Customer Retention Rate Calculator

Customer Retention Rate Calculator

What is Customer Retention Rate?

Customer Retention Rate (CRR) is a key metric that measures a company's ability to retain its customers over a specific period. It's calculated by comparing the number of customers you have at the end of a period to the number you started with, taking into account any new customers acquired. A high retention rate indicates customer satisfaction and loyalty, which are crucial for long-term business success and profitability.

A high retention rate often leads to increased customer lifetime value (CLTV), reduced customer acquisition costs (CAC), and positive word-of-mouth marketing. Conversely, a low retention rate can signal underlying issues with your product, service, or customer experience, leading to higher churn and increased pressure to constantly acquire new customers.

How to Calculate Customer Retention Rate

The formula for calculating Customer Retention Rate is as follows:

CRR = ((E – N) / S) * 100

Where:

• E = Number of Customers at the End of the Period
• N = Number of New Customers Acquired During the Period
• S = Number of Customers at the Start of the Period

It's important to ensure that the 'New Customers Acquired' figure only includes customers gained during the period, not those who were retained from the previous period.

Example Calculation

Let's say a company starts the month with 1000 customers. During the month, they acquire 200 new customers and end the month with 1150 customers.

• Customers at Start (S): 1000
• Customers at End (E): 1150
• New Customers Acquired (N): 200

Using the formula:

CRR = ((1150 – 200) / 1000) * 100
CRR = (950 / 1000) * 100
CRR = 0.95 * 100
CRR = 95%

This means the company retained 95% of its existing customers during that month.

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