Customer Retention Rate
The percentage of customers who return to make another purchase within a given time period.
Customer retention rate measures how well a business keeps its existing customers over time. It is calculated as: ((Customers at end of period - New customers acquired) / Customers at start of period) x 100. A retention rate of 80% means four out of five customers came back.
Retention matters because it is dramatically cheaper to keep an existing customer than to acquire a new one. Research consistently shows that acquiring a new customer costs five to seven times more than retaining one. Even a 5% increase in retention rate can increase profits by 25-95%, according to Harvard Business School research.
For cafes, restaurants, and service businesses in Dubai, retention rate is the single most important metric that most owners never track. Without a loyalty programme, you simply do not know who comes back and who does not. Digital loyalty cards make retention visible — your dashboard shows exactly how many first-time visitors become regulars.
Related terms
Customer Lifetime Value (CLV)
The total revenue a business can expect from a single customer over the entire duration of their relationship.
Churn Rate
The percentage of customers who stop doing business with you over a given time period.
Repeat Customer
A customer who has made more than one purchase from the same business.