Top 6 Customer Retention Metrics That Allow You to Measure Customer Loyalty

All of us are customers at some point, be it buying groceries or subscribing to internet services, and we have views about the brands. You may be very impressed with the products or services of some brands and become a loyal customer. On the other hand, you might have a poor experience with some companies and stop buying their products.

It is essential to understand how customers think and what makes them loyal to certain brands. Loyal customers are assets to the business. They talk to their family members and friends about the experience and convert them to customers, thus significantly contributing to the revenue.

Retaining your customers should be your prime focus, and a solid retention strategy can significantly increase revenue and profit. Some metrics allow you to measure customer loyalty. This article focuses on seven key customer retention metrics that track the loyalty of your customers and how you can improve them.

Why Should You Focus on Customer Retention?

Customer retention is convincing your customer to purchase your product or services regularly. It is crucial to growing your business and earning new customers without spending on advertisements.

Happy customers spend more and do marketing for your brand knowingly or unknowingly. Every loyal customer brings more customers, and your business may see unprecedented growth in a short time. Moreover, they also help in creating a brand name, especially if you are new to the business. Every business must know the customer retention metrics and focus on improving them.

6 Customer Retention Metrics to Track Brand Loyalty

1. Net Promoter Score (NPS)

A better net promoter score means more customers recommending your products to others. It is the most popular KPI (Key Performance Indicator) to measure customer loyalty and helps businesses know how likely they are to refer your products and services to others. Businesses ask their customers to rate their experience from 1 to 10. Based on customer ratings, the scores are divided into three categories.

  • Promoters: These customers rate your product or service with 9 and 10. They are fans of your brand and love it so much that they will recommend it to others.
  • Passives: Those who rate your service between 7 and 8 are either too happy or disappointed with your product or services. They are not interested in discussing your brand and usually refrain from promoting it.
  • Detractors: These customers do not have a great experience with your brand and rate their experience between 0-6. They say negative things about the brand, which damages your reputation.

You can calculate NPS as:

NPS = Promoters – Detractors

2. Customer Retention Rate (CRR)

Customers’ shopping patterns vary significantly; some customers may be seasonal shoppers, while others may buy regularly. Targeting every repeat customer and knowing their purchase habits and preferences is a complex process, even for companies with a small customer base.

Customer Retention Rate is a simple yet effective formula to measure customer loyalty. Many customers buy your products or services for the first time and are likely to choose your brand if they have a great experience. It would help if you found what percentage of the new customers are purchasing your products again over a period. It helps you understand if your current strategies are good enough to create loyal customers.

A higher customer retention rate means you have created a pool of loyal customers who will happily choose your brand repeatedly.

How to calculate the customer retention rate?

Customer Retention Rate = (Number of customers at the end of the period) – (number of new customers) / Number of customers at the beginning of the period.

3. Customer Churn Rate (CCR)

Customer Churn Rate (CCR) is a critical measure of customer loyalty. It is the number of customers you lose over a certain period to the total number you have at the beginning.

CCR, also known as the customer attrition rate, is crucial for businesses. A low CCR means very few customers are unhappy, and most customers are loyal to your brand. However, a high CCR is alarming for the business; you must be cautious and change your strategies.

Churn rate = Number of customers lost in a period / Number of customers at the beginning

4. Customer Lifetime Value (CLV)

It is another critical metric to measure customer loyalty. This indicator represents the money customers spend on your product or services. If the customers are happy with your brand, they will spend more, increasing the customer’s lifetime value. Higher CLV means customers are pleased, which is a great sign for your business.

Customer lifetime value is not as simple to calculate as it sounds. It requires you to know a few other metrics. It gives you an idea of how much revenue you can expect from every customer during his or her lifecycle. Multiplying the amount of money spent by the average customer divided by the average lifespan of each customer will give you this value. Therefore, you need to find the average lifespan of customers and the average money they spend.

5. Repeat Customer Rate (RCR)

Loyal customers are the ones who make multiple purchases. Repeat Customer Rate is an effective measure of customer loyalty; customers that are more loyal mean more repeat purchases. Your repeat customer rate is the percentage of the total number of customers who have purchased your product or service multiple times over a period.

Calculating the RCR is a simple process; divide the number of customers who made more than one purchase in a certain period by the number of customers for that period and multiply it by 100. You need to choose the period according to the product lifespan. It can vary from one month to two years, depending on the kind of products or services you deal in.

6. Customer Engagement Score

It is another way to measure customer loyalty. The customers who use your products or services always engage with your brand online. If you are selling your products or services online, you can track the frequency of their purchases, how much time they spend on your online store or which products they are interested in, the average order value, and many other things. To track engagement scores, you have to measure the following metrics.

  • The number of orders they place in a given period.
  • The number of times customers spend at your online store.
  • The frequency of their visit.

To measure customer engagement, you have to find the above metrics. Loyal customers will engage more with your brand than those who are not.

How do you increase customer loyalty?

Loyal customers are the heart and soul of your business as they purchase your servers multiple times. It helps you generate a fixed amount of revenue and profit over a period. It is not easy to retain customers and turn them loyal. However, you can take a few measures to improve customer loyalty.

  • Secure your store: Cyber security is a concern nowadays; no customer will shop on an unsecured website. You can boost the website or app security by installing an SSL certificate in your store. You can easily get a low-priced single-domain SSL, Wildcard SSL (Unlimited Subdomain), and multi-domain SSL Certificate online. It does not cost you a significant amount.
  • Offer discounts: Every customer likes rebates as it helps them save money. With too many brands and stores, customers have more options and shop where they have to spend less. Offering some discounts at times can help you retain customers.
  • Loyalty programs: Loyalty programs are a great way to retain customers. Most companies are using this strategy these days. For example, an e-commerce store offers a lower price for taking a one-time loyalty subscription for a period.
  • Offer convenience: One way to retain customers is to offer more convenience than competitors, like free home delivery or cash-on-delivery payment. These things add to customer convenience, and they like to stick to your brand.


Organizations always try to run after user loyalty. However, tracing the churn rate and its reasons is complicated. Therefore, important customer retention metrics are necessary because you must ensure that the marketing budget is not wasted on customer retention without building any strategy.