A repository of acronyms, jargon, and useful definitions perfect for eCommerce founders & marketers like yourself.

Customer Retention

Customer Retention

Customer retention is the ability of the business to retain its existing customers over a certain period of time. A higher customer retention rate is indicative of the fact that the business has managed to build a sustainable relationship with its customers and these customers will continue to come back for doing business and might even refer their close ones to do the same.

We use customer retention rate as the metric to measure the number of customers who remain with the business at the end of a given period.

Formula to calculate customer retention rate

Customer retention= ((CE-CN)/CS)x100


CS= Number of customers at the start of the measured period

CE=ย  Number of customers at the start of the measured period

CN= number of customers acquired during the period

Ways to improve customer retention rate:

  • The game of loyalty - Things like a simple point-based system or an elaborate rewards scheme works to delight your customers.
  • Address the feedback - Listen to your customers and act on their queries. You need to show them that your business cares about them.
  • Customer feedback loop - Close the feedback loop with an NPS questionnaire, an email survey, or a similar mechanism.
  • Corporate social responsibility - Show that your business cares about the environment in which it lives and works.
  • Use groups and communities - Build belonging and a sense of ownership with user groups, forums, and communities, be it online or offline.
  • Personalization of offerings - Personalized customer support, product suggestions, and even compliments can make the customer feel special and stay loyal to your business.
  • Subscriptions - A subscription-based payment system will make it easier for customers to stick to the business than switch vendors from time to time.ย 
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