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The customer retention rate is a crucial measure of a business's success. It is the percentage of clients/ customers who continue using a business’s products or services over time.

A high customer retention rate indicates a strong and loyal customer base, which is essential for a company's long-term growth and profitability.

This article will help you calculate customer retention rate. It also has tips to improve your customer retention rate. Read on to learn more.

What Is Customer Retention Rate?

It is the process of keeping your existing clients happy and loyal. You can then use these happy and loyal customers to acquire new customers.

You can achieve customer retention through various methods, including satisfaction surveys, improved customer service, and better product quality.

The first step to customer retention is acquiring new customers. However, while acquiring new customers is easy, retaining them over time is much more complicated. If you can retain more customers, you'll be able to build a more sustainable business that grows over time.

How to Calculate Customer Retention Rate

Calculating the customer retention rate is relatively easy. It’s because it involves basic arithmetic that doesn’t need specialized software. This makes it accessible to businesses of all sizes and levels.

Regardless of your expertise, you can track and analyze your customer retention rate with minimal effort. Note that customer retention rate is essential for understanding the health and success of the business.


1. Identify the period that you want to find out about the customer rate.

2. Find the record of the customers you got at the start of this period.

3. Find the total customer number at the period’s end.

4. Determine how many new customers you’ve acquired in this period.

With this information, you’re good to use the standard customer retention rate formula, which is [(E-N)/S] x 100 = CRR

  • E – Is the customers' number at the period’s end
  • N – Is the new customers' number that you've got within the period
  • S – Customer number at the start of the period

For example, a business has 100 customers at the start of the year. It then gets 20 extra customers during the period, thus having 120 customers at the end of the year. Its customer retention rate should be calculated as follows: [(120-20)/100] x 100 = 100%. This means the company retained all its existing customers during the year.

How to Improve Customer Retention Rate

Client retention is essential to running a successful business. Keeping your customers happy and ensuring they keep coming back for more is a key factor in your success. But customer retention can be challenging.

Building a loyal customer base takes time, effort, and the right strategies. Fortunately, there are proven strategies available to help you improve your customer retention rate.

1. Establish Online Presence

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Building an online presence is essential in today's digital world. Customers research, compare and buy online. Customers will likely only buy from you if they can find you online. With eCommerce sales predicted to reach $6.51 trillion by 2023, an online presence is a must for any business.

Customers want to know who you are, what you do, and how you do it. They want to know what sets you apart from the competition.

Without an online presence, you’ll miss out on sales; because customers won't see how you can help them. To increase your customer retention rate and boost your business, you need to have an online presence.

2. Provide Excellent Customer Service

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The more you can do for your customers, the more likely they will stay with you. Customer service should be at the heart of everything you do.

Customer service doesn't just mean answering questions and providing help and advice. It means understanding your customers' needs, concerns, and issues. You should be proactive by going above and beyond for your customers.

Do everything you can to help customers solve their problems and give them the best possible customer experience. They'll appreciate the extra effort you're putting in and will more likely recommend you to others.

If you need more resources to provide excellent customer service, hire extra help from freelance websites.

3. Use Personalized Communication

Customer retention may seem a bit old school, but its concept is as relevant as ever. This is an era where people increasingly buy services and products online. You'll only have a more straightforward path to success by improving customer retention rates.

Communicate with your customers one-on-one using emails, chats, etc. You should be personal and genuine in all that you say. You'll achieve this if you take the time to research your customers, find out what they want, and meet their needs.

The more personally you can communicate with customers, the more likely they will stay loyal to your brand.

4. Offer Incentives and Rewards

Giving incentives and rewards can help improve your retention rate. Rewards and incentives can come in many different forms. There are plenty of ways to reward your best customers, whether through exclusive discounts, free shipping, or money off their next purchase.

You can increase your customer retention rate after finding out what your customers want and then offering that to them.

5. Price Your Products Well

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Keep an eye on your prices to ensure you're not overpricing your products and services. You don't want to price yourself out of the market. However, you also want your prices to be reasonable, or you won't make a profit.

Price your products and services at a competitive level that will allow you to profit. If your products and services have the right prices, you'll be able to improve your customer retention rate.

6. Use Customer Feedback Positively

Customer feedback is valuable, so ensure you actively seek it out wherever possible. Take part in online forums and discussions. Respond to customer reviews on your website, social media pages, and eCommerce platform.

Please take note of any issues or concerns your customers may have and do your best to address them. The more you show your customers that you care and value their feedback, the better.

Feedback is more than just a way for your customers to voice their opinions. It's a way to discover what your customers like and don't like about your products and services. This will help you identify the areas where you can improve.

When you actively seek out customer feedback, you'll be able to use it to improve your business and customer retention rate and help you move toward success.

7. Offer High-Quality Products

This may seem obvious, but your products should be high quality. The product's quality should meet your customers' needs and expectations. This will likely make them stay loyal to your brand and increase your customer retention rate.

8. Create Great Blog Content

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Having lots of content on your website, and social media pages will help you to increase your customer retention rate. The more customers engage with your brand, the more likely they will stay loyal. This can make them more likely to continue doing business with you rather than switching to a competitor.

The blog content you post should be helpful, valuable, and of high quality. Informative content on your website and social media pages can attract new customers. It'll also keep them coming back to your site.

9. Continuously Improve Products

To retain customers, continually improving your products or services is important. This helps ensure that they meet your customers' changing needs and expectations. If you don't improve your products, you might experience customer dissatisfaction and loss of business.

In addition, note that the market and customer needs are constantly changing. So, staying up-to-date with industry trends is important to remain competitive and relevant to your customers.

What Is a Great Customer Rate?

Generally, a great customer rate is likely to refer to high customer satisfaction or loyalty. This means that a business has a large number of repeat customers who are highly satisfied with the products or services that the business offers.

A great customer rate also refers to a high percentage of customers recommending the business to others. Or those who have positive things to say about the business.

You can know if your business has a great customer rate by measuring customer satisfaction or loyalty in some way. This could involve conducting customer surveys, analyzing customer feedback, or tracking customer behavior (such as the number of repeat purchases or referrals).

After collecting this information, you can determine the business's customer rate and compare it to industry benchmarks or other businesses. This will help you see if you’re doing great.


Customer retention is an essential part of running a successful business. Keeping your customers happy and ensuring they keep coming back for more is a key factor in your success. But customer retention can be challenging.

Building a loyal customer base takes time, effort, and the right strategies. Fortunately, there are proven strategies available to help you improve your customer retention rate. These include building relationships, providing excellent customer service, using personalized communication, offering high-quality products, etc.