Few people know how to calculate customer retention, a metric that can help evaluate a business and its growth rate. The higher it is, the better the company works with its old customers, and then they come back for services and goods again.
In practice, the Retention Rate calculation is carried out according to the following scheme: first, the time interval during which the analysis will be carried out is determined. Then, from the total number of the company's clients during this period, you need to subtract those who came for a service or product for the first time. The resulting value must be divided by the number of leads recorded at the beginning of the study. The resulting value must finally be multiplied by one hundred, and the calculation is complete. Different areas of business may require different amounts of time to carry out calculations.
Examples of calculating the DRR
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The Retention Rate calculation chinese singapore b2c cell phone number data formula looks like this:
CRR = ((CE − CN) / CS)) x 100,
Where:
CE – total number of consumers at the end of the studied time interval;
CN – the number of leads received during the research period;
CS – number of clients at the beginning of the studied time interval.
In other words, the retention rate is equal to the difference between the number of customers at the end of the studied time interval and the number of leads received during the study period, divided by the number of customers at the beginning and multiplied by 100%.
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Metrics that impact Retention Rate
These are coefficients such as Churn Rate, NPS, Repeat Purchase Rate, LTV. Let's consider them in more detail.
Churn Rate – churn rate
The sum of this metric and RR is 100%.
To calculate Churn Rate you will need:
number of clients at the beginning of the month – S;
their number at the end of the month is K.
Churn Rate = (S − K) ÷ S × 100%