What is customer retention rate?
Jan. 3, 2019, 3:24 p.m.
Retention rate is measuring how many customers your company retains at the end of a given period, how many new customers you got and the number of customers who left your company.
The formula for counting your customer retention rate looks like this:
CE = number of customers at the end of a given period,
CN = number of new customers acquired during a given period,
CS = number of customers at the start of a given period.
Counting your retention rate might look complicated at first glance (especially if this is the first time you read about it), but it will get much easier to use with time. If your customer retention rate is low, it means you need to give much more effort to build a relationship with your customers – regular customers buy more (and more often from you), they are more forgiving in case you make a mistake, and they are happy to recommend your product or service to their friends and families. What is more, it is estimated that 20% of customers of a given company are the source of 80% of the company’s overall profits.