The following is from the February 2011 Drilling Down Newsletter. Got a question about Customer Measurement, Management, Valuation, Retention, Loyalty, Defection? Just ask your question. Also, feel free to leave a comment and I’ll reply.
Q: Thank you for creating this useful website!
A: You’re welcome!
Q: When figuring out retention rate for an annual or a 8 months life time cycle period, how do I pick the starting period? Do I look at their first orders on a date? Or I pick a time frame such as one month?
A: It depends on:
1. What kind of “retention” you are talking about, the definition, which is probably impacted by the audience for the data
2. What you will do with the retention data, what kind of decisions will be made and actions be taken because of the data
You should always ask these questions above when someone requests “retention data” – or any other kind of analysis, for that matter! For example, there probably is a huge difference in what you would provide to the Board of Directors for an annual benchmark and what you would provide to Marketing people for executing campaigns.