Retention Rate How to Calculate

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Customer Retention Rate Calculator

Your Retention Rate

0%

function calculateRetentionRate() { var s = parseFloat(document.getElementById('startCustomers').value); var e = parseFloat(document.getElementById('endCustomers').value); var n = parseFloat(document.getElementById('newCustomers').value); var resultDiv = document.getElementById('retentionResult'); var percentageDisplay = document.getElementById('percentageDisplay'); var resultText = document.getElementById('resultText'); if (isNaN(s) || isNaN(e) || isNaN(n) || s = 90) { feedback = "Excellent! You have high customer loyalty."; } else if (rate >= 70) { feedback = "Good performance. Your retention is healthy."; } else if (rate >= 50) { feedback = "Average. There is room to improve customer engagement."; } else { feedback = "Warning: High churn detected. Consider analyzing customer feedback."; } resultText.innerHTML = "Out of " + s + " original customers, you retained " + retained + " (excluding " + n + " new acquisitions). " + feedback; }

Understanding Retention Rate: The Ultimate Guide

Customer Retention Rate (CRR) is a critical business metric that measures the percentage of existing customers who remain loyal to your brand over a specific period. It is the direct inverse of "churn rate." High retention suggests product-market fit, customer satisfaction, and a sustainable growth model.

How to Calculate Retention Rate

To calculate your retention rate, you need three specific data points for a set time period (e.g., a month, quarter, or year):

  • S: Customers at the start of the period.
  • E: Customers at the end of the period.
  • N: New customers acquired during that period.

Retention Rate = ((E – N) / S) x 100

A Practical Example

Let's say you run a SaaS business. On January 1st, you have 1,000 subscribers (S). During the month, you sign up 200 new users (N). On January 31st, you have a total of 1,100 subscribers (E).

  1. Subtract new customers from total end customers: 1,100 – 200 = 900.
  2. Divide that number by the starting count: 900 / 1,000 = 0.90.
  3. Multiply by 100 to get the percentage: 90% Retention Rate.

Why Retention is Better Than Acquisition

According to research by Bain & Company, increasing customer retention rates by just 5% can increase profits by 25% to 95%. It is significantly cheaper to sell to an existing customer than to acquire a new one. Loyal customers also tend to spend more over time and become brand advocates, reducing your overall marketing costs.

What is a Good Retention Rate?

Benchmarking varies significantly by industry:

  • SaaS: 90% – 95% is considered elite.
  • E-commerce: 30% – 40% is common due to one-off purchases.
  • Banking: Typically 75% or higher.
  • Media/Subscription: 80% or higher.

The key is to track your trend internally. If your retention rate is dropping month-over-month, it's an early warning sign of issues with your product or customer service.

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