Retention
Definition
- Retention measures how well a company, product, or service can keep customers/users over time.
- It’s the opposite of churn (when customers leave).
- High retention = customers continue to engage, subscribe, or purchase.
Types of Retention Metrics
- Customer Retention Rate (CRR)
- $\text{CRR} = \frac{E – N}{S} \times 100$
- $S$ = number of customers at the start
- $E$ = number of customers at the end
- $N$ = number of new customers acquired during the period
- $\text{CRR} = \frac{E – N}{S} \times 100$
- User Retention (Cohort Analysis)
- Track how many users from a starting group (cohort) return over time.
- Example: 100 users sign up in Week 1 → 40 still active in Week 4 → 40% Week-4 retention.
- Revenue Retention
- Gross Revenue Retention (GRR) → how much recurring revenue is kept (ignores expansions).
- Net Revenue Retention (NRR) → includes upsells, cross-sells, and expansions.
Examples
- Mobile App: If 1,000 people installed an app, and 300 still use it after 30 days → 30-day retention = 30%.
- Subscription Service (SaaS):
- If you start with 100 paying customers, lose 10, gain 20 → CRR = $(110 – 20) / 100 = 90\%$.
- E-commerce: Tracking repeat customers across months.
Why Retention Matters
- Cheaper than acquisition → Keeping customers costs less than finding new ones.
- Revenue stability → High retention = predictable recurring revenue.
- Indicator of product value → If users stick around, product is valuable.
In ML Context
- Retention prediction models: predict which users are likely to churn.
- Retention optimization: run A/B tests or recommender systems to increase engagement.
Summary
Retention = how well a business keeps customers or users over time.
- Key metric in SaaS, mobile apps, and e-commerce.
- Can be measured as customer retention rate, cohort-based user retention, or revenue retention.
- Directly tied to growth, lifetime value (LTV), and churn reduction.