Loyal customers are key to the success of any business. Growing brands rely on the support of their existing customers not just for repeat sales, but also for those highly profitable word-of-mouth recommendations. Customers who come back time and time again are far more likely to refer friends and spread the word about great service, and that helps to push a brand forward and send profits soaring. 

Retaining loyal customers is sometimes easier said than done, however. So it’s up to brands to ensure that they prioritize retention strategies, and do all they can to exceed the expectations of current customers. Analytical insights often provide all the information brands need to keep improving their customer experience, with calculations like the retention rate formula playing a key role in top retention strategies. 

If you’re new to the retention rate formula, it could be time to find out more. Let’s see how it works.

What is the Retention Rate Formula?

The retention rate formula is a mathematical calculation that brands can use to measure the rate at which they have retained customers over a given period of time. It’s a relatively simple calculation, but it can have some eye-opening results. 

To work out the retention rate, marketers simply need to decide on a specific time frame to be analyzed, and then make a note of a few key metrics. They need to know how many existing customers a brand had at the beginning of the time period being analyzed, how many it had at the end, and how many new customers joined the fold between those two dates. 

The calculation itself is usually written as ((E – N) / S) * 100 = X. E refers to the customers at the end of the time period, N is the number of new customers who joined during this time, and S is the number of customers the brand already had at the start. 

To get the retention rate, it’s just a case of subtracting the number of new customers from the number of customers that were found at the end and dividing that figure by the number of customers the brand already had. The end result is then multiplied by 100 to give the true retention rate. 

Why is Customer Retention so Important for Growth Marketing?

Customer retention is vital in growth marketing because it reveals so much about a brand’s potential and how customer experience improvements could be used to facilitate growth. 

In order to grow organically, a brand must first ensure that it’s providing its customers with a standout experience that makes them likely to come back for more. If customers are left feeling underwhelmed by the service they received, then they’ll soon switch to competitors, and sales will start to slip. 

Customer acquisition is of course a key consideration in any growth marketing strategy, but attracting the attention of a brand new customer is time-consuming and expensive. It’s much easier and more cost-effective for brands to divert their energy into piquing the interest of their existing customers, tempting them back with new products and promotions. 

Companies that channel all their money and energy into acquiring new customers could find that existing customers are slipping away, and they’re left with dwindling customer numbers despite all their acquisition efforts. And that’s why brands need to prioritize retention as well as acquisition in any good growth marketing strategy. 

Best Practices For Maximizing the Retention Rate

There are many changes that brands can make to maximize their retention rate. Tips and tricks like personalization, great use of data, and customer journey improvements can all have a significant impact on the retention rate of a company – and therefore its ability to grow. Take a look at some of the following best practices to start improving your retention rate. 

Optimize the User Journey

Make the most of your data to analyze your user journey in detail. Look out for particular points where your company might be losing the interest of users, and take steps to make improvements where you can. By fully optimizing your user journey, you’ll leave customers satisfied and far more likely to return for another purchase.

Remember Canceled Customers Aren’t Churned Customers

If a customer cancels, they may not be lost forever. Provide feedback forms at the point of cancellation and encourage customers to share their thoughts on how the service could be upgraded. This will open a channel of communication between your customer service team and the customer, which could help to sway their decision back in favor of your brand. And even if it doesn’t, your team will gain some valuable feedback that can be used to inform future customer experience improvements. 


Nothing shows a customer that they’re valued by a brand quite like personalization, so use your customer data to make this a possibility. Personalize interactions as much as you can to communicate with existing customers in a more meaningful way. Not only will you be showing them products and services that they’re more likely to be interested in, you’ll also leave them with a great lasting impression of your brand. 

Leverage Your Data 

Data forms the basis of all good retention strategies, so put it to full use. Track the metrics that reveal all there is to know about your customer retention rate and make sure that important metrics are continuously monitored and analyzed. Start testing different user journey improvements to see how they might affect retention to check that you’re doing all you can to optimize the journey in a way that ensures customers return. 

The retention rate formula offers a quick and simple way to calculate the real retention rate of a brand, helping companies to understand how retention rates may be changing over time. This is crucial if a brand is taking steps to improve customer retention, as it will quickly show whether changes are proving effective, or whether more needs to be done to stop customers from leaving. By managing data well, and keeping a keen eye on customer retention rates, brands stand a far better chance of reaching their true potential. 

For app-first companies, Leanplum is the only solution that helps personalize and optimize all customer touchpoints, both inside and outside the app. Leanplum combines multi-channel Lifecycle Marketing with the ability to A/B test the Product Experience for complete, end-to-end personalization of the mobile journey. Break down organizational silos and eliminate point solutions to enable rapid growth.