The ability of a company to keep its existing customers over a specified period of time. It measures how successful a business is at maintaining ongoing relationships with customers and preventing them from switching to competitors.
The term emerged in the 1980s business literature as companies began to focus more on relationship marketing rather than just acquisition. 'Retention' comes from Latin 'retinere' meaning 'to hold back' or 'keep.' The concept gained prominence when studies showed that retaining existing customers is significantly more cost-effective than acquiring new ones.
The famous '5:1 rule' states that it costs five times more to acquire a new customer than to retain an existing one, making retention one of the most powerful profit drivers in business. Interestingly, increasing customer retention rates by just 5% can increase profits by 25-95%, which explains why loyalty programs have become a multi-billion dollar industry.
Complete word intelligence in one call. Free tier — 50 lookups/day.