What is customer retention rate (CRR)?
Customer retention rate is the share of your existing customers who are still with you at the end of a period. Here is the formula, a worked example, how it relates to churn and lifetime value, and the mistakes that inflate it.
Customer retention rate (CRR) is the percentage of customers you had at the start of a period who are still customers at the end of it. Customers won during the period are left out, so the figure shows how well you keep existing customers rather than how fast you add new ones. It is the inverse of churn rate.
How do you calculate customer retention rate?
Customer retention rate = (customers at the end of the period − new customers acquired during the period) ÷ customers at the start of the period × 100.
| Input | What it means |
|---|---|
| Customers at start (S) | Active customers on day one of the period |
| New customers (N) | Customers acquired during the period |
| Customers at end (E) | Active customers on the last day |
For ecommerce without subscriptions, define "active" first, for example a purchase in the last 12 months, or track repeat purchase rate instead.
Customer retention rate example
An illustrative UK subscription box starts a quarter with 2,000 customers, wins 400 new ones and ends with 2,150:
- Retention rate: (2,150 − 400) ÷ 2,000 = 87.5%.
- Customers lost: 2,000 − 1,750 = 250, a churn rate of 12.5%.
- At £30 a month per customer, keeping 100 more of them would be worth £3,000 a month.
Total customers grew 7.5%, but one in eight existing customers left. Headline growth alone would hide that.
Pitfalls
- Including new customers: it inflates retention and hides losses.
- Mismatched periods: monthly and annual retention are not comparable without conversion.
- Bought retention: heavy discounts keep customers but can erase their margin.
Related terms
See churn rate, customer lifetime value and LTV to CAC ratio.
How Grower helps
Run retention as its own campaign group in Grower, with an objective, theme, budget and target personas, and see spend by channel and ROAS over time. Mailchimp and HubSpot connect alongside your ad channels.
Frequently asked questions
What is the difference between retention rate and repeat purchase rate?
Retention rate tracks whether customers from the start of a period are still active at the end, which suits subscriptions and contracts. Repeat purchase rate is the share of customers who bought more than once in a period, which suits ecommerce without subscriptions. Both describe loyalty, but they answer slightly different questions and should not be compared directly.
Why does retention matter for marketing budgets?
Retention sets customer lifetime value, and lifetime value sets how much you can afford to pay to acquire a customer. Better retention lets you bid higher on acquisition channels and still make money. Poor retention means you must keep replacing lost customers just to stay the same size, which drains the acquisition budget.
How often should I measure customer retention rate?
Match it to how customers buy. Monthly subscriptions need monthly retention. Annual contracts are best measured around renewal dates. Ecommerce brands often look quarterly or yearly. Whatever you choose, keep the period consistent, and split it by acquisition channel or campaign to see which sources bring customers who stay.
See how retention changes the payback on acquisition spend with the free CAC payback calculator.