Customer Retention Rate

Meaning & Definition 

Customer Retention Rate (CRR) analyses how many customers have retained as paying or returning, or who have re-established their relationship with the company over a particular time frame, while ignoring any new units of customers obtained during that period. If a company’s Customer Retention ratio is high, then customers will be satisfied with and loyal to the company and have established a positive relationship with it.

Important aspects of Customer Retention Rate

• Demonstrates how happy customers are with a company and its services.
• Encourages businesses to grow by having returning customers.
• Costs less to maintain customers than it does to acquire new ones.
• Helps align employee performance with the customer experience they provide.
• Can be used for establishing sales, service, and support team targets.

Compliance Requirements

• The use of this term does not require compliance with any particular law or statute.
• All businesses must obey certain types of laws related to customer management, such as consumer protection, privacy of information about customers, and fair trade laws.

The Digital Personal Data Protection Act, 2023, applies where customer personal information has been or will be processed, collected, or stored.