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. This metric helps businesses understand key operational efficiencies, areas for improvement, and strategic opportunities to drive growth and user engagement.
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
Net Promoter Score (NPS)
A measure of customer loyalty and satisfaction based on user feedback.
Average Order Value (AOV)
The average value of orders placed on the platform.
Supplier Lifetime Value (SLV)
The projected revenue generated by a supplier over their tenure on the platform.
Repeat Purchase Ratio
The proportion of customers who make repeat purchases over a given period.
Customer Lifetime Value (CLV)
The projected revenue a customer will generate during their relationship with the business.