Customer retention
Keeping the customers you have - measured as the share still active or still paying after a period. The mirror of churn and the quiet engine of compounding: small retention gains outperform equivalent acquisition gains because they repeat every period.
Where it's used
Used in subscription, CRM and loyalty work, and read by cohort. Good for judging product fit and deciding where the next growth dollar goes.
How to calculate it
Customers left = Customers at the start × Yearly retention to the power of the number of years
Worked example
Illustrative numbersYou start with 10,000 customers and add none for five years. Compare keeping 80% each year with keeping 85%.
At 80% a year
10,000 customers × 0.80 to the power of 5 = 3,277
At 85% a year
10,000 customers × 0.85 to the power of 5 = 4,437
What it tells you
Five points a year end up as about a third more customers. A one-off acquisition win of the same size does not repeat like that.