All of you who have been keeping up with my blog during the past several months have learned quite a bit about the inner workings of Slingshot SEO. Today we are going to hone in on one of my favorite topics to discuss with our leadership team. In fact, if you ask them, they would state it is the topic I most often refer to … except, perhaps, excellence in staffing.

That key topic is Customer Retention. Here is what Wikipedia says about customer retention. My favorite excerpt is: “Customer retention is more than giving the customer what they expect; it’s about exceeding their expectations so that they become loyal advocates for your brand.”

Our business at Slingshot SEO is all about meeting — if not exceeding — client expectations. We interact daily with many of the top marketing minds in the world from some of the most successful brands in the world. I have stated, over virtually my entire business career, you are only as good in the client’s eyes as the success of each contract renewal.

Customers can say just about anything in customer satisfaction surveys, even the currently popular Net Promoter Score, which we will discuss a bit further down the road. Their true satisfaction is measured, in my opinion, by their renewal and PAYMENT of their next contract, period!  Although it may sound too simple to be taken seriously, the most successful leaders in any market watch this as closely as any revenue or profit number.

Why is it watched so closely? I believe the answer lies in the fact that it is such a leading indicator of future results in just about every single area of your business. Just about any business serving existing clients from one period to another or one who has repeat clients can easily figure their success based on this key metric.

My favorite part of truly tracking this metric is that most teams who start measuring customer retention automatically start making great strides toward improving it. Think how powerful that can be for your organization. I have lead organizations where a tenth of one percent change in retention has equaled more than a full one percent change in profit. How about using that as a huge lever to scale your business?

There are two ways to measure customer retention. You will need to decide which is best for your organization or do like we do at Slingshot SEO and measure both. The first and, in my opinion, the less powerful method is based purely on the number of customers you have at the beginning of the period and how many renew. This is the easiest measure to figure and, if your clients are similar in size and scope, it might be a strong indicator of future growth and success.

The second method, and my favorite, is based upon actual dollars. This is a bit more complicated to figure because you must take into account not only renewals and cancellations, you also must figure in upgrades and downgrades. Once you do this, you and your team really have an accurate leading indicator to measure and utilize. As I tell our team, dollar retention does not lie.

So how is Slingshot SEO doing? Over the past five months we have improved our dollar-based client retention by nearly 10 percent! We have even had a couple of months where our dollar retention has been more than 100% based upon some wonderful upgrades.

To say the least, I am delighted!  (Quiet though, please do not let all of our team know how delighted I am because I am urging them to do even better in 2012 . . .)