# What is customer retention rate?

> Customer retention rate is the share of your customers who are still buying after a period. The formula, a worked example and five ways to raise it.
- **Author**: Marxx
- **Published**: 2026-11-16
- **Category**: Metrics
- **URL**: https://marxx.ai/library-glossary/customer-retention-rate

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Customer retention rate is the share of customers you had at the start of a period who are still buying at the end of it. A rate of 88% means 88 of every 100 customers stayed. The other 12 left.

## The formula

Retention rate = ((E - N) / S) x 100

- **E** = customers at the end of the period
- **N** = new customers won during the period
- **S** = customers at the start of the period

New customers come out of the sum, so only people you already had are counted.

## A worked example

Say you start the quarter with 500 customers. You win 120 new ones. You end with 560.

- E - N = 560 - 120 = 440 customers kept
- Retention rate = 440 / 500 x 100 = **88%**
- Churn rate = 100% - 88% = **12%**, which is 60 customers gone

Define "customer" before you count. Pick a rule, such as "bought in the last 180 days", and keep it the same every period.

## What is a good rate?

It depends on how often people need to buy. A shampoo brand expects repeat orders every month or two. A sofa brand does not. Compare yourself with your own past quarters, not with another category.

## Why ad teams care

Higher retention makes each customer worth more over time, so you can afford to pay more to win one. See [LTV to CAC ratio](/glossary/ltv-to-cac-ratio) and [CAC](/glossary/cac). Repeat orders from past buyers often need less ad spend than new ones, which helps your [blended CAC](/glossary/blended-cac).

## How to raise it

1. Message buyers when the product is about to run out. A 30-day pack needs a nudge around day 25.
2. Offer a refill pack or a subscription.
3. Send a how-to-use message after delivery, on WhatsApp or email.
4. Run ads to past buyers using a [custom audience](/glossary/custom-audience) built from your customer list.
5. Fix the reasons people leave. Read your returns and one-star reviews.

To see why people leave, Marxx mines Google and review-site feedback into named personas with pain points. Each pain point traces back to the verbatim comment. We make Marxx. See [audience personas](/features/audience-personas).

## FAQ

### Is retention rate the same as churn rate?

No, they are two sides of one number. Retention plus churn adds up to 100%.

### How often should I measure it?

Match your buying cycle. Monthly suits a refill product. Quarterly or yearly suits things people buy rarely.

### Does a higher retention rate lower my ad costs?

Not directly. It raises what a customer is worth, so a higher cost per new customer can still pay back. Check it with [CAC payback period](/glossary/cac-payback-period).

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