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Retention Rate

Simply put, the Customer Retention Rate is a measurement for customer loyalty. It provides information about the number of customers a company can retain over a certain period of time.

Retention Rate incorporates a window of time between two orders to look at longer-term loyalty. The window of time that is chosen to determine the retention rate is largely depending on the type of product sold by a company. For example, a grocery store would use a shorter window than a bed company.

One way to calculate the retention rate is to look at the proportion of customers who shopped a set amount of time ago and that would still be considered now. For example, a company could include all customers that purchased at least one of their products within the last 12-24 months and customers who purchased a product again during the last 6 months, and then divide it by the total number of customers who shopped within the last 12-24 months.

The Retention Rate is a measure that is especially important to mobile marketers. Since 80% of app users usually churn within the first 90 days after downloading a mobile app, developers are constantly trying to improve their customer retention. Some approaches to improve the customer retention can be:

  • App Onboarding
  • In-App Messaging
  • Push Notifications
  • Individualization
  • Predictive Insights
  • etc.