Tracking your member retention rate is one of the most important steps you can take to understand your association’s growth. Rather than just looking at totals, you gain insight into trends and member satisfaction.
If you are like many marketers, however, you groan at the thought of complicated math equations. Fortunately, once you know how to calculate your retention rate, you will find that the math itself is quite simple. We will walk you through how to run the calculation and interpret the results so you can add this data point to your operations.
What is Your Member Retention Rate?
Your member retention rate shows you the percentage of users who stay with your brand over a period of time. This tracks how many of your existing members renew their memberships, giving you insight into their engagement and perceived value.
Associations use member retention rates because they make it easy to see how member engagement and renewal behavior change over time.
With your member retention rate, you can see:
- The percentage of members who renew during a specific period
- How this rate changes from year to year by running a YoY comparison
- How the engagement and long-term value of your membership is viewed by your customers
Why Member Retention Rate Matters for Associations
As an association, you know that the more information you have to guide your decisions, the better your outcomes will be.
With a member retention rate, you can improve your tracking related to:
- Revenue prediction. Retention is more cost-effective than acquisition, so anticipating renewals improves your revenue projections for a given period and member lifetime value.
- Planning and forecasting memberships and engagement. When you see high retention rates, you can calculate and predict likely renewal and engagement in your program.
- Member satisfaction. Members renew when they are satisfied with the value your association provides. High rates and positive trends indicate you are meeting these expectations.
How to Calculate Member Retention Rate
The Member Retention Rate Formula
Your member retention rate formula is as follows:
(Number of members at the end of your chosen period — the number of new members who joined during that period) / (Number of members at the start of the chosen period) X 100
Let’s break down what this means.
You need the following data points to run this calculation.
- The number of people with a membership at the start of your period
- The number of people who join over the course of the period
- The number of people at the end of the period.
Including all three groups gives you the most accurate view of how many members renew their memberships and how well you retain them over time. If you have 100 members at the start and 100 at the end, the calculation will show a 100% retention rate.
Let’s look more closely at how you can use this calculation and why you need to subtract the number of people who join during your tracked period.
Member Retention Rate Examples
Example 1: Simple Annual Retention Calculation
Association A knows that strong membership retention would be the cornerstone of long-term revenue stability. They ran the numbers to calculate their membership retention rate and assess their performance. The year started with 508 members. At the end of the year, they had 473 members, giving them a retention rate of 93%. After subtracting new members and dividing by their starting total, the calculation confirmed a 93% retention rate. Comparing their growth year over year, they found their renewal rate stood between 92% and 96%. The rate calculation empowered them to keep an eye on the trend and continue to look for ways to bring in high renewal rates.
Example 2: When Membership Grows but Retention Declines
Association B has been thrilled with their customer acquisition rate. Over 2023-2024, they acquired 2,000 new memberships. To confirm their success, they calculated their member retention rate. Careful not to disrupt their data with the new members, they used their initial member rate of 1700. To find their retained members, they took their ending membership of 3275, but then subtracted the 2000 new accounts, leaving only 1275 renewals. When they ran the calculation, they saw that they had a retention rate of only 75%, well below the industry average.
Realizing there was a disconnect between what customers wanted and the value they received, they spent the next year boosting their membership services. The following year saw a 10% improvement in retention and a 30% increase in revenue, opportunities they would have missed without improving their membership retention rate.
Common Mistakes When Calculating Retention Rate
While calculating the member retention rate may appear straightforward at first glance, businesses often make several common mistakes.
- Including new members as retained members. These customers haven’t renewed yet and will throw off your calculations.
- Comparing inconsistent time frames. If you compare different time periods or different times of the year, you can’t accurately identify trends.
- Ignoring reactivated members. Members who have come back to your program should be noted in your calculations. They may have initially not renewed, but they demonstrate engagement and interest in your brand.
- Pulling data from inconsistent systems. Always use the same sources for your data. This ensures consistency across your numbers, so that all the start dates, end dates, and renewal dates are calculated the same for maximum accuracy.
How to Interpret Members’ Retention Rate
Once you understand how to calculate member retention rate, the next step is interpreting what that number actually tells you about member behavior.
Your cornerstone is your annual retention rate. This lets you compare year over year to see your overall trends and renewal rates.
However, many businesses will also want to use a quarterly check-in. Comparing the renewals one quarter to the next can give you an early indication of trends or problems that you want to correct before they impact your yearly numbers.
Remember as you run through these calculations that your retention rate alone does not give you the explanation about why people leave. You will want to add these inquiries to your process to gain deeper context into your retention rate findings. For example, people might cite price, continued value or the competition. All this helps you put your retention rate insight to work.
Using Retention Rate to Improve Results
Once you have the insights from your retention rate, it’s time to put them to work.
- Start by tracking retention rates over time. You want to see the trends behind the numbers.
- Segment your data by member type and tenure. This improves your forecasting and your ability to see how you can adjust your plan for different target audiences.
- Pair your retention rates with engagement insight. See the connection between how people interact with your brand and their likelihood of renewing. This will guide improvements in member services.
- Collect data on why people leave. Examining the common causes of membership decline will help you strategize your next steps.
Tools that Make Retention Tracking Easier
With all the information you need to effectively track to make good decisions for your brand, having some tools available can simplify the process.
We recommend incorporating an AMS reporting system and the associated dashboard. These tools give you access to the data you need to ensure that you draw from consistent data sources and can quickly gather the information you need to run your calculations.
Conclusion
When you have the right data in front of you, calculating your member retention rate is straightforward and incredibly valuable. Tracking this metric over time helps you move beyond surface-level totals and understand how your association is performing with the members you already serve.
While knowing how to calculate member retention rate is an important first step, improving retention requires consistent follow-through and a clear strategy. To explore practical ways to strengthen engagement and drive renewals, download the Member Retention 101 Guide and start turning insight into action.
Need Help?