Measuring Marketing

Chapter 31 Retention Rate

Measurement Need

Marketing must not only attract customers so that initial sales are created, but retain customers over time since doing so is usually less expensive financially than new customer prospecting.i Therefore, knowing customer retention (CR) rates is important.

Solutionii

The retention rate measures the percentage of a company’s customers it is able to retain over a specified time period. The formula for retention rate is:

$\text{Retention}\text{rate}=\frac{C_a}{C_{at}}$

Where

Ca = number of active customers at end of time period

Cat = number of active customers at start of time period t

Impact

Retained customers are usually less expensive to maintain since marketing has to invest less in marketing education ...