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Retention Rate Definition
Retention rate tracks the percentage of users or customers who continue to use a product, service, or app after a specific period. High retention rates indicate strong customer loyalty and satisfaction, making it a key performance metric.
How Retention Rate Works
- Total customers at the start of a period are recorded.
- Customers retained by the end of the period are counted.
- Retention rate = (Retained customers ÷ Starting customers) × 100%.
- It’s monitored regularly to assess brand or product stickiness.
Example of Retention Rate
A mobile gaming app tracks how many users return to play within 30 days of installation to gauge retention.
Why Retention Rate Matters in Advertising
- Indicates customer satisfaction and brand loyalty
- Reduces acquisition costs by maximizing existing users
- Supports long-term business growth and profitability
- Essential for sustainable, high-performing marketing strategies
