Customer and member retention rate calculator

Customer retention rate formula

Retention rate = retained customers from the starting group ÷ starting customers × 100. With consistent active counts, retained customers = ending active customers − new customers still active at the end. Churn rate = 100% − retention rate for that same group and period.

For example, start with 500 active customers and end with 480, including 30 new customers still active. You retained 450 of the original 500: retention is 90%, churn is 10%, and 50 starting customers were lost.

The common start/end/new-customer approach is described in Shopify’s retention and churn guide. New customers who already left are not in the ending active count, so subtracting them again would understate retention. If reactivations or changing definitions make the counts ambiguous, follow the original customer group directly.

Retention, repeat purchases and renewals are different

For paid memberships, define active consistently, including how you treat cancelled-but-still-paid members and failed payments. For an ordinary store, define an activity window that fits the product’s buying cycle. A historical customer record is not evidence that someone is still active.

Repeat purchase rate and renewal rate answer different questions. Someone can renew a membership without placing another product order, or place repeat orders without a membership. Use the metric that matches your experiment, with guidance from our customer retention examples.

How the 12-month revenue model works

Each month, the model collects the membership fee from active members and charges the extra retention cost to active scenario members. It then applies churn at month end. Both scenarios begin with the same members; no new members or reactivations enter during the year.

• Active members at the start of month m = starting members × (1 − monthly churn)^(m − 1).
• 12-month revenue = sum of active members × monthly fee for months 1 through 12.
• Expected members after month 12 = starting members × (1 − monthly churn)^12.
• Extra retention costs = sum of active scenario members × extra monthly cost for months 1 through 12.
• Revenue difference after extra costs = scenario revenue − current revenue − extra retention costs.

Expected member counts can be fractional; the model does not round them between months. Extra retention costs apply to all active members in the scenario, not only those retained beyond the baseline. Enter only added costs relative to the current program. Annual billing, refunds, variable churn and the timing of cash flows need a different model.

A simple membership scenario example

Suppose 100 members pay $10 per month. With 100% monthly churn, all pay for the first month and then leave, producing $1,000 over the year. With 0% churn, the same group produces $12,000. If the scenario adds $1 of retention cost per active member each month, its extra costs are $1,200. The revenue difference after those costs is $9,800.

This deliberately extreme fictional example makes the billing order and formulas easy to check. It is not a realistic target or evidence that benefits will eliminate churn. Use conservative assumptions and compare the results with observed customer behavior.

Connect retention with customer value

Use the customer lifetime value calculator for purchase frequency and contribution assumptions, or the loyalty ROI calculator to compare program contribution and costs. These tools answer different questions and their results should not be added together.

Memberply helps Shopify merchants configure membership benefits such as store credit, discounts and exclusive access. Start with a customer need, measure outcomes, and include benefit costs. Configuring a benefit does not guarantee a retention improvement.

Customer and member retention questions