How To Calculate Customer Retention Cost in Oracle EBS | Arithmix

Customer retention cost is an important metric for any business that wants to maintain its customer base. It is the cost incurred by a company to retain its existing customers over a certain period of time. Calculating customer retention cost can help businesses understand the value of their customers and the cost of keeping them. In this article, we will explore what customer retention cost is, when it is valuable to calculate it, and how to calculate it.

What Is Customer Retention Cost?

Customer retention cost is the cost incurred by a company to retain its existing customers over a certain period of time. It includes the cost of marketing, advertising, promotions, discounts, loyalty programs, customer service, and other activities that are aimed at retaining customers. Customer retention cost is an important metric for businesses because it helps them understand the value of their customers and the cost of keeping them.

Customer retention cost is different from customer acquisition cost, which is the cost incurred by a company to acquire new customers. While customer acquisition cost is important for businesses that are trying to expand their customer base, customer retention cost is important for businesses that want to maintain their existing customer base.

When Is It Valuable To Calculate Customer Retention Cost?

Calculating customer retention cost is valuable for businesses that want to understand the value of their customers and the cost of keeping them. It is particularly valuable for businesses that have a high customer churn rate, which means that they are losing customers at a high rate. By calculating customer retention cost, businesses can identify the cost of retaining customers and compare it to the cost of acquiring new customers. This can help them make informed decisions about their marketing and customer service strategies.

Calculating customer retention cost is also valuable for businesses that want to improve their customer retention rate. By understanding the cost of retaining customers, businesses can identify areas where they can reduce costs and improve their retention strategies. This can help them retain more customers and increase their revenue.

How to Calculate Customer Retention Cost

Calculating customer retention cost involves adding up all the costs associated with retaining customers over a certain period of time. These costs can include marketing, advertising, promotions, discounts, loyalty programs, customer service, and other activities that are aimed at retaining customers.

To calculate customer retention cost, businesses can follow these steps:

1. Identify the period of time for which you want to calculate customer retention cost. This could be a month, a quarter, or a year.
2. Identify all the costs associated with retaining customers over that period of time. This could include marketing, advertising, promotions, discounts, loyalty programs, customer service, and other activities.
3. Add up all the costs associated with retaining customers over that period of time.
4. Divide the total cost by the number of customers retained over that period of time to get the customer retention cost per customer.

By calculating customer retention cost, businesses can gain valuable insights into the cost of retaining customers and make informed decisions about their marketing and customer service strategies.

How Do You Calculate Customer Retention Cost in Oracle EBS

Oracle EBS itself isn’t naturally geared towards letting you calculate complex metrics like Customer Retention Cost. As an alternative, teams typically use products like Arithmix to import data from Oracle EBS and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Oracle EBS, combine it with data from other systems, and create calculations like Customer Retention Cost.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Customer Retention Cost in Arithmix

Calculating metrics like Customer Retention Cost is simple in Arithmix. Once you've created your free account, you’ll be able to import your Oracle EBS data, and use it to create natural language formulas for metrics like Customer Retention Cost.

Arithmix is designed to give you the power to build any calculations you want on top of your Oracle EBS data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.