How can I compute my customer retention rate?

Retention rate is the percent of customers you expect to still have as customers after a year.

When you are planning your startup, you will enter your best guess for your customer retention rate on the bottom-up customer acquisition sales model assumption page. See related questions below for where to do this.

After you launch your business, you will collect data on acquiring and losing customers, and thus determine actual values for customer retention. Annual Customer Retention Rate (ACRR) is calculated as follows:

  • ACRR = (# of customers at end of year - # of new customers acquired during year) / # of customers at beginning of year

Initially, you will find that the calculated retention rate varies wildly. As the company matures, retention rates should settle down, and you can replace the guess you entered into Offtoa with more reasonable values. And as you improve the quality of product and/or service, you should see retention rates improve.

Related Questions:

How do I change the customer retention rate? How do I change the customer attrition rate?

How do I change average order size? How do I change AOS?


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