# Retention Rate

## Definition, how to track & measure it

What is Retention Rate?

How to Track and Measure Customer Retention Rate

### What is Retention Rate?

As the old saying goes, it costs more to acquire a new customer than it does to keep an existing one. That’s why customer retention rate is such an important metric for businesses to track. But what exactly is customer retention rate? And how do you go about tracking and measuring it? Keep reading to find out.

Customer retention rate is a metric that measures the percentage of customers who continue doing business with a company over a given period of time. In other words, it tells you how “sticky” your customer base is. The higher your customer retention rate, the less money you have to spend on acquiring new customers, and the more profit you’ll ultimately make.

### How to Track and Measure Customer Retention Rate

There are a few different ways to track customer retention rate. The most common method is to simply calculate the number of customers you had at the beginning of a given period (let’s say, a month) and subtract the number of customers you had at the end of that period. This will give you your net customer churn for the month. To get your customer retention rate, simply take the number of customers you had at the beginning of the month and divide it by your net customer churn for the month.

For example, let’s say you had 1,000 customers at the start of January. By the end of January, you lost 100 customers but gained 50 new ones. Your net customer churn for January would be 50 (1,000-100+50), and your customer retention rate would be 95% (1,000/50).

### In Conclusion

Customer retention rate is an important metric for any business to track because it tells you how “sticky” your customer base is. There are a few different ways to track customer retention rate, but the most common method is simply calculating the number of customers you had at the beginning of a given period and subtracting the number of customers you had at the end of that period. By tracking your customer retention rate on a regular basis, you can make sure that your business is keeping its existing customers happy and profitable.