Top 12 Customer Retention Metrics to Track and Improve Performance

There are two fundaments to business growth in 2025 - customer acquisition and customer retention. However, due to high customer acquisition costs, focusing on increasing customer lifetime value is proven to be the secret to success.

In this article, we will explore what are the key metrics to follow in existing customer revenue growth, and how to use this knowledge to improve customer retention.

Understanding Customer Retention Metrics

Before we start talking maths, let's see what customer retention metrics are and why they matter in the first place.

What are customer retention metrics?

Customer retention metrics are the factors you take into account when estimating the odds of retaining your customers.

There are different groups of metrics used to track and measure customer retention such as customer lifetime value, customer satisfaction score, as well as monthly recurring revenue, and other revenue metrics.

Put together, these numbers help you understand how well you are retaining your customers. Moreover, they help you discover which areas need improvement, and develop a plan to optimize your overall performance.

Why are customer retention metrics important?

The math here is simple - the more customers you keep, the higher revenue you are able to generate. With a higher repeat purchase rate, you don't need to spend as much resources on increasing the number of customers as the average customer lifespan increases.

Furthermore, gathering customer retention data helps your marketing, sales, and customer success teams gain insights into an overall customer experience. Based on a comprehensive analysis, they can develop customer retention strategies, customer engagement plans, and more.

Importance of tracking customer retention metrics

Tracking customer retention metrics helps you:

• Understand your customers better and improve customer loyalty.
• Create action plans to improve customer retention and customer satisfaction scores.
• Measure the effects of your strategies by tracking the number of repeat customers and revenue churn rate.
• Predict the revenue and make more sustainable financial plans on a quarterly and yearly basis.

Setting Goals and Benchmarks

In order to successfully use these metrics and improve customer retention rate, let's start with setting the goals of this analysis. Clever goal setting enables you to decide which metrics to follow and what kind of data to collect.

Determine what success means to you

First of all, visualize what the end game looks like for your business. Identify which areas you want to focus on - customer happiness, customer loyalty and advocacy, increasing repeat purchase rate, or reducing revenue churn rate.

For example, the goal can be that all new customers acquired stay in the funnel and make repeat purchases.

Identify the customer retention metrics that can help you inform your goals

The metrics you track depend on the goal you set. Overall, customer retention metrics help you understand how customers feel about your brand and how many loyal customers you have.

On the other hand, the number of churned customers helps you understand how many customers you are losing. Based on this rate, you could conduct exit surveys to understand the reasons for lost customers.

Get the data you need to calculate your metrics

Generally speaking, all the data you need to understand customer retention can be pulled from your customer relationship management system (CRM). Then, specific formulas are used to calculate customer lifetime, customer retention rate, churn rate, and other key metrics.

Set a SMART goal

Your goals need to be realistic and achievable. In practice, we often use SMART goals as a guideline for adequate goal-setting:

• Specific: Increase customer retention rate by 10%.
• Measurable: There are numbers within the goal helping you see whether the goal is met or not.
• Achievable: Not exaggerated, but feasible.
• Relevant: Appropriate for your niche under the current market situation.
• Time-bound: Able to reach within a set period of time.

Customer Retention Metrics

There are three essential customer retention metrics worth tracking - a customer retention rate, customer churn rate, and customer lifetime value CLV.

Customer Retention Rate

Customer retention rate measures the number of customers you have successfully kept active over a period of time. The most straightforward formula to calculate this metric is a number of active customers over a total customer number during the measured period.

Customer Churn Rate

Unlike customer retention rate, customer churn refers to the number of customers you have lost during a set period of time. The formula for calculating customer churn rate is the number of lost customers over the total number of customers acquired within the time span.

A high churn rate could indicate that your product or service is not meeting the customer expectations, and help you improve your weak sides. Customer churn rate is a critical indicator of customer satisfaction.

Customer Lifetime Value (CLV)

Customer lifetime value or CLV for short measures the total revenue you can expect from a single customer over your entire relationship. This number is the average revenue per customer and is calculated as a multiplication of a customer value and a customer lifespan.

For example, if you charge a subscription of $30 per month per customer, and an average customer stays with you for 10 months, your customer lifetime value is estimated at $300 in total.

Revenue Metrics

In the light of customer retention, revenue metrics refer to the existing customer revenue growth rate, revenue churn rate, and monthly recurring revenue or MRR.

Existing Customer Revenue Growth Rate

The existing customer revenue growth rate tells you how much success you have in generating revenue from loyal customers. A growing tendency means that your customer success, marketing, and support teams are doing a great job.

Usually, this rate is measured on a year-over-year basis, determining the spending of your current customer base.

Revenue Churn Rate

Customer churn means customer loss, while revenue churn refers to the revenue loss you face from existing customers. This is a crucial indicator of customer satisfaction with your product, service, offer, and support.

To calculate the revenue churn rate, divide the net revenue lost from existing customers by the total revenue at the start of the observed period.

Monthly Recurring Revenue (MRR)

MRR is the number of dollar bills your product or service generates each month. When spread over the course of time, you can see the oscillations in revenue and map growth tendencies.

To calculate MRR, multiply the average revenue per active account (ARPU) by the total number of monthly active accounts.

Engagement and Adoption Metrics

Your customer community engagement is vital to understand how your customers feel about your business. There are various metrics types to choose from, so select the ones that make the most sense for your business.

Daily/Weekly/Monthly Active Users (DAU/WAU/MAU)

The number of active users of your product or service is a general measurement of how engaged your customers are.

These are the most crucial user retention metrics for tracking engagement, as they provide an overall measure of how many users are returning to your product or service over a certain period of time.

Feature Adoption Rates

With new features added to your product, engaged customers are eager to learn and use what you have developed for them. Feature adoption rate measures the percentage of active users who take advantage of new features.

The formula here is: Number of users of a specific feature in the last month over a total number of product users × 100 = Feature adoption rate.

Average Session Duration

Average session duration makes sense for companies developing an online SaaS product. This metric signals how engaged users are while using the software. You can use internal analytics to learn these numbers or leverage a third-party tool such as Google Analytics.

The formula to calculate average session duration is the total time across all sessions over a total number of sessions.

Engagement Rate by Channel, Segment, and Cohort

You can further calculate the customer community engagement by channel (email, social media, etc). Then, you can calculate different metrics based on the customer segmentation and cohort.

Why do this? This kind of analysis makes sense when you want to understand who your real target audience is, and what is each segment of your audience most interested in. The insights you take out of such research help you optimize your strategy and refine marketing and sales targeting campaigns.

Rates are expressed in percentages, and the formulas are simple:

• Engagement rate by channel = Total number of active users from a specific channel over a defined time period over a total number of users from a specific channel × 100
• Engagement rate by segment = Total number of active users from a specific segment over a defined time period over a total number of users from a specific segment × 100
• Engagement rate by cohort = Total number of active users from a specific cohort over a defined time period over a total number of users from a specific cohort × 100

Loyalty and Satisfaction Metrics

Right next to the customer engagement metrics, customer success teams also track customer loyalty and their overall satisfaction with your product, service, and customer support.

Net Promoter Score (NPS)

Net promoter score or NPT is a scale that measures customer loyalty and showcases it on a scale from -100 to 100.

A negative score means that you don't have a base of loyal customers, while higher scores imply your customers are satisfied with the product or service and are likely to recommend your brand to their friends and family.

Customer Satisfaction Score (CSAT)

Customer satisfaction score is an average rate of how happy the customers are with your product, service, or specific aspects of your relationship.

The data is collected through collecting customer feedback, typically via survey, where customers rate different items on a satisfaction scale (e.g., 1 to 5 or 1 to 10). An average result across multiple items is the CSAT score.

Loyal Customer Rate

The loyal customer rate refers to the repeat customers who keep coming back to your product or service.

You can determine how many customers are loyal to your product by looking at the number of clients who have purchased from you more than once in a given time period.

Loyal customer rate identifies the percentage of your customer base that’s demonstrated loyalty to your business.

These customers are of utmost value to your business because not only do they keep generating revenue for your pocket, but they are also most likely to become your brand advocates and help you expand your customer base.

Repeat Purchase and Reactivation Metrics

Another relevant set of metrics that helps you boost member retention among your customer community is referred to as the repeat purchase rate and the number of reactivated customers.

Repeat Purchase Rate

The repeat purchase rate measures the percentage of customers who make repeat purchases of your product or service. It is calculated as the number of customers who are repeat customers over the total number of customers acquired over a period of time.

A high RPR is a good indicator of an effective customer retention strategy, and it signals customer satisfaction and loyalty.

Reactivation MRR and Reactivation Rate

Reactivation MRR is a metric that shows you how much MRR you have successfully returned from the previously churned revenue. At the same time, you track the number of customers that have returned after leaving your business.

The formula for calculating reactivation MRR is the sum of all monthly recurring revenue from customers that have formerly abandoned your business (reactivated customers).

Time Between Purchases

The time between purchases is the average time that takes a customer to make another purchase after the previous one. The smaller this number is, the happier your customers are to return to your brand.

For example, customers use/buy your software license each month, or get a cup of coffee from your coffee shop every morning.

Product Return and Stickiness Metrics

A good product is the product that sticks - aka the product that makes your customers stick with you. However, if the number of customers who return the product or ask for a refund is high, you must be doing something wrong.

Product Return Rate

The product return rate is the percentage of all products that are returned or refunded after being purchased. Ideally, this score should be 0% or as close to 0% as possible.

If this number is high, make sure to investigate what is the common reason for your product to fail to meet customer expectations.

Product Stickiness

Unlike the product return rate, the stickiness score should be as high as possible. This metric measures the rate at which customers return to your product regularly.

To calculate product stickiness, for a SaaS product, for example, divide daily active users by monthly active users.

Strategies for Improving Customer Retention

How to leverage these metrics and data to achieve a high customer retention rate? There are four general directions to which you can direct your customer retention strategies:

• Better onboarding
• Better communication
• Better customer service
• Better retention tools.

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Personalized onboarding

The initial step of the customer retention road is the purchase and onboarding.

Customized onboarding flows give you the best chance to make a memorable first impression on all of your customers—not just your average ones.

Moreover, if you introduce a smooth flow to the self-onboarding process, you are one step closer to a long-term engaged relationship with your customers.

In-app messaging and email campaigns

Improving communication is essential for revitalizing community engagement. Learn about customer engagement for different channels and segments to tailor targeted campaigns for the right audience.

Use in-app messaging and email campaigns to engage with customers and improve retention rates. Moreover, in-app messaging could be particularly effective because it allows you to speak directly to users and avoid spam filters.

Great customer service

Customer support metrics show you what you do right and what not so much when it comes to customer service and customer support.

Better service and reliable support are pillars to fighting high churn rates. According to Zendesk, 61% of customers would change to a competitor after just one bad experience in 2024, which is an increase of 22% compared to the previous year.

Better customer retention tools

The right tools could help you save both time and money when creating a smooth customer experience. They can help build better onboarding flows, improve messaging, and boost customer service records.

Moreover, if you treat your customers as a community, you'll see a high increase in both retention and loyalty. In that case, you'd need to investigate community manager metrics to meet the needs of your customer pool.

Conclusion

Are you ready to take the next step and elevate your customer retention rate through the roof?

Bettermode might be able to help you with that.

As a powerful community-building platform, Bettermode excels at bringing your customer community closer and helping you turn new customers into brand advocates.

Curious to try it? Sign up for free today.

FAQ

What is the metric for customer retention?

Customer retention is primarily measured by the retention rate, which calculates the percentage of customers who continue using a company’s products or services over a given period. This metric is often used alongside the churn rate, which tracks the percentage of customers lost during the same timeframe.

What are the 8 C's of customer retention?

The 8 C's of customer retention are commonly identified as Communication, Consistency, Credibility, Customer-Centricity, Customization, Convenience, Commitment, and Care. These principles serve as guidelines for fostering strong relationships and building long-term loyalty through clear, reliable, and customer-focused strategies.

What is the best way to calculate customer retention?

The best way to calculate customer retention is by using the formula: ((Number of customers at the end of the period vs. Number of new customers acquired during the period) / Number of customers at the start of the period) × 100. This calculation provides a clear percentage that reflects how effectively a business is maintaining its existing customer base over time.

What is a good customer retention ratio?

A good customer retention ratio is generally considered to be around 80–90%, though the ideal rate can vary depending on the industry and business model. Companies achieving retention ratios in the high 80s or above typically indicate strong customer loyalty and effective relationship management.

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