Customer Retention Rate – why it is a customer service KPI, and how to calculate it.

Customer retention is cheaper than customer acquisition.

This makes customer retention rate an important customer service KPI.

Customer retention rate is the percentage of customers you retain over a period of time versus the percentage of customers you lose.

Your existing customers generate 65% of your company’s business. Moreover, acquiring a new customer is seven times more expensive than retaining an existing one.

Your customer retention rate can provide you with insights into the factors that keep customers coming back to your business. It can also highlight areas where customer service could be improved.

How to derive your customer retention rate?

To calculate the customer retention rate, we need to look at three factors:

• Customers that you have at the start of the business (S)
• Customers that you have at the end of the business (E)
• The total number of customers acquired during the period for which you are calculating (N)

The formula for customer retention will then be as follows.

Want to learn more about crucial customer service KPIs you should track? We have done the homework for you.