What is retention rate?

Customer retention rate designates the percentage of customers a company has retained over a given time period. Retention rate is a reverse side of churn rate, which shows the percentage of customers a company has lost over a specific period.
The importance of retention rate as a metric varies depending on the industry. For example, for businesses providing services or selling software, customer retention is crucial and it directly affects profitability.
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How to work with retention rate?

There are several formulas to calculate customer retention rate, one of the most used and easy one is the following:

Customer Retention Rate = ((EC-NC)/SC)*100, where:
  • EC - number of customers at the end of a period
  • NC - number of new customers during that period
  • SC - number of customers at the start of that period
Let's say you released a mobile game. On September 1st, you had 1,000 players. You drew 500 more new players by September 30. However, at the same time, 200 players stopped playing the game. So, at the end of a period (in our case, one month) you had 1300 playing customers.

Let's calculate the retention rate: ((1300-500)/1000)*100=80

So, you managed to retain 80% of your customers. Every industry has their own benchmarks for retention rates. Needless to say, every company tries to retain the maximum percentage of customers. Proper customer relationship management software aims at increasing customer satisfaction and loyalty thus improving customer retention rate.
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Increasing retention rate with Bitrix24

If you are looking for simple and powerful customer management software to increase your retention rate, consider Bitrix24. With over 35 sales and marketing tools on board, Bitrix24 is a perfect choice for any business.

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