What is Retention Rate, and how do you calculate it?
In short – Percentage of customers who continue to use the marketplace over a period. A key marketplace metrics you should track.
Retention Rate Formula
Retention Rate = ((Customers at End of Period - New Customers Acquired) ÷ Customers at Start of Period) × 100%
Retention Rate measures the ability of the marketplace to retain customers over time. High retention indicates customer satisfaction and loyalty.
Improving retention can reduce the need for new customer acquisition, as retained customers often contribute more to revenue. Monitoring this metric helps in evaluating customer satisfaction initiatives.
How can you find your Retention Rate?
You should generally be able to calculate your Retention Rate with tools you already posess. If that's not the case, signing up for an analytics tool may make sense.
Among others, twosided is one of the tools you could consider. Out-of-the-box, you'll get over two dozens marketplace KPIs and detailed tracking for your supply, demand and other factors that determine marketplace health.
Explore other metrics
Order Frequency
Average number of orders placed by a buyer within a specific period
Cross-Sell Rate
Percentage of transactions that include additional products or services
Supply-Demand Ratio
Ratio of available listings to active buyers
Listing Quality Score
A metric evaluating the quality of product listings based on predefined criteria
User Net Adds
Net increase in the number of users over a specific period