Customer retention
Customer retention refers to a business’s ability to keep existing customers over a specific period, encouraging them to continue purchasing or engaging with the brand. High customer retention rates indicate strong customer satisfaction and loyalty and are crucial for the business’s consistent revenue growth. The formula used to calculate the customer retention rate is:
Customer Retention Rate = [(End Customers - New Customers) / Total Customers at Start] × 100
Where:
- End customers is the total number of customers at the end of the period.
- New customers is the number of new customers acquired during the period.
- Total customers at start is the number of customers at the beginning of the period.
A good customer retention rate varies by industry, but 75% or higher is generally considered strong.
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How to improve customer retention?
Offer excellent customer service, personalize interactions, reward loyalty, and gather feedback for improvements. Using tools like HoodEngage improves this process by enabling precise targeting and real-time engagement across channels like push notifications, SMS, and email, ensuring timely, relevant interactions that keep customers connected and satisfied, ultimately driving retention.
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