How to Measure Retention Rate: Excel Workbook and Guide

Understanding your retention rate is key to the health of your business!

Understanding the difference between your most valuable customers and those that will not renew, is like separating out the wheat seeds from all the wheat chaff at harvest time. It will take the right tools and tactics to maximize renewal rates.

The attached retention workbook (Excel) will help you track the retention performance by key drivers in your business, turning your data into both a summary and a detailed retention report that you can use to manage your retention. 

Download Retention Worksheet [Excel]: HERE


Getting Started

In order to track retention and utilize it to drive growth for your business, you need to be able to break up your business into meaningful pieces. “Meaningful” meaning key groups that will drive your business that will behave differently from one another. 

In an ideal world, you will want to track performance by channel, initial offer (free trial, discount, etc.), billing plans, and billing term (3-month, 6-month annual, etc.)  

Best practice also dictates tracking renewals by each renewal term, that is, retention from one year to the next – not just cumulative retention.  This means studying how a single group of new subs is retained from month 0-12, 13-24, 25-36 and so on.  This is because subscribers who have been with you for longer have different retention and loyalty characteristics from those who are new, and changes in their behavior have different implications from those with shorter tenures. 

Setting up your tracking to understand these key “meaning groups’ will show you how each has different retention characteristics that you will over time better understand and manage accordingly.

You will also need to create a shared renewal language across your organization so everyone from the C-suite to technical, editorial, product, marketing and customer service teams understands what they are. For example, what is your standard timeframe for renewals?  For example, are your monthly billing terms 30 days or calendar months? 

A big source of shared language confusion across teams is the term ‘conversion’. Retention marketing experts consider a customer converted once they have renewed after their initial term, which is very different than how an inbound acquisition marketing expert uses the term.

Using “Conversion” with acquisition lens:  

  • Visitor-to-Trial Conversion Rate (% of visitors that take a free trial offer)
  • Visitor-to-Paid Conversion Rate (% of visitors that convert, or “take” a paid subscription offer and start their initial subscription or membership term.)  
  • Trial-to-Paid Subscriber Conversion Rate (% of trial starts that continue and convert to a paid subscription plan and start their initial subscription or membership term.)

Using “Conversion with a retention lens:

  • Conversion Rate (% of subscribers in their initial term that convert to a second term.)
  • Renewal Rate (% of subscribers who renew in term 2 and beyond.)

Some companies will use different terms to avoid confusion between the two types of conversion, the key thing for YOUR company is that everyone understands the definitions of each key “meaningful group” you are measuring and why that group is important to your business.

Use the retention workbook to track acquisition, promotional offers, subscription plans and renewal terms. Included in the excel sheet are: 

  • Directions
  • Key definitions of retention terms
  • Explanation of how to “normalize” monthly subscribers and compare them to annual
  • Built-in “data input” areas for you to enter your own retention data

The workbook then turns your data into both a summary and a detailed retention report that compares group performance.

Download Retention Worksheet [Excel]: HERE


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