Customer Retention Rate

📊 What is Customer Retention Rate?

Customer retention rate is a metric that shows how many customers continue to buy or use a company’s services during a given timeframe. It is essential to assess loyalty, customer satisfaction, and predict business stability and growth.

🧮 Customer Retention Rate Formula Retention Rate

Retention Rate=(Customers at end of period−New customers during period/Customers at start of period​)×100

✅ Importance

• Measures the company’s ability to keep customers.
• Helps identify areas to improve experience and service.
• Retaining customers is generally more cost-effective than acquiring new ones.

📘 Practical example

If a hotel had 200 customers at the start of the year, gained 50 new customers, and ended with 180 customers, the retention rate is: ((180−50)/200)×100=65%

👉 Measures the percentage of customers who stay with a company over a specific period.