Harvey owns a restaurant. He had 425 customers at the end of the second quarter, 455 customers at the beginning of the second quarter, and 17 new customers in the second quarter. What is his customer retention rate for the second quarter?

• A. 92%
• B. 90%
• C. 93%
• D. 91%

Answer: (B)

Retaining customers means measuring how many of the people you started with are still customers at the end of the period. Start with 455 customers at the beginning of the quarter. During the quarter, 17 new customers joined, and the end-of-quarter total is 425. The number of original customers who remained is the end total minus the new customers: 425 − 17 = 408.

Retention rate = 408 / 455 ≈ 0.897, which is about 89.7%, rounding to 90%.

So the best answer is 90%. The end-of-quarter total isn’t the retention rate by itself because it includes the new customers; we must subtract them to see how many from the starting group stayed.