A company starts with 500 customers, gains 25 new customers during the period, and ends with 520 customers. What is the customer retention rate for the period?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Prepare for the GMetrix Marketing Test. Utilize flashcards and multiple choice queries, with each query featuring hints and explanations to bolster your understanding. Excel in your exam preparation journey!

Multiple Choice

A company starts with 500 customers, gains 25 new customers during the period, and ends with 520 customers. What is the customer retention rate for the period?

Explanation:
Retention rate shows what fraction of the starting customers remain by the end of the period. To find it, determine how many of the original 500 customers stayed. The ending total includes new customers, so remove those: 520 ending minus 25 new equals 495 retained from the original group. Then 495 retained divided by 500 starting equals 0.99, or 99%. Using the ending total wouldn’t be correct because it counts both retained original customers and new customers, inflating the measure of retention.

Retention rate shows what fraction of the starting customers remain by the end of the period. To find it, determine how many of the original 500 customers stayed. The ending total includes new customers, so remove those: 520 ending minus 25 new equals 495 retained from the original group. Then 495 retained divided by 500 starting equals 0.99, or 99%.

Using the ending total wouldn’t be correct because it counts both retained original customers and new customers, inflating the measure of retention.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy