Which key performance indicator reflects success in maintaining existing customer relationships?

Which key performance indicator reflects success in maintaining existing customer relationships?

• A. Net Promoter Score (NPS)
• B. Churn Rate
• C. Retention Rate
• D. ARPU

Answer: (C)

The Retention Rate is considered the key performance indicator that reflects success in maintaining existing customer relationships. It specifically measures the percentage of customers that a business retains over a specified period. A high retention rate indicates that customers are satisfied and engaged, which suggests that the business is successfully fostering ongoing relationships. This is crucial because retaining customers often costs less than acquiring new ones, and long-term customers typically contribute more value over time. While the other indicators provide valuable insights into aspects of customer relations, they do not specifically focus on the maintenance of these relationships. The Net Promoter Score (NPS) gauges customer loyalty and satisfaction but does not directly indicate how many customers are retained. The Churn Rate measures the percentage of customers lost, which can reflect a failure in maintaining customer relationships rather than success. Average Revenue Per User (ARPU) provides insights into revenue generated per user but does not indicate how well a company is maintaining its customer base. Therefore, Retention Rate is the most direct and relevant indicator of success in relationship management with existing customers.

The Retention Rate is considered the key performance indicator that reflects success in maintaining existing customer relationships. It specifically measures the percentage of customers that a business retains over a specified period. A high retention rate indicates that customers are satisfied and engaged, which suggests that the business is successfully fostering ongoing relationships. This is crucial because retaining customers often costs less than acquiring new ones, and long-term customers typically contribute more value over time.

While the other indicators provide valuable insights into aspects of customer relations, they do not specifically focus on the maintenance of these relationships. The Net Promoter Score (NPS) gauges customer loyalty and satisfaction but does not directly indicate how many customers are retained. The Churn Rate measures the percentage of customers lost, which can reflect a failure in maintaining customer relationships rather than success. Average Revenue Per User (ARPU) provides insights into revenue generated per user but does not indicate how well a company is maintaining its customer base. Therefore, Retention Rate is the most direct and relevant indicator of success in relationship management with existing customers.