FREE Customer Retention Calculator

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Approximately how long do your customers remain customers? This is what the customer retention calculator will do for you—showing you the percentage of how well you can retain customers over a defined period.

The customer retention rate (CRR) is vital to understand the overall condition of your business and the improvements it needs. As keeping existing clients is more advantageous than running for new ones.

Find out how much revenue you can generate depending on the number of customers, with our simple and easy-to-use tool.

Know what a good customer retention rate is for your business. And know how you can make customer retention even simpler with our tailored customer retention rate calculator for your business!

So, let’s explore this customer retention calculator, its importance, and how you can use it to keep your business healthy.

What is the Customer Retention Rate?

The customer retention rate defines as the percentage of the customer in a company that remains consistent over a specific time frame. The customer percentage rate (CRR) can be 100% if the numbers of potential customers remain the same within that specified period.

CRR helps you understand the factors that keep the consistency of the consumers with your company and what steps you should take to improve your overall customer service.

How to Measure Customer Retention Rate?

You can follow a few simple steps to measure the customer retention rate (CRR). It involves the number of customers a company had at the start(S), at the end (E), and the number of customers the company acquired over that particular time frame (N).

Finally, take the value of E and subtract it from N. Now divide the resultant amount by S and multiply it by 100 to get the retention rate.

So, here is the formula of CRR = [( E-N) / S] * 100

How to Calculate Retention Rate

  • The first step to calculating the retention rate is to set a particular time frame you want to measure.
  • The next step is obtaining the number of customers at the start of that specific time frame (S).
  • Collect the number of the total customer at the end of that specific time frame (E).
  • Now determine the number of new customers you gained over that measuring period (N).

Once you collect all the data, put the values in the retention rate formula and get the result. The retention rate varies among companies, and you can calculate it quarterly, monthly, or yearly.

Customer Retention Rate Formula

The customer retention rate (CRR) formula is = [( E-N) / S] * 100

  • S = The number of customers a company had at the start.
  • E = The number of customers at the end.
  • N = The number of customers acquired over a defined period.

Customer Retention Rate Example

Suppose a company had 130 customers at the start of October. In October, the company lost 10 customers and earned 20 new ones.

  • The customer’s number at the start of October was = 130
  • The customer’s number at the end of October is = 140

So, the customer retention rate is = 140-20 / 130 * 100 = 92.30%

The retention rate should be as high as possible. And in general, businesses should hit a retention rate of over 85%.

What is a Customer Retention Calculator?

A customer retention calculator is a tool used to measure the percentage of customers who remain constant over a designated period, such as weekly, quarterly, or monthly for a company.

It just needs three values to calculate it and help a company to determine its success and failure in terms of customer support, loyalty, and engagement.

The average customer retention rate may vary among industries, as in the case of media and professional services, the retention rate is pretty good and is around 84%.

What is a good customer retention rate?

Well, you will not get any clear answer to this question. Monthly subscription-based SaaS companies have different retention rates than accounting companies, which rely on one month of the year for 90% of their sales.

If you are in an accounting firm and in a good position, you can expect a good retention rate, while the rate will differ in the case of retail stores, where the possibility of getting repeat customers is pretty low. In short, the CRR tends to vary among industries. The customer retention rate for professional service and media is around 84%, retail 63%, telecom 78%, and the IT sector 81%.

Although you must know these are just general averages and may change when you dig into subsections of the respective sectors.

It might be tempting to compare your CRR with the industry’s, but don’t put too much emphasis on it. Just try to put your attention on enhancing the baseline number.

  Retail  Banking Telecom     IT  Insurance Professional     Services  Media
   63%    75%    78%     81%     83%      84%     84%

How to Calculate Dollar Retention Rate

We need to calculate the CRR to determine customer retention of a company. While analyzing the economy is equally essential for the overall growth of a business. With the help of the dollar retention rate, you can easily calculate whether the existing customers are beneficial for the economy or not and whether they are spending enough money on products.

The purpose is to retain all the customers while increasing their lifetime value. But it’s pretty natural to lose customers instead of having a good retention percentage and healthy competition on the market.

The dollar retention rate = Amount of the revenue at the start of the period + upgrades – downgrades – churn / amount of the revenue at the start of the period

Dollar Retention Rate Example

Let’s take an example of a food delivery app that offers discounts on food delivery every Saturday. But it results in a loss when the company offers discounts. This deal stretches over three months in the first quarter of the year. The customer retention rate for Q1 is 55% which is pretty good, but the operational rate for the first three months is not good.

The company decided to try surge pricing and stopped the first offer every Saturday. When they calculated the CRR for the second quarter, the rate decreased to 25%. Now they measure the dollar retention rate.

It’s clear that a healthier business model resulted in substantially higher profitability instead of a low retention rate. But the result can be against the company as well.

Customer retention could be higher, but dollar retention could be lower if surge pricing caused more purchases on other days of the week. That is why it is crucial to measure the dollar retention rate.

How to Improve Customer Retention Rate?

In order to run a business successfully, you must know all the tricks and strategies to retain customers. And if you feel like the retention rate is not satisfying, in that case, you need to focus on product quality, sales, marketing, pricing, and other crucial factors related to it.

So, take a quick look at some of the best techniques you can follow to improve the CRR,

1. Using customer feedback

Analyzing your client’s feedback is a great way to find out the loopholes in your business and thus improve the CRR. By this method, you can easily identify how the client feels about your brands and products and if they want to become a potential customer or not for your company.

You can apply this by using a satisfaction survey or the feedback bar on your website to gather users’ feedback that they can submit after using items. Many top businesses apply this tactic to achieve a high customer satisfaction rate.

2. Applying email service to encourage customers

One of the best ways to build interest in inactive customers is to provide automated email service via the CRM (Customer Relationship Management) system that compels them to take action immediately.

You can track users’ activity to analyze their interaction with the items and what features they like to explore while visiting your webpage. By sending an email that will contain other similar features, educational content, or some case studies, you can reapproach them in a better way.

3. Upselling the existing clients

If you want to enhance customer retention among loyal clients, upselling is a great way you should apply. You can convince them about the upgraded or the premium offers. It will not only improve the order value but equally boost retention.

As a reminder of the products and their features, you can use the existing content like the whitepapers or the ebooks to encourage existing clients to remain active as long as they want.

4. Optimize the user onboarding

In many cases, users simply don’t know how to leverage a product effectively, which leads to churn. A company must ensure that the customer knows about all the benefits a product can offer during this onboarding process.

You can arrange a training session in which the clients will learn the practices and workflow they need. It will help you build customer satisfaction and reduce churn over time.

5. Provide a loyalty program

The customer loyalty program is another beneficial way to build a connection with loyal customers while at the same time giving them rewards to make their consistency stronger.

There are plenty of ways to provide rewards in the form of discounts or by reducing the pricing on certain products for long-term loyalty to that brand. It ultimately leads to reducing their tendency to churn.

6. Noticing customers who want to churn

Customers that churn are easier to identify when KPIs (Key Performance Indicators) are based on customer satisfaction. You can notice several warning signs by which you will know who doesn’t want to continue with your company.

Such as checking the activity level of customers. If you notice that the user did not use any item for about thirty days, in that case, you need to find out the issue. So, your focus should be identifying issues a customer has faced and resolving them to reduce the churning risk.

FAQs About Customer Retention Calculator

Below are frequently asked questions regarding the Customer Retention Calculator

Is the Customer Retention Calculator Free?

Yes, the customer retention calculator is absolutely free of cost. You can use this tool to identify how well you can retain your customers and what steps you can take for the overall growth of your business.

Why Is Customer Retention Calculator Important?

Calculating customer retention is essential as it will represent the overall scenario of how the business is operating. A good retention rate indicates the number of active users and their engagement. And that will ultimately lead to opening new scopes for monetization. CRR also enhances loyalty, captures new clients, and boosts ROI (Return on Investment).

Can you use Custom Retention Calculator For A Dropshipping Store?

Yes, you can definitely use a customer retention calculator for your dropshipping store. It is essential to calculate the CRR of dropshipping as this business is all about creating competitive scopes in the market