Definition
Customer retention rate
Customer retention rate is the percentage of customers a business keeps over a given period. A high retention rate means most customers stay and continue doing business, which is more profitable than constantly replacing them. It is the direct counterpart to churn rate.
Customer retention rate measures how well you hold onto customers. If you begin a period with 100 customers and 90 are still with you at the end, your retention rate is 90 percent. Higher is better, and it is the mirror image of churn.
Because keeping a customer costs far less than winning a new one, retention rate is one of the most important numbers for profitable growth. Improving it, through good service, follow-up, and staying in touch, compounds over time into a larger, more stable base of repeat business.
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