What is Customer Retention and Which Metrics Should you Track to Improve it customer loyalty

What is Customer Retention & Which Metrics Should you Track to Improve it


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Customer churn signals that something has gone wrong in your relationship with your customer. Without existing customers continuing to do business with your brand, it is difficult to achieve sustainable growth. 

So how do you ensure that the customers keep coming back for your product? The answer to that is customer retention. 

You must have heard time and again that it is 5X more expensive to acquire a customer than to retain one. A retention program is a key component of business growth, especially in this competitive business environment. 

In this blog, we are looking at some key customer retention metrics and strategies that will help you focus on delivering value to the customers and driving bottom-line growth.

What is Customer Retention?

Customer retention refers to the different measures taken by organizations to retain existing customers. High customer retention is very advantageous to companies, boosting customer lifetime value (CLV), increasing customer loyalty, and increasing sales. 

It differs from customer acquisition, as it focuses on existing customers or customers who have subscribed for a service or purchase products from your brand. It refers to your ability to convert a customer into a repeat buyer.

Improve Customer Retention

What is a customer retention rate?

Customer retention rate helps organizations quantify customer retention by measuring the percentage of customers the company has retained over a given period of time. 

The number of customers you lose or gain impacts the retention rate for your brand. You can use the following retention rate formula to calculate how many customers you have successfully retained over a period of time.

Customer Retention4


E  = Total number of customers when the period ends,

N = Total number of new customers you acquired during the period,

S = Total number of customers at the beginning of a period. 

The key to improving retention is understanding the metrics impacting the retention rate. In the next section, we will discuss what these metrics are. 

Additional read: Importance of customer retention.

Convert customers into brand ambassadors.

Our guide will help you learn: 

  • How to measure customer retention for your business?
  • Steps to building an effective customer retention program

6 customer retention metrics

What is Customer Retention and Which Metrics Should you Track to Improve it customer loyalty

There are many different metrics that you can track while trying to understand your customer attrition. Let’s go over a few of them:

1. Customer Churn Rate

Customer Retention5

It is a customer retention metric that measures the percentage of customers that stop doing business with a company within a specific period of time. It is usually measured monthly, quarterly, or yearly. Although most firms measure it quarterly, there are certain industries or organizations that experience a faster churn rate and will instead choose to look at it monthly. 

How to measure customer churn?

Churn rate = ( No. of customers at the beginning of a period – No. of customers at the end of a period) / No. of customers at the beginning of that period X 100

Customer attrition rate can be calculated by subtracting the number of customers at the beginning of a specific time period from the number of customers at the end of the time period and then dividing this value by the number of customers at the beginning of the specified time period. To get this answer as a percentage, simply multiply it by 100.

Importance of evaluating churn rate:

One bad experience is all a customer needs to stop doing business with your brand. The churn rate is a great indicator of how satisfied your customers are with you and determines customer loyalty.

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2. Customer Lifetime Value (CLV)

Customer lifetime value measures the total amount of money a customer will spend while doing business with a company, from the time of acquisition to the end of their relationship. 

How to measure customer lifetime value?

CLV = avg. value of a customer (monthly/annual) X avg. customer lifespan

CLV formulas can get pretty complicated as it is not an easy metric to define. Another formula for calculating CLV is the average order total multiplied by the average number of purchases in a year multiplied by the average retention time (in years). 

Importance of evaluating CLV:

CLV shows that your customers are satisfied with their purchase and their experience. It indicates that you are doing something right that your customers choose to spend their money on your product.

3. Repeat Purchase Ratio (RPR)

The repeat purchase ratio is a measure of the percentage of customers that return to make purchases over a specific period of time. RPR is a strong indicator of customer loyalty and customer satisfaction. 

How to measure RPR?

RPR = No. of repeat buyers/ No. of unique customers

The repeat purchase ratio can be calculated by dividing the total number of returning customers in a specified time period by the total number of customers in that time period. 

Importance of evaluating RPR:

It is an excellent way to understand if your products add value to your target customer’s life and meet their expectations. This customer retention metric shows how well your retention program is working and how willing customers are to purchase a second or third time.

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4. Revenue churn rate

RCC indicates the revenue your company loses when customers leave. For SaaS or subscription-model companies, this is a key metric to understand how the loss of each customer or downgrade of a plan impacts the revenue. 

How to calculate RCC?

RCC = (MRR beginning of the month – MRR end of the month) –  revenue accrued /MRR beginning of the month × 100

MRR or monthly recurring revenue refers to the sum of recurring revenue accounted for the month. 

Importance of evaluating RCC:

The revenue churn rate helps you add weight to each customer. It considers all the churned customers but also takes note of losing the big accounts. 

Unlike retention rate, which treats each customer equally, revenue churn rate ensures you don’t get blindsided by growth in retention numbers.

5. NPS®

Net Promoter Score® is a key indicator of customer loyalty. It tells you how satisfied your customers are to recommend you to their acquaintances. The score tells you how positively and happily they view their experience with your brand. 

How to calculate NPS® ?

How likely are you to recommend {service type} to your acquaintance? On a scale of 0 to 10. 

NPS® = % of promoters (score 9 or 10) – % of detractors (score 0 to 6) 

Importance of evaluating NPS® :

NPS® helps you recognize which customers are at-risk of churning and who are loyal. A single question tells you how your customers perceive their experience with your brand, its product, and its service. 

Additional read: Predict Customer Retention – Improve Forecasting, planning & implementation.

6. Reactivation rate

If your retention strategies perform well, you might even gain lost or at-risk customers back. The reactivation rate refers to the percentage of customers who return to do business with your company. 

How to calculate the reactivation rate?

Reactivation rate = No. of reactivated customers / No. of churned customers X 100

Importance of evaluating reactivation rate:

Reactivation rate as a customer retention metric helps you understand if your retention strategies are working. Bringing back old or at-risk customers helps you strengthen relationships, boost revenue, and gain competitive intelligence.

Read how Voxco helped Cible Recherche/Vox Opinion improve client satisfaction rating.

4 customer retention strategies

Retaining customers is more than a business transaction. It’s about customer-brand relationships built on loyalty. A little bad experience can cause a customer to look for alternatives. Here are some of the customer retention strategies to gain loyalty and build a lasting relationship. 

1. Notice signs of churning:

Just like you look for happy customers, you should extend your search and look for unhappy customers. Capture early signs of churning by tracking purchase patterns or gathering customer feedback using loyalty surveys like NPS and CSAT. 

2. Gather feedback for consistent pulse checks: 

 Don’t miss out on small experiences in the hope of gathering feedback in annual surveys. Conduct surveys after every interaction and at all critical touchpoints to gather real-time data. 

Use simple survey questions like NPS, star, smiley, rating scale, etc., to get quick feedback after a support call or a purchase. 

3. Reward profitable customers:

Big spenders and repeat customers deserve recognition. Rewards these customers and make some effort to show them how much you value the relationship. You can create personalized offers for them, such as added benefits or goodies, on top of usual loyalty rewards. 

4. Deliver personalized follow-ups:

Whether it is customer service follow-up or regular follow-up, personalize the communication to show that you see the customer as a person and not an ID number.

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How can Voxco help you Boost Customer Retention?

These are a few ways in which Voxco can help you achieve increased customer retention:

Omnichannel Survey Solution

Use Voxco to collect feedback from your customers through any channel! Connect with customers on their preferred channels and create an effective feedback loop using our versatile and powerful survey software

Customer Retention7

Voxco IVR

With Voxco, you have access to tools such as Voxco Dialer and Voxco IVR. Our Interactive Voice Response system will help you achieve a higher FCR (first contact resolution), boosting call centre efficiency and improving customer satisfaction. 

Track Different Customer Retention Metrics

You can’t improve your customer retention rate without first tracking and understanding it. Use our powerful survey software to conduct surveys that help you understand the different reasons for customer grievances and customer attrition. Use this data to improve customer interactions and boost customer retention. 


Boosting customer retention takes effort and time. Grow your relationship with customers, deliver an exceptional customer experience, and understand their perspective to make them feel valued and earn their loyalty. 

This sums up the 6 key customer retention metrics and why you should evaluate them. Use the metrics to learn where you stand and develop a strategy that works for you. There will be many trials and errors, but the efforts will help you turn your customers into fans.

FAQs on Customer Retention

Customer churn rate can be thought of as the inverse of customer retention rate as it measures the percentage of customers who are lost over time, while the latter measures the customers who stayed over time.

  •  Customer acquisition is the process of acquiring new customers, while customer retention is the process of retaining the acquired, or existing, customers. 

A customer retention strategy can be described as a plan that businesses create to reduce customer attrition by turning customers into repeat buyers and preventing them from switching to competitors. 

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