Retention Rate

Retention rate is the percentage of customers who continue to pay for one company’s product or service over a given period of time. Retention rate is a very important barometer of customer happiness. If a customer buys sandals at Nordstrom in July and then comes back to Nordstrom for winter shoes in November, that indicates customer retention. If retention rate is low and customers are dropping off once they make a purchase, (the customer doesn’t return to Nordstrom for the second pair of shoes) this is called “churn” which negatively affects a company’s bottom line.