Retention Rate

Retention rate is the percentage of customers you still have at the end of a period, counting only the ones who were already with you at the start. It's the mirror image of churn: if 5% of your base leaves this month, you retained 95%. The number tells you whether people keep finding a reason to come back, which is the part of growth that acquisition spend can't fake.

How to calculate customer retention rate (formula and example)

Worked example: you start the month with 800 customers, sign 90 new ones, and finish with 760. Strip the new arrivals out first, because they tell you nothing about whether your existing base stuck around: (760 - 90) / 800 x 100 = 83.8% retention. That's the same math the calculator above runs, so the default inputs land on 83.8% too. It also means you lost about 16% of the customers you started with, which is your churn for the period.

Two things to nail down before the number means anything. First, pick the right unit. Counting logos gives you customer (or logo) retention; counting dollars gives you revenue retention, and the two move apart the moment your accounts differ in size. Second, pick a period and stick to it. Most SaaS teams report monthly and annual side by side, because a healthy-looking 96% monthly rate compounds to roughly 0.96 to the 12th, about 61% over a year, once you let it run.

Customer retention vs net revenue retention

Logo retention caps at 100%: you can't keep more customers than you started with. Revenue retention has no such ceiling. Once you add expansion revenue from upgrades and seat growth, net revenue retention can push past 100% even while a few logos walk out the door. That's the number investors fixate on, because a business with 85% logo retention and 115% net revenue retention is still growing from its existing base alone.

So track both. Logo retention tells you whether the product is sticky enough to keep accounts. Net revenue retention tells you whether the accounts you keep are worth more over time. If logo retention is sliding while revenue retention holds, you're propping up the top line on a shrinking set of customers, and that catches up with you. For the full set of numbers worth watching, see the customer retention metrics reference.

What is a good retention rate?

For B2B SaaS, a good annual logo retention rate is 85% or higher, very good is 90%, and best-in-class clears 95%. ChartMogul's study of 2,100-plus SaaS businesses puts best-in-class retention at 85 to 87% and the top quartile for companies in the $15 to 30M ARR range at 84.2%, and notes that only 11 to 19% of SaaS businesses hold retention above 85%, those that do grow 1.5 to 3x faster than peers. KeyBanc and Sapphire's 2024 to 2025 SaaS survey reports gross retention near 90% for larger sellers, which is why the bar rises with contract size: enterprise buyers churn less than self-serve users, so they're held to a higher number.

The headline rate also depends on who you sell to. First Page Sage's 2026 retention study (10,214 firms, using this exact formula) pegs broad B2B SaaS at 74% and software development at 82%, while e-commerce sits at 62% because the products are commoditised and customers churn on price. Read your row against your own vertical, not the global average.

Retention Rate benchmarks by industry

The spread across industries is real. AI/ML sits lowest in the table, and that's not a typo: ChartMogul's 2025 AI churn-wave report found AI-native companies running median gross retention around 40%, up from 27% earlier in the year as the early tourists left and committed users stayed. Healthtech and dev tools sit near the top because switching costs are high and nobody rips out their infrastructure on a whim. Fintech and martech land below the SaaS line: financial-services and adtech logos churn faster than the B2B SaaS average in the same datasets. So a retention rate that would worry a dev-tools team can be a perfectly normal quarter for a consumer fintech app.

One axis the table flattens is time horizon. The numbers above are annual logo retention, the right frame for B2B SaaS. Consumer and mobile apps usually track retention as a day-one, day-seven, and day-thirty curve instead, where a day-30 retention in the 8 to 14% range is strong for most consumer apps (higher for sticky utilities and social) and the annual SaaS line means little. If you run an app, measure that curve with the cohort analysis tool and read your app user retention rate against mobile benchmarks, not the logo-retention rows here.

How to improve retention rate

• Fix activation first. Most churn is decided in the first week, before anyone reaches a habit. If new users never hit the value moment, no win-back campaign saves them. Pair this with your activation rate.
• Watch the leading signals. A drop in logins or feature usage shows up weeks before a cancellation. Build an early-warning view so you can reach an account while it can still be saved, not after it's gone.
• Segment by cohort. A blended retention number hides the truth. Slice by signup month, plan, and channel, then go fix the cohort that leaks worst instead of averaging it away.
• Make leaving cost something. Stored data, integrations, and team workflows raise switching costs honestly. The more a customer builds inside your product, the harder it is to walk away.

Retention is also the cheapest lever you have. Winning a new customer runs roughly 5 to 7 times the cost of keeping one (HBR), and lifting retention 5% raises profit 25 to 95% (Bain and Co.), so a few points of retention quietly stretch your customer lifetime value and shorten payback on every dollar of acquisition spend. Before pouring more into the top of the funnel, plug the bottom.

Related calculators

Retention rarely travels alone. Pair it with churn rate (its inverse), net promoter score (the leading indicator that predicts it), and expansion revenue (the lever that turns retained accounts into net revenue retention above 100%).