What is customer retention rate?
Customer retention rate, or logo retention, is the share of customers you keep over a period, excluding any new ones you add. It is the mirror image of churn: a 97% retention rate is a 3% churn rate.
Retention measures customers, not dollars. It tells you how sticky your product is, separate from how much each customer is worth.
The retention rate formula.
Retention rate = customers at the end minus new customers acquired, divided by customers at the start, as a percentage. Subtracting new customers is what isolates retention from growth.
Without removing new customers, fast acquisition would hide churn. The formula keeps the two separate.
A worked example.
You start the month with 100 customers, end with 105, and 8 of those are new. Retained customers are 105 minus 8, which is 97. Retention rate is 97 divided by 100, which is 97%.
What is a good retention rate?
It depends on period and segment, the same as churn. For B2B SaaS, healthy monthly logo retention is around 97% or higher. On an annual basis, 85 to 90% or higher is healthy, and enterprise products usually retain better than small-business ones. Judge against your own segment, not a single global number.
Retention counts logos, but losing a few large accounts can hurt more than the rate suggests. Pair it with revenue churn to see the dollar impact.
How to improve retention.
Retention is won in onboarding and early value. Customers stay when they reach the outcome they bought quickly, and leave when they never do or were a poor fit from the start.
Acquisition channel shapes fit. Customers who arrive through organic search for a specific problem tend to retain better than discount-driven traffic. See how we attract better-fit customers through SEO.