Customer Retention Rate: Formula and How to Track It

By Alva Chew · Updated 2026-11-02

Definition Customer retention rate is the percentage of customers you had at the start of a period who are still buying at the end of it. The formula is (customers at end minus new customers) divided by customers at start, times 100. A shop with 400 customers that keeps 280 has a 70% retention rate.

What is customer retention rate?

Customer retention rate measures how many of your existing customers keep buying from you over a set period. It is usually quoted per month, quarter or year. A higher number means more of the people who bought from you before are still coming back.

For a café, restaurant or shop, it answers a plain question: of the regulars I had in January, how many are still here in March?

How do you calculate customer retention rate?

Formula: (customers at end of period minus new customers gained) ÷ customers at start of period × 100.

Item	Illustrative number
Customers at start of the quarter	400
New customers gained in the quarter	50
Customers at end of the quarter	330
Retained from the start	330 - 50 = 280
Retention rate	280 ÷ 400 × 100 = 70%

These numbers are made up to show the arithmetic. The 30% who left is the churn rate, which is 100 minus retention.

How do you decide who counts as a customer?

The formula needs a rule for “active”. A shop has no contracts, so a customer who stops coming simply stops. Two rules work for most small businesses:

Bought in the last 90 days. Good for cafés and lunch spots where regulars visit weekly.
Bought in the last 180 days. Better for bakeries, restaurants and shops where a good customer may visit once a month or less.

Choose the window that matches how often your regulars really come, write it down, and never change it mid-year.

Why is retention hard to measure without a program?

A till records sales, not people. If a customer pays by cash or a different card each time, you cannot tell whether Tuesday’s customer is the same person as last month’s. Retention needs an identifier that stays with the customer.

A loyalty program supplies that. Each member has an account, so each visit is tied to a person and you can list who bought in each window. The figure only covers members, so it describes your most engaged customers and not everyone who walks in. Say so when you report it.

How does a points program affect retention?

A points-based loyalty program gives customers a balance that grows with each purchase, which is a reason to return. Whether it works for you is something to test, not assume. Compare the retention rate of members who joined before and after you launched, and look at whether members who redeem come back more often than those who never do.

Two companion numbers help you read the result:

Redemption rate. If few members spend their points, the balance is not giving them a reason to return.
Active members. The count of members who bought in your window is the top line of the retention formula.

What is a good customer retention rate?

There is no single good number, and a figure from another industry says little about your shop. Measure your own rate for a few periods first. Then judge changes against that baseline. A rise from 60% to 66% after a change you made is more useful than any benchmark taken from a different business.

Tracking it with Gimify

Gimify keeps one points balance per member across every outlet, so a member who visits a second branch stays one person in your records. A digital loyalty card in Google Wallet means members do not download an app. The free plan covers one outlet with unlimited members.

Questions owners ask

How do I calculate customer retention rate?

Subtract the new customers you gained in the period from the customers you have at the end, divide by the customers you had at the start, then multiply by 100. With 400 at the start, 330 at the end and 50 of those new, retention is (330 - 50) / 400 = 70%.

What counts as a retained customer in a café or shop?

Pick one rule and keep it. A common rule for a small shop is a customer who bought at least once in the last 90 days. Whatever you choose, use the same window every month so the trend means something.

Is customer retention rate the same as repeat purchase rate?

No. Retention compares the same group of customers across two points in time. Repeat purchase rate is the share of customers who bought more than once in a period, which can include people who joined during it.

How does a loyalty program help me measure retention?

A member account ties every visit to a person, so you can see who came back. Without it, a till only shows sales, not whether the same people returned.

Can retention rate go above 100%?

Not with this formula. Customers at the end minus new customers can never exceed customers at the start. If your result is higher, new customers were counted twice or the starting list is incomplete.