Retention rate measures the percentage of customers who continue using a product over time. Learn how retention fits into KPI tree analysis.
Retention rate is the percentage of customers who remain active over a defined period. It is calculated as: (Customers at End - New Customers) ÷ Customers at Start × 100. In a KPI tree, retention rate is the complement of churn rate (Retention = 1 - Churn) and directly influences customer lifetime value. Improving retention is almost always more cost-effective than increasing acquisition.