E-commerce Glossary

Retention Rate

Percentage of customers retained over a given period.

Retention rate measures your ability to keep customers active. Formula: Retention Rate = (End-of-Period Customers - New Customers) / Start-of-Period Customers x 100. A quarterly retention of 80% means you keep 4 out of 5 customers. It's the inverse of Churn Rate. Improving retention by 5% can increase profits by 25% to 95% according to research.

Related terms

AOV (Average Order Value)Average amount spent per order in your store.See definition ARPU (Average Revenue Per User)Average revenue generated per user over a given period.See definition Blended CACAverage acquisition cost including all marketing channels.See definition Blended ROASOverall return on all advertising spend combined.See definition CAC (Customer Acquisition Cost)Total cost to acquire a new customer.See definition Churn RatePercentage of customers lost over a given period.See definition
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