Glossary
Customer Retention Rate
Customer retention rate is the percentage of customers a business retains over a specific period. It's the inverse of churn rate and one of the most critical metrics for recurring revenue businesses.
How to Calculate Retention Rate
Retention Rate = ((Customers at End of Period - New Customers During Period) ÷ Customers at Start of Period) × 100
Industry Benchmarks
- Fitness/Gyms: 70-80% annual retention
- Salons/Spas: 60-75% annual retention
- SaaS: 85-95% annual retention
- Retail: 60-70% annual retention
The Economics of Retention
Acquiring a new customer costs 5-25x more than retaining an existing one. Increasing retention by just 5% can boost profits by 25-95%. Yet most businesses spend 80% of their marketing budget on acquisition and only 20% on retention.
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