How is the Customer Retention Rate (CRC) calculated?

The Customer Retention Rate (CRC) is a crucial metric that indicates the percentage of customers a business has retained over a period of time. The correct method to calculate this rate involves understanding how many customers remain with the business after accounting for any new acquisitions during the specified period.

In the correct calculation, you take the number of customers at the end of a period and subtract the number of new customers that were acquired during that same period. This gives you the number of retained customers. By dividing this number by the total number of customers at the start of the period, you can derive the retention rate as a percentage. This approach highlights the effectiveness of a business's strategies in maintaining its customer base and distinguishing between retained and newly acquired customers, which is vital for assessing customer loyalty and satisfaction.

The other options do not accurately reflect the principles of calculating customer retention. For example, simply dividing the starting customers by end customers does not capture retention dynamics, nor does subtracting starting customers from new ones effectively represent customer retention. Similarly, the calculation involving total customers added compared to market reach does not offer insight into customer retention but rather focuses on growth in customer numbers.