer retention. There are some very common mistakes that are often made when calculating CRR that can have adverse effects on a company.
Not calculating MRR “Monthly Recurring Revenue”
CRR and MRR are two different metrics that define different things. On the one hand, customer retention rate measures the percentage of users who stay with a service from week to week or month to month. This metric is the one associated with the concept of retention.
On the other hand, MRR refers to the revenue maintained over time through subscription payments. This is the revenue that a company earns on a recurring basis.
CRR helps you learn more about the reasons for churn related to a uruguay whatsapp number database company's product, marketing, customer service, or pricing. MRR retention helps you understand whether your company can maintain profitability.
Counting your customers' cancellations as Churn Rate
Churning customers stop paying. Churning customers indicate that they will stop paying when the next payment is due, even if their subscription period has not expired.
There is one opportunity to win back users and that is when they cancel before the end of the period. If they are counted as churned, you are wasting a chance to retain them and maintain revenue.
If, in one month, 12 out of 100 users cancelled and were unrecoverable, the situation would be absolutely unsustainable over time, since after 6 months more than half of the original customer base would be lost.
Many of these customers may have frustrations or obstacles that can easily be overcome with a customer service call. If you can convince half of the unsubscribers, your retention rate will increase to 92%, and after 6 months, you will have 22% of customers retained.
By implementing practices to retain churned customers, you can increase your customer retention rate month over month. You should not count churned customers as churned customers, because in doing so you lose the opportunity to do something to make them decide to continue.