KPIs for Marketing

KPIs for Marketing: product retention rate

Discover the importance of product retention rate as a key performance indicator (KPI) for marketing.

As a marketer or business owner, understanding the retention rate of your product is crucial. In a world where customer acquisition costs are increasing, having a high product retention rate can help you save money and build long-term relationships with your customers.

Understanding Product Retention Rate

Product retention rate is the percentage of customers who continue to use your product or service over a given period of time. This metric is a reflection of how well your product is meeting the needs and expectations of your customers. In today's competitive market, it's essential to keep your customers engaged and satisfied with your product to ensure their loyalty.

Retaining customers is crucial for the growth and success of any business. It's much more cost-effective to keep existing customers than to acquire new ones. By focusing on product retention rate, you can improve customer satisfaction, reduce churn, and increase revenue.

Definition and Importance

Product retention rate is a key performance indicator (KPI) that shows how successful your marketing efforts are in convincing customers to stick with your product. A high retention rate means that you are not only acquiring customers effectively but are keeping them satisfied and engaged with your product.

Product retention rate is a valuable metric that helps you understand how well your product is performing in the market. It's an indicator of customer loyalty and satisfaction. By tracking your retention rate, you can identify areas for improvement and make data-driven decisions to enhance your product.

How to Calculate Product Retention Rate

Calculating your product retention rate is simple. Take the number of customers who are still using your product at the end of a given period (e.g. a month) and divide it by the number of customers using your product at the start of that period. Multiply that number by 100 to get your product retention rate.

For example, if you had 100 customers using your product at the start of the month and 80 customers still using it at the end of the month, your product retention rate would be 80%.

It's important to track your retention rate over time to see if it's improving or declining. If your retention rate is declining, it's a sign that you need to take action to improve your product and customer experience.

Industry Benchmarks and Standards

Product retention rate benchmarks can vary across industries and depend on factors such as product type, price point, and customer behavior. It's important to look at industry standards and compare your retention rate to your competitors to understand how well you're performing.

For example, in the SaaS industry, a good retention rate is typically around 90%. If your retention rate is lower than this, it may be time to evaluate your product and customer experience to identify areas for improvement.

By understanding industry benchmarks and standards, you can set realistic goals for your retention rate and work towards achieving them. Remember, improving your retention rate is an ongoing process that requires continuous effort and attention to customer needs.

Factors Affecting Product Retention Rate

Product retention rate is a critical metric for any business. It indicates the percentage of customers who continue to use your product over time, and it can be a strong indicator of customer satisfaction and brand loyalty. However, product retention rate is influenced by a variety of factors that impact how satisfied your customers are with your product. Here are some of the key ones:

Product Quality and Features

The quality of your product and the features it offers play a crucial role in how satisfied your customers are. Customers expect products to be reliable, efficient, and easy to use. If your product doesn't meet these expectations, customers may become frustrated and switch to a competitor. It's important to continually improve the quality of your product and add new features that meet the changing needs of your customers.

For example, let's say you sell a fitness tracker. If your competitors offer a more comprehensive or higher quality product with more accurate tracking, longer battery life, and a better app interface, you may struggle to retain customers.

Customer Satisfaction and Support

Providing excellent customer service and support is a key factor in customer satisfaction. If your customers have a positive experience with your brand and receive timely support when needed, they're more likely to continue using your product. On the other hand, poor customer service can lead to frustration and negative reviews, which can harm your brand reputation and lead to lower retention rates.

For example, if a customer has a problem with your product and reaches out to your support team, they expect a prompt and helpful response. If your support team is slow to respond, unhelpful, or dismissive of the customer's concerns, the customer may become frustrated and switch to a competitor.

Pricing and Value Proposition

Price is always a consideration for customers, and a product that is considered expensive may not be able to retain customers long-term. However, if your product provides a unique value proposition that justifies the cost, you may have better retention rates. Customers are willing to pay more for products that offer significant benefits or solve a particular problem.

For example, let's say you sell a meal delivery service. If your prices are significantly higher than your competitors, customers may be hesitant to sign up. However, if your meals are made with high-quality, locally-sourced ingredients and cater to specific dietary needs, customers may be willing to pay more for the added value.

Brand Loyalty and Reputation

The reputation of your brand and the loyalty of your customers play a big role in retention rates. If your customers are loyal to your brand and trust you, they're more likely to continue using your products. Building brand loyalty takes time and effort, but it can pay off in the long run.

For example, let's say you sell eco-friendly cleaning products. If your customers believe in your mission to reduce environmental impact and trust that your products are safe and effective, they're more likely to continue using your products and recommending them to others.

In conclusion, product retention rate is a complex metric that is influenced by a variety of factors. By focusing on product quality, customer satisfaction, pricing, and brand loyalty, you can improve your retention rates and build a loyal customer base.

Strategies to Improve Product Retention Rate

Improving your product retention rate requires a combination of strategies that address the factors influencing customer satisfaction and retention.

Enhancing User Experience

Customer engagement and satisfaction are crucial to product retention rate. By improving the user experience of your product, you can encourage customers to continue using your product. This can include streamlining your product design, optimizing your website for mobile users, and making your product intuitive and easy to use.

One effective way to enhance user experience is by incorporating user feedback into your product development process. By listening to your customers and taking their suggestions into account, you can create a product that meets their needs and exceeds their expectations. Additionally, you can conduct user testing to identify areas where your product could be improved, such as by simplifying complex features or adding new functionality.

Implementing Effective Onboarding Processes

The onboarding process is the first impression that a customer has of your product. By providing a smooth and efficient onboarding process, you can improve the overall customer experience and encourage long-term retention.

One way to enhance your onboarding process is by providing clear and concise instructions that guide customers through the product's features and functionality. You can also use interactive tutorials and videos to help new users get up to speed quickly. Additionally, you can personalize the onboarding experience by asking customers about their goals and preferences, and tailoring the product to their needs.

Offering Incentives and Loyalty Programs

Incentivizing customers to stick around can be a great way to improve retention rates. By offering rewards for continued usage or implementing a loyalty program, you can give customers a reason to stay engaged with your product.

One effective way to incentivize customers is by offering discounts or freebies for continued usage. For example, you could offer a discount on the customer's next purchase after they have used your product for a certain period of time. Another option is to implement a loyalty program that rewards customers for their loyalty, such as by offering exclusive content or early access to new features.

Continuously Gathering and Analyzing Customer Feedback

Getting feedback from your customers is an effective way to improve your product and ensure that it meets their needs. By regularly gathering and analyzing feedback, you can identify areas of improvement and make necessary changes to retain customers.

One way to gather feedback is by conducting surveys or focus groups to get a sense of how customers are using your product and what they like or dislike about it. You can also monitor social media and online forums to see what customers are saying about your product and respond to their concerns or feedback. Additionally, you can use analytics tools to track user behavior and identify areas where your product could be improved.

Monitoring and Measuring Product Retention Rate

Monitoring and measuring your product retention rate is essential for identifying areas of improvement and setting realistic goals for the future. It can also help you determine the effectiveness of your marketing strategies and customer engagement efforts. In this article, we'll explore some key considerations for monitoring and measuring your product retention rate.

Selecting the Right Tools and Metrics

When it comes to measuring product retention rate, there are many tools and metrics available. However, not all tools and metrics are created equal. It's important to select the ones that are most relevant to your product and industry to ensure accurate measurement. Some common tools and metrics for measuring product retention rate include:

  • Churn Rate: This metric measures the percentage of customers who discontinue using your product or service over a given period of time. A high churn rate can indicate that customers are dissatisfied with your product or that you need to improve your customer engagement efforts.
  • Net Promoter Score (NPS): This metric measures customer loyalty and satisfaction by asking customers how likely they are to recommend your product to others. A high NPS score indicates that customers are satisfied with your product and are likely to recommend it to others.
  • Customer Lifetime Value (CLV): This metric measures the total amount of revenue a customer is expected to generate over the course of their relationship with your business. A high CLV indicates that customers are loyal and engaged with your product.

By selecting the right tools and metrics for your product and industry, you can ensure that you're measuring the right data and making informed decisions about how to improve retention rates.

Setting Realistic Goals and Targets

Setting realistic goals and targets is essential for improving retention rates over time. It's important to set goals that are specific, measurable, achievable, relevant, and time-bound (SMART). By monitoring your progress and adjusting your strategies accordingly, you can ensure that you're continuously improving.

For example, if your current churn rate is 20%, you might set a goal to reduce it to 15% within the next six months. To achieve this goal, you might implement new customer engagement strategies, such as personalized emails or loyalty programs, and monitor the impact of these strategies on your retention rate.

Regularly Reviewing and Adjusting Strategies

The effectiveness of your retention strategies will depend on many factors, including customer behavior and market trends. Regularly reviewing and adjusting your strategies is essential for staying competitive and improving retention rates.

For example, if you notice that your churn rate is increasing despite your current retention strategies, you might need to adjust your strategies to better meet the needs of your customers. This might involve conducting customer surveys or focus groups to better understand customer needs and preferences.

In conclusion, monitoring and measuring product retention rate is a critical component of any successful business strategy. By selecting the right tools and metrics, setting realistic goals and targets, and regularly reviewing and adjusting your strategies, you can improve retention rates and ensure the long-term success of your business.


Product retention rate is a crucial KPI for marketers and business owners, as it shows how successful your product is at keeping customers engaged and satisfied in the long-term. By monitoring and analyzing your product retention rate, identifying the factors influencing retention, and implementing effective strategies to improve customer satisfaction, you can increase retention rates and build a loyal customer base that is key to long-term success.