Retention rate is a measure of how well a business is able to retain its customers over a given period of time. It is usually expressed as a percentage, and is calculated by dividing the number of customers retained by the total number of customers at the beginning of the period, and multiplying the result by 100.
For example, if a business has 1,000 customers at the beginning of the month, and 900 of them are still customers at the end of the month, the retention rate for that month is 90%.
Retention rate is an important metric for businesses, as it is often more cost-effective to retain existing customers than to acquire new ones. High retention rates can also be an indicator of customer satisfaction and loyalty, and can lead to positive word-of-mouth marketing and increased customer referrals.
Retention rate can be influenced by a variety of factors, including product quality, customer service, pricing, and competition. By monitoring retention rates over time, businesses can identify areas for improvement and take action to improve customer retention and increase revenue.