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Customer Retention Rate: A Key Metric for Measuring Your Customer Satisfaction

Posted on

March 27th, 2023

Customer Retention Rate: A Key Metric for Measuring Your Customer Satisfaction

The happier your customers are with you, the more likely they are to stick around and become repeat customers.  

One of the main factors that will determine a business’s success is customer satisfaction. According to Salesforce, 91% of customers unsatisfied with a brand will leave without complaining. 

With the help of different tools and metrics such as customer satisfaction score, net promoter score, and customer retention rate, you can measure your customer satisfaction (overall satisfaction, loyalty, trust, positive engagement, and intent to repeat business). 

In this article, we will discuss one of the metrics you can use to measure your customer satisfaction: Customer Retention Rate. 

What is Customer Retention Rate? 

One of the critical things to measure to know if your customers are satisfied with your business is the Customer retention rate. The customer retention rate is the percentage of existing customers who continue doing business with you after a given time. By keeping track of your customer retention rate, you will understand how well your business is in keeping your customers happy and retaining them.

How to calculate your customer retention rate 

To determine your customer retention rate, you need three key numbers: 

  • Total number of customers at the start of a given period (CS) 

  • Total number of customers acquired during a given period (CN) 

  • Total number of customers at the end of a given period (CE) 

Once you have this information, the formula to calculate your customer retention rate is:


If your retention rate within a given period is 100%, this means that you lost 0 customers and if your retention rate is 0%, it means you lost all your customers.

For Instance, let’s say you want to calculate your retention rate in March. At the beginning of March, you had 205 customers. During the month, you gained 32 new customers but by the end of the month, you had a total of 221 customers. Your retention rate would be calculated as follows:


This means that your retention rate in the month of March was 92% and you lost 8% of your customers within that month.

Strategies to Improve Retention Rate

Now that we understand how to calculate our customer retention rate, let us break down the different strategies to employ to retain your existing customers and turn them into loyal customers; thereby improving your retention rate.

  1. Invest in providing a positive customer experience: You need to understand that your customers’ experience begins before they reach out to you; it begins the moment they become aware of your business till their post-purchase experience. Your customers’ experience when interacting with your business will determine if they become repeat customers or not.

  2. Consistent engagements with your customers: Send out newsletters, engage with your audience on your social media platforms, and constantly ask them for feedback.

  3. Personalize your customer experience: Personalize all offerings and interactions to each customer’s needs and preferences. This will make your customers feel valued and encourage them to come back.

  4. Introduce customer loyalty programs: Offer rewards, discounts, and exclusive offers to your existing customers. This will incentivize them to make repeat purchases.


To improve customer satisfaction, you need to develop a customer-centric approach to your business. Focus on providing a positive experience to all your customers; both new and existing. This will encourage them to be loyal to you and to continue supporting your business.

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