Retention Rate

Retention rate is the percentage of your customers who return to your website or app within a specific period to complete actions like a second purchase.

For example, if 100 customers bought last month and 80 returned this month, your retention rate is 80%.

Why use Retention Rate?

  • Pinpoint how well your campaigns keep customers coming back by tracking the impact of tactics like loyalty emails or exit-intent popups.
  • Benchmark business health and forecast revenue growth by measuring customer loyalty and lifetime value over time.
  • Reduce acquisition costs and maximize ROI by focusing spend on customers who are proven to purchase again.

Retention Rate vs. Churn Rate vs. Customer Lifetime Value (CLV)

MetricDefinitionAutonomy / MeasurementContext / FocusIntegration / Usage
Retention Rate% of customers who return to your app/website to engage or purchase again in a set periodFully measurable and often automated via analytics platformsMeasures ongoing customer engagement and loyaltyTied into CRM, analytics, and campaign adjustment tools
Churn Rate% of customers lost or who stop returning during a set periodCalculated from customer recordsFocuses on losses and attritionShown in retention dashboards, tied to risk mitigation
Customer Lifetime Value (CLV)Total net revenue a customer generates during their entire relationshipEstimated using average order value, purchase frequency, and retention dataSpans the full engagement duration and revenue generatedLinked with ROI, marketing forecasting, and personalization

FAQs

How do you calculate retention rate?

Retention rate is calculated as ((Customers at end – New customers) ÷ Customers at start)) × 100. This metric shows how well your brand keeps existing users over time and helps identify growth opportunities. For a detailed guide on measuring and optimizing retention, read the retention marketing strategies guide.

What is a good retention rate?

Retention benchmarks vary by industry and customer behavior, but many brands target 70–85%. High-performing eCommerce and SaaS companies often exceed 90%. Comparing your results with insights from your customer data platform can give a more accurate context.

Why is the retention rate more important than new customer acquisition?

Retained customers are easier to re-engage and typically deliver higher lifetime value than new buyers. They require fewer marketing resources and convert at a stronger rate due to existing trust. This makes retention a more efficient and profitable growth strategy for most brands.

How can you boost your retention rate?

Focus on personalized communication that reflects each customer’s behaviors and preferences. Introduce loyalty programs or incentives to encourage repeat purchases. You can also use marketing automation to deliver timely post-purchase journeys that strengthen long-term engagement.

What is the difference between retention and churn?

Retention measures the percentage of customers who stay active over a period of time. Churn reflects the customers who leave or stop engaging. Tracking both in your marketing analytics helps you understand customer health and identify where improvements are needed.