Product metrics. Part 9. Retention metrics

 


Retention Metrics


1. Customer Retention Rate


Definition: % of customers who stay active over a given period.

Formula:

Retention Rate = ((End Customers – New Customers) / Start Customers) × 100


Examples:


Subscription Box: Start: 1,000 | End: 950 | New: 100 →

((950 - 100) / 1000) × 100 = 85%


Health App: Start: 2,000 | End: 1,800 | New: 400 → 70%


EdTech: Start: 5,000 | End: 4,700 | New: 600 → 82%




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2. Churn Rate


Definition: % of users who stop using the product.

Formula:

Churn Rate = (Customers Lost / Total Customers at Start) × 100


Examples:


Streaming App: Lost 150 of 1,000 →

= 15% churn


Loan Management SaaS: Lost 50 of 500 → 10% churn.


Productivity Tool: Lost 300 of 1,200 users → 25% churn.




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3. Repeat Purchase Rate / Return Rate


Definition: % of customers who purchase again.

Formula:

Repeat Rate = (Repeat Customers / Total Customers) × 100


Examples:


E-commerce: 3,000 of 10,000 bought again →

= 30%


Pharmacy App: 2,000 of 5,000 repeat purchases → 40%.


Online Grocer: 1,500 of 3,000 monthly users reorder → 50%.




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4. Customer Lifetime Value (CLTV)


Definition: Predicted total revenue from a customer over their lifetime.

Formula:

CLTV = Average Order Value × Purchase Frequency × Customer Lifespan


Examples:


Meal Subscription: ₹500/order × 4 orders/month × 12 months →

= ₹24,000


Language App: ₹1,200/year × 3 years = ₹3,600 CLTV.


Online Retailer: ₹2,000/order × 2 orders/year × 5 years = ₹20,000.




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5. Product Return Rate (for Physical Goods)


Definition: % of products returned after purchase.

Formula:

Return Rate = (Returned Orders / Total Orders) × 100


Examples:


Fashion E-comm: 2,000 returns from 10,000 orders →

= 20%


Electronics Store: 150 returns from 3,000 orders → 5%.


Shoe Brand: 500 returns from 2,500 pairs sold → 20%.




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6. Average Subscription Length


Definition: Average time users remain subscribed.


Examples:


Streaming Platform: Avg. = 14 months.


Cloud Storage: 2.5 years avg. duration.


Fitness App: 9-month average retention.




---


7. Reactivation Rate


Definition: % of churned users who return to the product.

Formula:

Reactivation Rate = (Reactivated Users / Churned Users) × 100


Examples:


Fintech App: 300 of 1,200 churned users rejoined →

= 25%


Language App: 500 reactivations from 2,000 churned → 25%.


Workout App: 150 of 600 churned users returned → 25%.



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