Sarah Malone

How to Improve Your Customer Retention Rate

How Do I Calculate My Customer Retention Rate? Customer retention rate formula: CRR = ((E-N)/S) X 100 For example, if a company had 100 customers at the start of the period (E), added 10 customers over the period (N), and ended the period with 100 customers (E), they would have a customer retention rate of 90%, or ((100 - 10) / 90) * 100 = 90%.    S = The number of customers at the start of the time period you’re reviewing (you may want to take an annual approach; monthly or quarterly may not give you appreciable trends to review)  E = The number of customers at the end of the same period  N = The number of new customers acquired during the period Different industries may see wide-ranging levels of attrition. For example, SaaS providers typically see annual churn in the 6% range; other industries with higher-priced products (which means a higher level of investment for the customer) may see lower annual churn rates. It’s also important to ensure you pay attention to monthly versus annual churn rates. A 5% annual churn rate is not ideal but is very manageable; a 5% monthly churn rate can have a serious negative impact on your business success. You've worked and invested a lot of time and money in connecting with prospects and nurturing leads. You’ve brought them through the sales process successfully, signed the contracts, and implemented your product or service.

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