What is Retention Rate?

Retention rate measures the percentage of your customer base that continues from one period to the next. In a term-based activity business, it is typically calculated as: (number of children who rebooked for the new term / number of children enrolled at the end of the previous term) x 100. A healthy retention rate for a children's activity business is generally 75-85% per term, though top-performing businesses achieve 90% or higher.

Retention is the single most important metric for sustainable growth. Acquiring a new customer costs five to seven times more than retaining an existing one, so even a small improvement in retention has a significant impact on profitability. If you retain 80% of two hundred children each term, you need to find forty new children per term to maintain your numbers. Improve retention to 90% and you only need twenty new enrolments — halving your marketing effort and cost.

Key drivers of retention include: quality of teaching (is the child making progress and having fun?), communication with parents (do they feel informed and valued?), convenience (are booking, payment, and scheduling easy?), sense of community (do families feel they belong?), and perceived value for money. Track retention by class, by teacher, and by age group to identify specific areas for improvement.