How to Calculate Your Customer Retention Rate

Do you know the formula for customer retention?
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Get ready to do a little math. While not my typical lesson, this is very important. After all, customer retention can lead to customer loyalty. Loyal customers are important to all businesses regardless of industry or size-large, small, B2B or B2C. Most businesses know their numbers, but do they know the right numbers? It’s easy to measure customer satisfaction at different levels. We find out how they liked our experience. We know that if they liked the experience, that is the first step in getting them to come back. The “getting them to come back” number is different than the “were you happy with us?” number. I’d love for customers to rate our business as a five out of five every time, but the number that is almost as important-maybe even more so-is the one that proves to us that the customer came back. That’s your customer retention number. If this is of interest to you-and it should be-then get out a pad of paper and a pencil. It probably wouldn’t hurt to have a calculator, either. Let’s get started. According to Zendesk, the customer retention rate measures the number of customers a company continues to do business with over a given period of time. It’s a percentage of existing customers that maintain loyalty to the business within that window of time. The formula for calculating customer retention is pretty simple. First, you need three pieces of information. You need “S,” which is the number of existing customers at the Start of the period of time. You need “N,” which is the number of New customers added in the period of time. And you need “E,” which is the total number of customers at the End of the period of time. To calculate the rate, first subtract the number of new customers added over a period of time (represented by the letter N) from the total number of customers at the end of that same period of time (represented by the letter E). That’s E minus N. Then, divide that number by the number of customers at the start of the period of time (represented by the letter S). Finally, multiply that number by 100 and you’ll have the percentage of customers who stay. In other words, E minus N divided by S equals the customer retention rate. Obviously, the closer you are to 100%, the better. Very few companies can say, “We retain 100% of our customers!” But if you’re close, you’re in the zone. When you continue to bring in new customers and get existing ones to return, that’s a recipe for success and growth!
This video will answer the following questions and more...
What variables do you need to know in order to find your customer retention rate?
How can you make your customer retention rate equal 100%?
Shep Hyken is a customer service & experience expert, award-winning keynote speaker and New York Times bestselling business author. For information go to www.hyken.com.
For information on The Customer Focus™ customer service training programs go to www.thecustomerfocus.com.
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[@lindsayhengehold5341]

❤ this for the app industry and all industries!

[@muskduh]

Thanks so much!

[@sanchitmittal3447]

This formula is wrong sir... Because e-n will always be equal to S. And s\s will always give 100%

[@sackdeezle]

Some customers at the end of the period “E” will have churned since “S”

[@vjm5246]

100 at start. 10 Added. 95 at end. You've lost 15. Retention rate = 85%

[@liemnguyenhuu7492]

If your E-N always equal S, then you have no leaving Customers. In real world, E-N usually less then S