Question

What formula is used to determine a company's customer retention rate?

o o o o
(The number of new customers during the period - the number of customers at the end of that period) x the number of customers at the start of the period x 100 Incorrect Correct
(The number of new customers during the period - the number of customers at the end of that period) / the number of customers at the start of the period / 100 Incorrect Correct
(The number of new customers during the period + the number of customers at the end of that period) / the number of customers at the start of the period x 100 Incorrect Correct
(The number of customers at the end of the period - the number of new customers acquired during the period) / the number of customers at the start of the period x 100 Incorrect Correct

Answer 1

The correct formula is:

(Customer count at end of period − New customers acquired during period) ÷ Customer count at start of period × 100

Or compactly: Retention rate = ((E − N) / S) × 100

Where S = customers at start, E = customers at end, N = new customers added during the period.

Example: start = 200, end = 220, new = 50 → ((220 − 50) / 200) × 100 = (170 / 200) × 100 = 85% retention.