As we come to the second half of 2026, it’s a great time to take a closer look at how your small business is performing. 

While obvious success markers like revenue, sales growth and profit are important but they don’t tell the whole story. To really understand the health of your business, it’s worth keeping an eye on three more key metrics:

• Customer retention.
• Customer acquisition cost.
• Customer satisfaction.

These metrics help you understand your customers, keep your cash flow healthy and make smarter business decisions as your business grows.

CR & Churn - Customer retention and Churn Rate

Churn and CR rates are super important because they’re like a business's relationship barometer. Providing insights into customer satisfaction and loyalty.

They tell you how many customers are sticking around, and how many are waving goodbye. Getting a handle on these two metrics is key to keeping your customers happy, forecasting revenue and planning long-term growth strategies.

Churn Rate is the number/rate of customers leaving a business in a given period.

To figure out your business's monthly churn rate, use this formula:

(The number of customers at the beginning of month - the number of customers at the end of the month.

Answer ÷ the number of customers at the beginning of month X 100 = monthly CR as a percentage.)

Conversely, Customer Retention is all about, as you might have guessed, the ability to keep customers around - i.e. retain customers.

To figure out your business's monthly customer retention  rate (CRR), use this formula:

(The total number of customers at the end of the month - number of new customers gained in that month.

Answer ÷ by the number of customer at the beginning of the month X 100 = monthly CRR as a percentage)

What’s a good CR and CRR?

The churn rate typically differs across industries, with some sectors experiencing rates upwards of 25% annually. A 3% monthly CR would be good for any business.

For customer retention, a rate of 35% - 40% and higher would be a good target.

CAC - Customer Acquisition Costs

Customer acquisition, as the term implies, involves the process of gaining new customers or clients for a business. This can be seen as a targeted marketing effort aimed at increasing the customer base, ideally attracting customers who will bring in steady, recurring business over the long term.

The Customer Acquisition Cost is calculated by dividing the total Sales and Marketing expenses by the number of newly acquired customers.

There are some more extensive and complex calculation methods that can be used to do this but let’s keep things simple for now:

(Sales & Marketing expenses ÷ the number of new customers for a given time period = CAC cost)

Customer acquisition cost is crucial as it reveals the expense and eventual profitability of your company's growth. 

When CAC is disproportionately high compared to the Lifetime Value (LTV) of a customer, it leads to unsustainable growth, as the cost to acquire customers exceeds the profit each customer brings.

Customer Satisfaction Scores (NPS or CSAT)

Conducting customer surveys are a great way to measure customer satisfaction more directly and accurately. As opposed to solely relying on revenue as an indicator.

The Net Promoter Score (NPS) is a simple survey with just one question, asking customers about their likelihood of recommending your product or service.

To determine the customer satisfaction (CSAT) score, divide the sum of all responses by the total number of responses received.

It's beneficial to compare your CSAT scores with the industry average. Falling short of the average of 50 - 65 signals a need to enhance the customer experience.

Keep your business heading in the right direction

These aren't just any metrics; they’re useful signals that can help you understand what’s working, where you could improve, and how your business is really performing.

By keeping an eye on customer retention, acquisition costs and satisfaction levels, you can make more informed decisions, build stronger customer relationships and put your business in a better position for growth.

For more business tips like these, check out our knowledge base. It’s packed full of helpful guides and tips for ambitious SMEs!