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Tired of leaky funnels and acquisition costs eating your margins? Then you need to start obsessing over customer retention. The smartest marketers know that keeping existing customers is the real growth hack.
But you can't improve what you don't measure. Measuring customer retention gives you insight into what’s working in your business and what’s not. After all, data-backed decisions are the way to build a loyal customer base that sticks and spends.
So, let's get tactical and dive into the 10 key customer retention metrics that will help you understand how effective your customer retention strategies are.
Why measuring retention is important
You're working hard to bring customers in, but are they sticking around? Measuring retention helps you understand your existing customer relationships and the health of your business.
It helps you pinpoint the friction points so you can make strategic decisions and optimize your customer retention strategies.
And acquisition is expensive. We’re talking 5 to 10x more than selling to an existing customer. Returning customers also spend 67% more than new customers through repeat purchases. So it pays to track retention.
10 essential customer retention metrics
You can't talk about keeping existing customers without digging into these 10 key customer retention metrics:
1. Customer retention rate (CRR)
The most straightforward customer metric is your customer retention rate (CRR), which measures the percentage of retained customers over a period of time.
Knowing your customer retention rate is your reality check. It indicates your ability to keep customers engaged with your brand throughout their customer lifetime with you.
A high customer retention rate means customers are responding to what you're putting out — they're seeing value and sticking around. A low customer retention rate signals underlying issues that need to be fixed to keep existing customers.
How to calculate:
Customer retention rate = (Customers at the end of the period) - (New customers acquired) / Customers at the start of the period
2. Customer churn rate
On the flip side of customer retention rate, your customer churn rate, or attrition rate, tells you how many customers leave over a given period.
It's a hard truth to swallow, but it's essential to assess the sustainability of your business model and the overall health of your customer base.
While some level of customer attrition is normal (people’s needs change and they move on), a high customer churn rate can cancel out some of your customer acquisition efforts.
The average churn rate varies by industry. Here's a quick snapshot based on 2024 data:
How to calculate:
Annual churn rate = (Number of customers at start of year - Number of customers at end of year) / Number of customers at start of year
3. Customer lifetime value (CLV)
The big picture customer retention metric, customer lifetime value (CLV), measures the total projected revenue from a customer. Basically, it’s what an existing customer is expected to spend over the course of their relationship with your business.
Knowing your customer lifetime value will help you identify which customers might be costing you more than they're worth and which loyal customers you should be investing in instead.
This metric is also your guide to customer acquisition cost (CAC). Ideally, your customer lifetime value should significantly outweigh your customer acquisition cost. If it doesn't, you're essentially spending more to get a customer than they're ever going to give you back.
How to calculate:
Customer lifetime value = Customer value * Average customer lifespan
Customer value = Average purchase value * Average number of purchases
4. Repeat purchase rate
Your repeat purchase ratio tells you the percentage of your customers who come back for seconds (and thirds, and fourths...). It's a direct measure of how effective you are at turning first-time buyers into loyal customers who make repeat purchases.
Check which types of consumers are making the most repeat purchases and refine your target buyer personas and retention strategies to attract more of those loyal customers.
How to calculate:
Repeat purchase ratio = Number of returning customers / Number of total customers
5. Customer satisfaction score (CSAT)
Are your customers happy with your brand, product or service? Your customer satisfaction score (CSAT) will tell you exactly that. Usually, the customer satisfaction score is measured directly after a specific interaction or experience for immediate customer feedback.
This quick pulse check will point out what areas need more work, whether it’s a clunky checkout process, slow customer support response times or a feature bug.
The customer satisfaction score is generally measured with survey questions, and customers will respond using a scale:
How satisfied were you with your [product/service/interaction]?
- Very unsatisfied
- Unsatisfied
- Neutral
- Satisfied
- Very satisfied
How to calculate:
Customer satisfaction score = (Number of happy customers (those who chose 4, 5) / Total number of respondents) x 100%
6. Net Promoter Score (NPS)
Your Net Promoter Score (NPS) gauges how likely your customers are to recommend your company, products or services to others.
While a killer Net Promoter Score doesn’t necessarily mean more growth and customer retention, if you compare it to your revenue growth rate and customer churn rate, you may be able to predict potential growth through customer retention and referrals.
NPS is based on this question: On a scale of 0 to 10, how likely are you to recommend our company, product or service to a friend or colleague?
Those who score 9-10 are your promoters, your most enthusiastic and loyal customers who are likely to send you referrals. Passives are those chilling in the 7-8 zone, satisfied but susceptible to other competitive offerings. Your detractors are the ones who score 0-6. They’re unhappy customers with a high risk of churning or negative reviews.
Knowing where your customers land on this scale gives you important intel on your brand's reputation and growth potential.
How to calculate:
Net Promoter Score = % of Promoters - % of Detractors
7. Time between purchases
Get strategic about marketing by measuring the time between purchases made by your customers. This data will reveal buying patterns and behavior that you can capitalize on.
Say, you notice a chunk of your customers restock their favorite coffee beans every four weeks. That's your cue to hit them with a timely "Your beans running low?" email around week three.
With this knowledge, you can time your marketing efforts to match their natural buying cycles. That way, you stay top of mind when your customers are ready to buy.
How to calculate:
Average time between purchases = Sum of individual purchase rates / Number of repeat customers
8. Average order value (AOV)
Your AOV gives you the lowdown on how much each customer spends. More importantly, it shows you where the untapped potential lies within your current customer base.
A low AOV could indicate things like pricing issues, poor product recs or ineffective upselling. You’ll want to dig into the "why" and design retention strategies to encourage more spending.
Tactics like upselling, cross-selling, product bundles or minimum order for free shipping can all help you increase revenue without acquiring new customers. 
How to calculate:
Average order value (AOV) = Total revenue/ Total number of orders
9. Customer engagement score
Transactions are not the only sign of a loyal customer. Customer engagement score measures how active and engaged your customers are beyond purchases.
A high customer engagement score means your customers are actively interacting with your brand. Why does this matter? Because customers emotionally connected to brands have a 306% higher customer lifetime value.
There’s no universal formula to measure customer engagement. You have to tailor it to your specific business goals with custom metrics. Then, determine the relative weight of each.
How to calculate:
For example, an ecommerce brand would value:
- Website visits (Weight: 2)
- Email opens (Weight: 3)
- Social media likes/shares (Weight: 1)
- Leaving product reviews (Weight: 5)
Customer X does this in a month:
- 10 Website visits: 10 * 2 = 20
- 5 Email opens: 5 * 3 = 15
- 2 Social media likes: 2 * 1 = 2
- 1 Product review left: 1 * 5 = 5
So, your customer engagement score for customer X is 20 + 15 + 2 + 5 = 42.
10. Revenue churn rate
Lastly, the metric that hits you right in the wallet: revenue churn rate. It tracks the very real revenue lost due to customer churn.
Even if your overall customer churn rate looks good, a high revenue churn rate can be a silent killer — it means you’re losing big spenders.
So, while counting heads is important, tracking the dollars walking out the door gives you a much clearer picture of the true cost of churn.
How to calculate:
Monthly revenue churn rate = [(MRR at start of month - MRR at end of month) - MRR in upgrades during month] / MRR at start of month
How to improve customer retention metrics
Now, let's talk about how to actually move the needle and improve these customer retention metrics:
Track retention with the best tools and data sources
Invest in a customer relationship management (CRM) system if you haven’t yet. It acts as a hub for all customer interactions, purchase history and engagement data, making it easier to identify trends and make adjustments.
Analytic platforms like Google Analytics and Adobe Analytics can provide insights into user behavior and potential drop-off points. Survey tools also come in handy for gathering direct customer feedback on customer satisfaction.
Your data needs to talk to each other to give you the full picture. Funnel’s data hub integrates all data sources, including CRM systems, analytic tools and ad platforms, into one unified place so you can see the connections between different touchpoints and what's actually driving customer retention.
Identify churn drivers and address them
You're losing customers, it happens. But look for patterns in which types of customers are leaving most often.
Are your free trial users churning at a higher rate than paying subscribers? If so, it may be because they're not seeing the value during the trial period or low customer satisfaction during onboarding. Breadcrumbs lead you to the root cause.
And don’t be shy. When a customer leaves, ask them why. Analyze support tickets, chat logs and call recordings to identify recurring issues or pain points — and take concrete steps to fix them.
Personalize customer experience at key touchpoints
Stop treating your existing customers like one homogeneous blob of buyers. Segment your audience based on their demographics, behavior and past purchases.
Personalize their experience and communication through emails, in-app messages and content. And suggest products they might actually want and content that aligns with their interests.
Based on their usage patterns, you should also reach out with tips or solutions before they even hit a roadblock. That's how you build serious customer loyalty.
How Funnel can help
Wrestling with scattered marketing data while trying to nail down customer retention is a headache nobody needs. Funnel is specifically designed to tackle that mess head-on.
Track retention trends with data integration
Funnel is your central hub, integrating data from hundreds of ad platforms, CRM systems, email tools and other channels — everything you need to see the effectiveness of your customer retention strategies.
No more data silos, just a single source of truth for customer retention metrics. Basic Fit was able to ditch that chaos with Funnel. Our easy, zero-maintenance integrations gave them a clear, unified view across all their channels, showing them exactly what drives results.
Streamline reporting to spot opportunities and risks
Funnel’s marketing reporting automates the grunt work of collecting, cleaning and organizing your marketing data. This means you get real-time updates on your customer retention metrics. You can dive deep, identify key levers and optimize your customer retention strategies without needing a data science degree.
And honestly, it’s really easy to use. Take Babyshop Group, for example. Their performance marketers loved how easy it was to transform data within Funnel's interface — something that's usually a huge headache without the right tools.
Reach sustainable growth through retention
Sustainable growth starts with keeping your customers. Track, understand and measure customer retention by religiously tracking those 10 customer retention metrics.
Book a Funnel demo now and see how we can help you build a loyal and spending customer base.