Customer Retention Rate
Date created: Oct 12, 2022 • Last updated: Oct 12, 2022
What is Customer Retention Rate?
Customer Retention Rate calculates the proportion of customers in a particular period that are retained into the next period.
Customer Retention Rate Formula
How to calculate Customer Retention Rate
A business had 1,100 customers at the beginning of the year and has 1,000 customers at the end of the year, out of which 100 are newly acquired. In this case, the Customer Retention Rate would be (1,000 - 100) / 1,100 which is approximately 81%.
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How to visualize Customer Retention Rate?
Visualize Customer Retention Rate as a summary chart. This type of data visualization, also known as a metric chart, will allow you to see the current value of your metric in comparison with a previous period. This way, you can quickly see the impact of your efforts (or lack of efforts) on Customer Retention Rate.
Customer Retention Rate visualization example
Summary Chart
Customer Retention Rate
Chart
Measuring Customer Retention RateMore about Customer Retention Rate
Customer retention is probably the most important loyalty metric because it represents the proportion of an organization’s customers that remain loyal from year to year. It is the opposite of Churn, which is the rate at which customers cancel subscriptions. Customer retention is critical to success and profitability. It is a well-known fact that it’s far more expensive (upto 10x more) to acquire a new customer than it is to retain an existing one which makes this metric crucial for every organization’s health, performance, and prosperity. A decreasing retention rate is a big warning sign that customers are not happy and must be addressed.
Recommended resources related to Customer Retention Rate
8-week retention benchmark from MixPanel for SaaS apps and websites.Metric Toolkit
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