What is retention rate?
Retention rate is the percentage of existing customers who stay with you over a set period. To calculate it, divide the customers from your starting cohort who are still active at the end by the number in that cohort at the start, then multiply by 100.
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How to calculate retention rate
Divide retained customers from the starting cohort by customers at the start, then multiply by 100.
Percentages in this equation use numeric percent values: 40 means 40%.
Why retention rate matters
Keeping a customer is usually less costly than winning a new one, and long-term customers tend to bring in more revenue over time. Retention rate shows how well you're holding onto the people you've already earned.
Follow the same customer cohort
Count only customers who were active at the start, then check which of those same customers remain active at the end. Exclude customers acquired during the period, including those who joined and left before it ended. Define how reactivations count and use the same rule each time.
In the example, 850 of the original 1,000 customers remain active, giving 85% retention. New customer acquisition does not change that starting-cohort rate.
Ways to improve it
Strong onboarding, steady communication, and good support all help customers stay. Lifecycle emails, loyalty offers, and checking in with at-risk accounts can also help.
Disclaimer
This calculator is for informational purposes only, and we don't guarantee the accuracy of its results. You're responsible for verifying any results before relying on them. See our terms of use.
Common questions
How do you calculate retention rate?
Divide starting-cohort customers still active at period end by customers at the start, then multiply by 100. Keeping 850 of your original 1,000 customers gives 85% retention.
What is a good retention rate?
It depends on your industry and business model. Compare against your own history, and look at the rate for different customer groups.
What's the relationship between retention rate and churn rate?
They're opposites. When both use the same customers and period, retention rate plus churn rate equals 100%.
Is retention rate the same as customer loyalty?
Not exactly. Retention rate is a measured result, while loyalty describes how attached customers feel. Loyal customers tend to produce higher retention, but people can also stay because of a contract or lack of options.
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