Retention Rate is a metric that measures the percentage of customers who continue to use a company’s product or service over a certain period of time. It is used to measure the effectiveness of a company’s retention efforts, such as customer service, marketing campaigns, and product development.
The formula for retention rate is:
Retention Rate = (Number of Retained Customers / Number of Initial Customers) * 100%
It is calculated by dividing the number of customers who continue to use a company’s product or service by the number of initial customers, and then multiplying by 100% to express the result as a percentage.
For example, if a company has 100 initial customers, and 80 of them continue to use the company’s product or service after a certain period of time, the retention rate would be 80%.
It’s important to track retention rate over time and compare it with industry benchmarks, as well as to identify specific factors that influence retention, such as customer service, marketing campaigns, and product development.
Retention rate can also be calculated for different segments of customers, such as geographic, demographic, and behavior groups, which can help identify specific areas where the company can improve its retention efforts.
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