Retention Rate Calculator

Calculate customer retention rate and cohort retention. Essential metric for subscription business health and customer loyalty.

Customer Retention Rate
retentionRate%
Percentage of customers retained
Churn Rate
churnRate%
Percentage of customers lost
Customers Retained
customersRetained
Count of retained customers
Net Growth Rate
growthRate%
Overall customer growth
💡 Retention Benchmarks
• Good retention: 85%+ monthly (70%+ annually for SMB SaaS)
• Excellent retention: 95%+ monthly (85%+ annually)
• 5% improvement in retention can increase profits 25-95%
• Acquiring a new customer costs 5-25x more than retaining existing
• Increasing retention by 5% increases customer value 25-100%

How to Calculate Customer Retention Rate

Retention rate measures the percentage of customers who continue using your product over time. It's one of the most critical metrics for subscription businesses, directly impacting customer lifetime value and company valuation.

The Retention Rate Formula

Retention Rate = ((Customers at End - New Customers) / Customers at Start) × 100
Excludes new customers to measure true retention

Step-by-Step Calculation

Step 1: Count Customers at Period Start

Use your customer count at the beginning of the measurement period.

Step 2: Count New Customers Acquired

Track all new customers gained during the period.

Step 3: Count Customers at Period End

Count total active customers at the end of the period.

Step 4: Calculate Retention

Example Calculation
  • Started month with: 1,000 customers
  • Acquired during month: 150 new customers
  • Ended month with: 980 total customers
  • Customers retained: 980 - 150 = 830
  • Retention Rate: (830 / 1,000) × 100 = 83%

Retention Benchmarks by Industry

IndustryMonthly RetentionAnnual Retention
Enterprise SaaS95-98%85-92%
SMB SaaS85-92%70-80%
Consumer SaaS75-85%60-70%
E-commerce Subscription70-80%50-60%
Media/Streaming80-88%65-75%

Strategies to Improve Retention

1. Optimize Onboarding

  • Set clear success milestones in first 30/60/90 days
  • Implement guided product tours and walkthroughs
  • Assign dedicated customer success managers
  • Achieve first value within 48 hours
  • Create onboarding email sequences

2. Proactive Customer Success

  • Implement customer health scoring
  • Flag declining usage patterns
  • Reach out before customers churn
  • Schedule regular check-ins and business reviews
  • Build customer success playbooks

3. Build Product Lock-In

  • Create integrations with essential tools
  • Build network effects where possible
  • Store valuable customer data
  • Increase switching costs through customization
  • Make product mission-critical to workflows

4. Continuous Value Addition

  • Ship features customers request
  • Improve core product performance
  • Communicate product updates regularly
  • Provide educational content and training
  • Build community around product

Frequently Asked Questions

What is a good retention rate?

Good retention varies by industry: B2B SaaS 85-95% monthly (90%+ annual), Consumer SaaS 75-85% monthly (60-70% annual), E-commerce subscription 70-80% monthly (50-60% annual), Mobile apps 25-35% day-30 retention. Higher retention is always better - top performers exceed these benchmarks significantly.

How do I calculate retention rate?

Formula: ((Customers at End - New Customers) / Customers at Start) × 100. Example: Started with 1,000 customers, gained 150 new, ended with 980 total. Retained: (980 - 150) / 1,000 = 83% retention. Always exclude new customers from numerator to measure true retention.

What is the difference between retention rate and churn rate?

Retention rate = customers kept. Churn rate = customers lost. They're inverse: Retention + Churn = 100%. Example: 85% retention = 15% churn. Track both for complete picture. Retention focuses on success, churn highlights problems. Both are essential SaaS metrics.

Should I measure retention monthly or annually?

Measure both. Monthly retention shows short-term health and allows quick intervention. Annual retention reveals long-term viability and customer lifetime. Monthly is tactical (90% monthly = decent), annual is strategic (35% annual = problem). Also track cohort retention to see retention by signup month.

How can I improve customer retention?

Top strategies: 1) Improve onboarding to show value faster (critical first 90 days), 2) Proactive customer success outreach, 3) Regular product updates and communication, 4) Build features customers actually want, 5) Create lock-in through integrations, 6) Offer annual contracts with discounts, 7) Implement health scores to identify at-risk customers early.

What is cohort retention analysis?

Track retention by customer cohort (signup month). Example: January cohort might show 90% month-1 retention, 80% month-3, 75% month-6. This reveals onboarding effectiveness and identifies when customers typically churn. Mature cohorts should stabilize - if they don't, product has retention problem.

How does retention rate impact company valuation?

Higher retention = higher valuation multiples. Companies with 90%+ retention trade at 10-15x revenue. Companies with 70% retention trade at 4-6x. Each 5% retention improvement can increase company value 20-40%. Investors heavily weight retention because it determines long-term viability and capital efficiency.

What is net dollar retention vs customer retention?

Customer retention counts logos kept (account-based). Net dollar retention measures revenue retained including expansions and contractions. Example: 90% customer retention with 110% NDR means you kept 90% of customers but revenue grew 10% from upsells. NDR is more important for SaaS businesses - aim for 110%+ NDR.

Related Calculators

Churn Rate Calculator

Calculate customer churn rate

CLTV Calculator

Calculate customer lifetime value

Net Revenue Retention

Calculate NDR/NRR metrics

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