What Is Customer Retention Rate?
Customer Retention Rate (CRR) is a metric that shows the proportion of customers a business retains over a set timeframe, typically calculated monthly, quarterly, or annually. It’s a key performance indicator in contact centres and service-driven organisations, used to assess how well a business maintains ongoing relationships with its customer base.
CRR is calculated using the formula:
[(E − N) / S] × 100
Where:
- E = number of customers at the end of the period
- N = number of new customers acquired during the period
- S = number of customers at the start of the period
A high retention rate often indicates strong customer satisfaction, effective support processes, and value-driven service delivery. Conversely, a low rate may signal issues such as poor customer experience, ineffective onboarding, or insufficient follow-up.
Why Customer Retention Rate Matters
Retaining customers is generally more cost-effective than acquiring new ones. In contact centres, understanding retention performance can guide strategic improvements in service quality, agent training, and customer engagement. It also complements other CX metrics like churn rate and Net Promoter Score.
Related Terms:
- Churn Rate
- Net Promoter Score (NPS)
- Customer Satisfaction (CSAT)
- Lifetime Value (CLV)