It is usually measured by cohort: of the customers acquired in a month, how many bought again in each following month. Cohorts show whether retention is improving or the brand is renting customers through ads.
Small changes compound: lifting 90-day retention from 25% to 30% changes the value of every customer acquired from then on.
Formula
Retention rate = Customers from the cohort who bought again ÷ Customers in the cohort
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Related terms
- Cohort analysisCohort analysis groups customers by when they were acquired and tracks how each…
- Churn rateChurn rate is the share of customers who stop buying in a period; for…
- LTV (customer lifetime value)LTV is the total value a customer generates over their relationship with a…
Part of the growth marketing glossary by Shiva Sharma.