Retention Rate
Also called: customer retention rate
What is Retention Rate?
Retention rate is the percentage of existing customers who continue to buy over a period. It is the complement of churn and the foundation of lifetime value.
Why Retention Rate matters
Retention is the cheapest growth there is. Keeping an existing customer costs a fraction of acquiring a new one, and retained customers usually spend more per visit.
Retention Rate formula
Retention rate % = Customers retained at period end ÷ Customers at start × 100
Exclude new customers acquired during the period.
How Retention Rate works in practice
Improve it with the ordinary things: consistency, service recovery when something goes wrong, and a reason to come back. Measure it by cohort so a good month is not confused with a durable improvement.
Frequently asked questions
Consistency and how failures are handled. A well-handled complaint often produces a more loyal customer than a flawless visit.