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Retention Rate | Definition

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What is Retention Rate?

Retention rate is a metric that tracks if and how often users return to your app.

The retention rate usually correlates with the quality of UX.

The retention rate can be calculated with the following formula:

Retention rate = ((cE - cN / cS)) x 100

cE = Number of customers at the end of the period

cN= Number of new customers acquired during this period

cS = Number of customers at the start of the period

Retention rate formula

Why is the Retention Rate important?

A good retention rate tells you that you have a good product that has users coming back.

However, it might be the case that you get a lot of new users, but your retention rate is bad. For example: Your new users visit your app only once.

This could indicate that your marketing is great, but your product needs improvement to fulfill the needs of your new users.

But it could also mean that marketing targets the wrong users. These users might not be a great fit for your product.

In any case, tracking your retention rate can uncover valuable opportunities for your product.

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