Customer Retention Cost (CRC)

The CRC is the CAC equivalent for managing customer retention and engagement. Customer Success organizations and strategies vary widely from one company to another and this makes precise measurements difficult. Plus, there are not commonly available benchmarks for CRC. Still, you should attempt to incorporate CRC into your financial reporting if the precision validates the cost of measuring it. Costs that should be included in CRC are,

  • Customer Success Team salaries and wages, benefits and taxes, stock-based comp and allocations for overhead and facility expenses
  • Post-Contract Support activities designed to improve on-going customer engagement such as on-site training and end user marketing (blog posts, email campaigns, webinars) as well as any software required to support these activities. Add in payroll costs for employees that are not classified as Customer Success team members.
  • Salaries and wages for any employees that engage customers directly for issue resolution should be included. Engineers are often pulled into customer conversations when the discussions require specific technical expertise. If such interaction is common and occurs with some consistency from period to period, then the CFO should estimate the amount of time spent on these activities and include them in the CRC calculation. To compare and contrast these activities, your company should have a recurring meeting for Customer Success team to educate the R&D team on the ways in which customers are using the service. This allows engineers to incorporate customer behavior learnings into the product roadmap. These activities should not be included in the CRC.

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