Retention Rate Calculation Example

Your Customer Retention Rate is:

0%

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How to Calculate Customer Retention Rate

Retention rate measures the percentage of existing customers who remain loyal to your business over a specific period. It is a critical KPI for understanding customer satisfaction and long-term business viability.

The Retention Rate Formula

Retention Rate = ((E – N) / S) x 100

• 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.

Retention Rate Calculation Example

Let's look at a realistic scenario for a SaaS company tracking their monthly retention:

Metric	Value
Customers at Start (S)	500
New Customers (N)	50
Customers at End (E)	520

Step-by-Step Logic:

1. Subtract new customers from total end customers: 520 – 50 = 470. (These are your retained customers).
2. Divide that number by your starting customers: 470 / 500 = 0.94.
3. Multiply by 100 to get the percentage: 94% Retention Rate.

Why Retention Rate Matters

Acquiring a new customer is often 5 to 25 times more expensive than retaining an existing one. High retention rates indicate strong product-market fit and healthy customer relationships. By focusing on retention, businesses can increase customer lifetime value (CLV) and create a more predictable revenue stream.

function calculateRetention() { var s = parseFloat(document.getElementById('startCustomers').value); var e = parseFloat(document.getElementById('endCustomers').value); var n = parseFloat(document.getElementById('newCustomers').value); var resultArea = document.getElementById('resultArea'); var resultDisplay = document.getElementById('retentionResult'); var summaryDisplay = document.getElementById('retentionSummary'); if (isNaN(s) || isNaN(e) || isNaN(n)) { alert('Please fill in all fields with valid numbers.'); return; } if (s <= 0) { alert('Starting customers must be greater than zero.'); return; } // Formula: ((E – N) / S) * 100 var retentionRate = ((e – n) / s) * 100; // Handle negative outcomes or illogical inputs if (retentionRate = 90) { summaryText = "Excellent! You have very high customer loyalty."; } else if (retentionRate >= 70) { summaryText = "Good retention. There is room to optimize further."; } else if (retentionRate >= 50) { summaryText = "Average. You may want to investigate why customers are leaving."; } else { summaryText = "Low retention. Focus on customer success and product feedback."; } summaryDisplay.innerText = summaryText; }