What Is Retention Rate?
Customer retention rate is a key performance metric that reflects the percentage of customers a business retains over a specific period.
It provides insights into your ability to maintain customer loyalty as a measure of the trust, satisfaction, and value your brand delivers to its audience.
A high retention rate indicates strong customer relationships, effective engagement strategies, and consistently delivering quality experiences or products.
By focusing on retention, you benefit from reduced marketing costs (as retaining a customer is generally less expensive than acquiring a new one), improved customer lifetime value (CLV), and a more stable revenue stream.
Using a retention rate calculator, you can quickly assess your current retention performance and identify patterns that drive customer loyalty.
How To Calculate? (Retention Rate Formula)
The formula to calculate the customer retention rate is straightforward:
Retention Rate (%) = [(E – N) / S] x 100
- E: Total customers at the end of the period.
- N: New customers acquired during the period.
- S: Customers at the start of the period.
For example, if you started the year with 1,000 customers, gained 300 new ones, and ended with 1,200 customers:
Retention Rate (%) = [(1200 – 30) / 1000] x 100 = 90%
