Customer Retention Rate

Measures how well a company retains its customers over a period.

Customer Retention Rate

Measures how well a company retains its customers over a period.

Customer Retention Rate

Measures how well a company retains its customers over a period.

Formula

Customer Retention Rate = (Number of Customers at End - Number of New Customers) / Number of Customers at Start * 100

Know your metric

Importance of

Customer Retention Rate

  1. Satisfaction and Loyalty Indicator

Indicates how well the company retains customer interest and satisfaction.

  1. Revenue Planning

Essential for forecasting and managing long-term revenue.


  1. Growth Predictor

Can be a strong indicator of potential for future company growth.

Drawbacks of

Customer Retention Rate

  1. Not Reflective of New Business

While important, high retention rates might distract from the need to attract new customers, potentially stunting growth.


  1. Difficult to Improve

Improving customer retention can be challenging, requiring significant investments in customer service, quality, and experience.


  1. Sensitive to Product Changes

Customer retention can be highly sensitive to changes in product offerings, pricing, or market conditions.

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