Retention rate is a key metric that measures the percentage of people who remain with a company, platform, or service over a specific period of time. Whether it applies to employee retention, customer retention, or user engagement, this metric helps businesses better understand how effectively they maintain relationships over the long term. For recruiters, it’s an essential measure of workforce stability, hiring quality, and onboarding impact.
Why Retention Rate Is Critical for Recruiters and Talent Leaders
A high retention rate indicates that a company is doing well at keeping its people—whether that means customers, team members, or even new hires. It reflects satisfaction, alignment, and a healthy employment experience. For talent acquisition leaders, it's a benchmark that directly correlates with hiring strategy, training and development training, and overall team health.
Poor retention can be a sign of deeper issues: misaligned expectations, lack of career growth, or ineffective succession planning. This is why measuring and improving retention is not just an HR function—it's a core part of every recruiter’s playbook.
How to Calculate Retention Rate
To calculate retention rate, use this formula:
Retention Rate = [(Total Number at End of Period - Number of New People) / Total Number at Beginning of Period] x 100
For example, if your company started Q1 with 150 employees, hired 25 new employees during that time period, and ended the quarter with 160 employees:
Retention Rate = ((160 - 25) / 150) x 100 = 90%
This formula helps you measure how many people stayed with you across a given period, excluding those who just joined. Want to go deeper? We break this down in our employee retention rate formula guide.
Retention Rate vs. Turnover Rate
These two metrics are closely related but measure opposite outcomes. While retention rate tells you how many employees or customers stayed, turnover rate (or churn rate) measures how many left.
Understanding both provides a more complete picture of workforce health. A high retention rate and a low turnover rate signal success in hiring, onboarding, and engagement.
What Retention Rate Measures
The retention rate gives you insights into:
- How long employees stay
- How engaged customers remain
- The effectiveness of automated onboarding and ai onboarding strategies
- The impact of recruiting automation on quality of hire
- The value of your training and development training efforts
It can also tie into larger business indicators such as monthly recurring revenue, customer lifetime value, and repeat purchase rate.
The Impact of Retention on Business Health
High retention rates save time, reduce cost per hire, and increase productivity. Retaining top talent means you're not constantly backfilling roles, and you can focus on developing talent and future-proofing your workforce.
With strong retention strategies, you increase the lifetime value of both customers and employees. Tools like GoPerfect can help by streamlining hiring workflows, improving candidate outreach, and simplifying candidate relationship management.
Want to go deeper? Explore our guides on:
Improving Your Retention Rate
To improve retention, you need a cross-functional approach that spans hiring, onboarding, development, and culture. Here are proven ways to boost your rate:
- Use structured onboarding with tools like automated onboarding
- Make sure roles align with long-term professional path expectations
- Offer ongoing training and development training
- Regularly review engagement and satisfaction data
- Conduct exit interviews to uncover issues early
If your retention rate is slipping, ask whether your onboarding is personalized, your roles are aligned with growth paths, and whether you're giving people reasons to continue.
Retention Rate Benchmarks and Variations
What constitutes a "good" retention rate depends on the industry, team size, and company stage. But broadly:
- High retention rate: 90%+
- Average retention rate: 75–85%
- Low retention: below 70%
Startups may see higher turnover early on, while mature businesses with strong employer brands may enjoy more stability.
Key Takeaways for Talent Leaders
Understanding and tracking retention rate can help you:
- Spot weak links in your strategy
- Align hiring with long-term company goals
- Reduce time and money spent on backfilling roles
- Increase employee value and satisfaction
If you’re ready to create smarter workflows, invest in recruiting automation and streamline recruitment processes. These tools can help you move beyond metrics and into meaningful, lasting impact.
The Next Step: Make Retention a Strategic Metric
Retention isn’t just a reflection of your company's culture. It’s a key business lever that influences profitability, brand strength, and team cohesion.
Want to learn how modern companies are building high-retention teams? Read our insights on:
To contact us about improving your retention metrics or to explore our professional services, visit our GoPerfect blog. Your best retention efforts begin with a clear, actionable strategy—and the right tools.
Skip to main ideas. Track the right data, focus on the people, and optimize for what matters most: keeping the right talent, engaged, productive, and growing with you.
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