How To Calculate Customer Retention Cost in Sage 300 | Arithmix

Customer retention is a crucial aspect of any business. It is the process of keeping existing customers engaged and satisfied with your products or services. However, retaining customers comes at a cost. In this article, we will explore what customer retention cost is and when it is valuable to calculate it. We will also provide you with a step-by-step guide on how to calculate customer retention cost in Sage 300.

What Is Customer Retention Cost?

Customer retention cost is the total amount of money a business spends on retaining its existing customers. This cost includes all the expenses incurred in keeping customers engaged and satisfied, such as marketing campaigns, loyalty programs, customer service, and product improvements.

Calculating customer retention cost is essential for businesses to understand the value of their existing customers. It helps them determine how much they should invest in retaining their customers and how much they can afford to spend on acquiring new ones.

When Is It Valuable To Calculate Customer Retention Cost?

Calculating customer retention cost is valuable for businesses in several situations. Firstly, it helps businesses determine the effectiveness of their customer retention strategies. By comparing the cost of retaining customers to the revenue generated from them, businesses can assess the ROI of their retention efforts.

Secondly, calculating customer retention cost is valuable when businesses are considering expanding their customer base. By understanding the cost of retaining existing customers, businesses can determine how much they can afford to spend on acquiring new ones.

Lastly, calculating customer retention cost is valuable when businesses are facing tough economic conditions. During a recession or economic downturn, businesses may need to cut costs. By understanding the cost of retaining customers, businesses can make informed decisions about where to allocate their resources.

How to Calculate Customer Retention Cost in Sage 300

Now that we understand the importance of calculating customer retention cost, let's explore how to do it in Sage 300. Here are the steps:

1. Identify the time period you want to calculate customer retention cost for. This could be a month, a quarter, or a year.
2. Determine the total revenue generated from existing customers during that time period.
3. Identify the total cost of retaining those customers during that time period. This includes all expenses related to customer retention, such as marketing campaigns, loyalty programs, customer service, and product improvements.
4. Divide the total cost of retaining customers by the total revenue generated from existing customers during that time period. This will give you the customer retention cost as a percentage of revenue.

For example, let's say you want to calculate customer retention cost for the month of January. During that month, you generated $50,000 in revenue from existing customers. You also spent $10,000 on marketing campaigns, $5,000 on loyalty programs, $2,000 on customer service, and $3,000 on product improvements. The total cost of retaining customers during that month was $20,000.

To calculate customer retention cost, divide the total cost of retaining customers ($20,000) by the total revenue generated from existing customers ($50,000) during that month. The customer retention cost for January is 40%.

By following these steps, you can calculate customer retention cost in Sage 300 and use this information to make informed decisions about your customer retention strategies and resource allocation.

How Do You Calculate Customer Retention Cost in Sage 300

Sage 300 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 Sage 300 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 Sage 300, 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 Sage 300 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 Sage 300 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.