What is customer retention rate?

Customer Retention Rate (CRR) measures the percentage of customers who continue to use your product or service over a specific period. This metric helps you understand how well you're keeping your customers engaged and satisfied.

High retention rates indicate that customers are happy and loyal. They find value in what you offer and choose to stick around. On the other hand, low retention rates can be a red flag. They often point to potential issues with your product or service that might be driving customers away.

Calculating CRR involves a simple formula. Start by determining the number of customers at the beginning of a period. Then, count how many are still customers at the end of that period. Lastly, subtract any new customers acquired during that time. Divide this number by the initial count of customers and multiply by 100 to get the retention rate percentage.

Example formula:

• ((Customers at end of period - New customers) / Customers at start) x 100

Understanding your retention rate provides valuable insights. It can reveal how effective your customer service, product features, and overall user experience are. If your CRR is high, it means you're doing something right. If it's low, it's time to investigate and improve.

How to calculate customer retention rate

1. Determine the number of customers at the start of a period.

2. Count the number of customers at the end of the period.

3. Subtract the number of new customers acquired during the period from the end total.

4. Divide the result by the number of customers at the start.

5. Multiply by 100 to get the retention rate percentage.

Example formula

((Customers at end of period - New customers) / Customers at start) x 100

These steps help you find the percentage of retained customers. Just plug in the numbers and follow the formula. It's straightforward and effective.

For further understanding of customer retention analytics, you can explore resources such as Retention Chart | Statsig Docs, which offers insights on how to measure and analyze user retention for product growth. Additionally, it might be useful to understand related concepts like Churn Rate and Bounce Rate to get a comprehensive view of your customer metrics.

Examples of improving customer retention rate

• Calm: Prompts for daily meditation reminders during onboarding led to a 3x retention increase. Simple changes can yield significant results. Learn more about retention.

• Kwit: Personalized experiences based on onboarding details reduced smoking relapse. Tailored interactions improve long-term retention. Explore customer journey management.

• Fishbrain: Conducted 40-50 experiments over 5 months; insights from product analytics led to a 50.6% weekly retention boost. Continuous testing and analysis pay off. Check out our A/B Testing Calculator.