Measure Customer Retention on Your Web Site - dummies

Measure Customer Retention on Your Web Site

Retention measures how many customers you keep once they come to your Web site. Customer retention is important to Web sites for various reasons. For instance, research shows that keeping existing customers costs less than attracting new customers.

Studies have shown that the cost for acquisition on a per-customer basis is much more than that of customer retention. Research also says there is a small chance of converting a prospect to first-time customer status, and a low percent chance of reacquiring a lost customer. So customer retention is key.

The following metrics and ratios can help tell you determine your customer retention:

  • The number of returning visitors

  • The average frequency of your returning visitors

  • The ratio of returning visitors to all visitors

  • The frequency of the visit

  • How recent the visit was

  • The activity of retained visitors

  • The views of key pages and contents

  • Your retained visitor conversion rate

  • The customer retention rate

  • The average frequency of return for retained visitors

The following key performance indicators listed here should be tracked regardless of your business model or industry:

  • The ratio of daily to monthly returning visitors. This is a quick measure of the average frequency of return for all visitors.

  • The percent of returning visitors and the frequency of those returns.

  • The loyalty measurements for groups of returning visitors. This monitors big changes in visitor loyalty. How many are you losing?

  • Your retained visitor conversion rate. This helps in determining Web site or campaign success.

  • Your customer retention rate. This helps determine your Web site success.

Although some business models do not expect customers to make a second purchase right away (for example, auto, housing, or travel), very few Web sites are designed for a single visit from a visitor without a return.