Formula
Customer Retention Rate = [(Customers at End of Period – New Customers) ÷ Customers at Start of Period] × 100
Calculation Example
If a company starts with 1,000 customers, gains 200 new customers, and ends with 1,100 customers, Retention Rate = [(1,100 – 200) ÷ 1,000] × 100 = 90%
Data Source
CRM software, billing systems, customer databases
Tracking Frequency
Monthly, Quarterly, Annually
Optimal Value
Higher is better; a rate above 80% is ideal for most industries.
Minimum Acceptable Value
A low retention rate suggests poor customer satisfaction.
Benchmark
Industry benchmarks: SaaS ~85-95%, Retail ~60-80%, Telecom ~70-90%
Recommended Chart Type
Line chart (to track trends), Bar chart (to compare segments)
How It Appears in Reports
Displayed in business reports to track customer loyalty.
Why Is This KPI Important?
Indicates how well a company retains its existing customers.
Typical Problems and Limitations
May not reflect true loyalty; customers may stay but be dissatisfied.
Actions for Poor Results
Improve customer experience, introduce loyalty programs, enhance support.
Related KPIs
Customer Churn Rate, Net Promoter Score (NPS), Customer Lifetime Value (CLV)
Real-Life Examples
A SaaS company improved retention from 80% to 92% by enhancing onboarding and customer support.
Most Common Mistakes
Focusing on retention without actively engaging customers.
