Definition: Retention rate

The retention rate is a term used in marketing to designate the proportion of customers who actually remain customers over a given period. This term is often compared to loyalty rate because it is used to measure customer loyalty.

In the age of mass communication, where individuals are constantly solicited by advertisements, it is essential for a company to maintain a permanent and active relationship with its customers in order not to lose them to competitors.

It is to maintain this customer relationship that many companies are increasingly interested in different tools that allow them to know their customers perfectly, to manage them and to keep them for a long time. The retention rate is one of these tools.

How to measure the retention rate?


The calculation of the retention rate is a KPI, in other words a key performance indicator. It is therefore significantly linked to the company’s growth, which you must constantly monitor. This is why this calculation must be done on a regular basis and over a given period of activity (a month, a quarter or a year).

Once you have defined the period you are interested in, you need 3 other important pieces of information to be able to calculate your customer retention rate (CRR): the number of customers you have at the beginning of the period (D); the number of customers you have at the end of the period (F); and the number of new customers you have acquired throughout the period (N).

Thus, you can apply the following formula: CRR = [(F-N) ÷ D] x 100.

It is then important to benchmark your results, i.e. compare the percentage obtained with those of your competitors in order to know where you stand and possibly define strategies for improvement.

How to increase your retention rate?


To increase your retention rate, there are many actions you can take, especially within your customer service department. The central point of all these actions is to maintain a privileged contact with the customer who should never feel “alone” or abandoned throughout his experience. Here are some examples of actions you can take to increase your retention rate:

Satisfaction surveys: this involves developing a series of targeted questions that you will submit to your customers. These questions can be related to the delivery time, the quality of the service, the product or the website… The goal is to have a direct feedback on the key points of the purchase process. It is preferable to conduct these surveys by phone or email.

Emailing: these are emails that you program to be sent automatically to your customers in advance. These emails can be newsletters, welcome emails to be sent to each new registration or birthday emails that you can accompany with a promotional code or any other type of exclusive offer.