Retention Rate

The opposite of churn rate, retention rate is the percentage of customers a brand is able to retain over a given period of time.

Why is retention rate important?

It is an important metric to keep an eye on, as the better you get at retaining customers, the more engaged they will be and the greater the opportunity for monetization will be. It is well known in business management that 80% of sales come from 20% of clients ¹

Many online businesses concentrate on acquiring new customers as the best way to increase revenue. This is despite the fact that the costs of retaining customers are much less than the costs of obtaining new customers—some sources would suggest it’s as much as 6 to 7 times less. Furthermore, according to one well-known source, the success rate of selling to an existing customer is 60-70%, while the success rate of selling to a new customer is only 5-20% ²

This suggests that retention is as important as new customer acquisition, if not more important. Indeed many of the leading retail brands see retention as the most significant driver of revenue, even higher than new customer acquisition ³

How do I increase my retention rate?

The key to retention is the ‘relationship’ you create with your customers, a bond, a personal touch that makes customers feel welcome, valued, and appreciated. The top reason for customer churn is the belief that their loyalty is not valued or appreciated—this is a symptom of the absence of a relationship.

A customer loyalty program is a great way to get you started thinking about how to retain the customers you’ve already got.  Other tactics you might consider include:

  • Anticipating site abandonment
  • Using your customer data to deliver the kinds of offers most likely to resonate with your customers. If you know the point in the purchase funnel where your customers abandon, for example, you can set about delivering offers to keep them interested at this key point.
  • Using polls and surveys to gauge sentiment to build up a picture of how your customers regarding your products, services, and overall experience. Use this data to optimize your site and the journey.


¹ Entrepreneur: The 80/20 Rule of Sales: How to Find Your Best Customers. Available here

² ClickZ: The Pareto Principle: Applying the 80/20 Rule to Your Business. Available here

³ KPMG: Omnichannel retailing: from expectation to execution. Available here