What is customer retention?
Customer retention is a company's ability to keep existing customers over a period of time. It is measured by the customer retention rate: customers at the end of a period, minus new customers acquired, divided by customers at the start, times 100.
Formula
Retention rate = ((customers at end − new customers) ÷ customers at start) × 100
Example: start 1,000, end 1,050, new 120 → (1,050 − 120) ÷ 1,000 = 93%.
Strategies
| Strategy | Example |
|---|---|
| Great onboarding | Faster time to value |
| Effortless support | Quick resolutions |
| Proactive success | Health checks, QBRs |
| Close feedback loops | Ship requested fixes |
| Loyalty rewards | Perks for long-term customers |
Related revenue metric
Net revenue retention (NRR) measures revenue kept and expanded from existing customers.
