Retention rate

Retention rate refers to the percentage of customers or users who continue to engage with a product, service, or platform over a certain period of time. It measures the ability of a business to retain its customers or users, indicating their satisfaction, loyalty, and ongoing interest in the offering.


What is retention rate?


In general, the retention rate is a statistical measure of the number of people who continue to be involved with an entity, such as a company or research project. Retention rate is a key metric for businesses, as it directly impacts long-term profitability and growth.


How to calculate retention rate?

Retention rate is often calculated like:

Retention rate= Nº of users at the end of a period /Nº of users at the beginning of that period 100*

For example, if you begin with 1,000 users and end with 900 users after adding 200 new users during the period, subtract the new users from the end total to find the number of retained users (900 - 200 = 700). Then, divide the retained users by the initial number of users (700 / 1,000) and multiply by 100 to get the retention rate. In this case, the retention rate is 70%, indicating that 70% of the users remained active during the period.


What is a good retention rate?

A high retention rate suggests that a business is effectively retaining its customers or users, while a low retention rate may indicate issues such as dissatisfaction, poor user experience, or lack of engagement.


How to increase retention rate?

To increase retention rate, focus on these five key strategies:

  • Enhance User Onboarding: Provide a seamless and informative onboarding process to ensure users understand the value of your product.
  • Personalise User Experience: Tailor content and interactions to individual user preferences and behaviors.
  • Improve Customer Support: Offer responsive and helpful customer support to address issues promptly.
  • Regular Engagement: Offer email marketing, push notifications, and other communication channels to keep users engaged with relevant content.
  • Gather Feedback: Collect and act on user feedback to improve the product based on their needs.