Customer Retention Rate Calculator

What is customer retention rate?

Customer retention rate is an important metric that is used to measure the percentage of customers who remain your customers after a given period. This rate reflects the effectiveness of your customer engagement and customer retention strategies, the quality of your products and services and how satisfied your customers are with them.

How to use the customer retention rate calculator

To calculate your customer retention rate, input the number of customers at the beginning of the given period, the number of customers at the end of the period, and the number of new customers that you acquired during that period. The tool will then determine your retention rate, providing insights into how well your business is retaining its customers.

Customer retention rate formula

Customer Retention Rate=(Customers at End of Period−New Customers Acquired)/Customers at Start of Period×100

Understanding the customer retention rate result

Depending on your industry, the ideal customer retention rate will vary. Here’s what the results would represent:

A high retention rate indicates that your customers are staying with your business. The higher the rate, the more effective are your retention marketing strategies
A low retention rate suggests that many of your customers are leaving. This could indicate that you need to take steps to increase customer satisfaction and optimize your retention strategies.

When to calculate customer retention rate

Customer retention rate is an important metric that should be calculated regularly. It should especially be calculated in the following situations.

During annual or quarterly performance reviews
After implementing a new customer loyalty program
Before making a decision about budget allocation between customer acquisition and retention efforts
After major product updates
When your competitors have major updates or launch a new product

How to calculate Customer retention rate with example

Suppose you started the quarter with 800 customers and gained 200 new customers, and had 900 customers at the end of the quarter. You can calculate the customer retention rate as follows:

Customer Retention Rate=(Customers at End of Period−New Customers Acquired)/Customers at Start of Period×100

Customer retention rate = [(900 - 200)/800] x 100 = 87.5%

In this example, your customer retention rate is 87.5% This means that 87.5% of your customers stayed with your business at the end of the quarter.