Subject areaMetrics and measurement
Also known ascustomer retention
Retention is a company's ability to keep its customers over time.
It is measured as the share of customers who, active at the start of a period, are still active at the end; its reverse is churn, the share of those who leave. It concerns the moment after the purchase: repurchase, upselling and cross-selling, the relationship that continues.
It matters because a customer who stays generates value without a new acquisition cost, therefore it drives lifetime value (the value a customer brings over the whole relationship). The question it raises is simple: are we only winning new customers, or are we building lasting relationships? The same word is also used for staff, and means the ability to keep talent.
An example
A distributor of industrial chemicals notices that customers won with an entry discount reorder less than the others. It moves the budget from the discount to a technical service after the first supply, and measures the retention of the two groups after a year.
Related entries
broader entriesthis entry and narrowertwo levels down← up · → down
Enrico Giubertoni. Licensed under CC BY-NC 4.0: you may quote, translate and adapt this entry with the author’s name and a link, stating any changes. For commercial use, write to info@enricogiubertoni.com
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