Definition
The percentage of customers whose contracts come up for renewal and actually renew.
Formula
Contracts renewed / Contracts up for renewal x 100
How to measure
Divide the count of contracts that renewed by the total count of contracts that reached their renewal date in the same period.
Why track it
Renewal rate is often the cleanest retention signal for contract-based businesses, since it reflects an explicit repurchase decision.
Example
Of 60 annual contracts up for renewal this quarter, 51 renew, an 85% renewal rate.
FAQ
- What is Renewal Rate?
- The percentage of customers whose contracts come up for renewal and actually renew.
- How do you calculate Renewal Rate?
- Contracts renewed / Contracts up for renewal x 100
- Why track Renewal Rate?
- Renewal rate is often the cleanest retention signal for contract-based businesses, since it reflects an explicit repurchase decision.