What Is Customer Retention Rate? Formula, Benchmarks and How to Track It

What is Customer Retention Rate?

Customer retention rate measures how many of the customers you started a period with are still paying at the end of it. It is the exact mirror of customer churn, but stating it as retention changes what you notice: the base you are building on rather than the leak.

Written by Serena Prifti, Founder of ChartsyPublished 21 September 2026

Also known as: Logo retention

Key takeaways

Formula: (customers at end − new customers) ÷ customers at start × 100.
Retention and churn always sum to 100% over the same window.
Annual logo retention runs 90–95% in enterprise B2B and 70–85% in SMB SaaS.
Common mistake: leaving new signups in the ending count, which lets acquisition hide a retention problem.

Formula

Retention Rate = (Customers at end − New customers) ÷ Customers at start × 100

Benchmark

Enterprise B2B 90–95% annually, mid-market 85–90%, SMB 70–85%. Compare within your segment, never against a headline figure.

Customer retention rate measures how many of the customers you started a period with are still paying you at the end of it. It is the exact mirror of customer churn - if 4% of customers leave in a month, 96% were retained - but stating it as retention changes what you notice. Churn draws your attention to the leak. Retention draws it to the base you are building on.

What Is Customer Retention Rate?

Customer retention rate is the percentage of existing customers who remain customers across a defined period, excluding anyone you acquired during that period. That exclusion is the part people get wrong: if you count new signups in the ending number, strong acquisition will hide a retention problem completely.

It counts customers, not revenue. A retention rate of 95% tells you nothing about whether the 5% who left were your largest accounts or your smallest. That is what revenue churn and net revenue retention are for.

How Do You Calculate Customer Retention Rate?

Customer Retention Rate = (Customers at end of period − New customers acquired) ÷ Customers at start of period × 100

A worked example over one month:

Customers at the start: 500
New customers acquired: 80
Customers at the end: 540

Retention rate = (540 − 80) ÷ 500 × 100 = 92%

The 80 new customers are removed before the division because retention asks a question about the cohort you already had. Skip that step and you get 108%, which is meaningless.

Retention and churn always sum to 100% over the same window: 92% retention means 8% customer churn.

Why Does Customer Retention Matter?

It compounds in your favour. Small differences look trivial monthly and enormous annually. 95% monthly retention keeps 54% of a cohort after a year. 97% keeps 69%. Two percentage points a month is the difference between rebuilding half your customer base each year and rebuilding a third of it.

It sets the ceiling on LTV. Lifetime value is ARPU divided by churn rate. Retention is the denominator's other half, so improving retention raises LTV faster than almost anything you can do to pricing.

It decides what acquisition is worth. A business retaining 70% annually has to run acquisition just to stand still. At 90%, the same spend compounds.

What Is a Good Customer Retention Rate?

Annual logo retention, by segment:

Segment	Typical annual retention
Enterprise B2B	90–95%
Mid-market B2B	85–90%
SMB-focused SaaS	70–85%
B2C / prosumer	50–70%

SMB retention is structurally lower and it is not a sign of failure. Small businesses close, pivot and cut costs at rates enterprise accounts do not. Compare yourself against your segment, never against a headline number from a company selling to a different market.

How Do You Improve Customer Retention?

Fix the first thirty days. Retention curves are steepest at the start. Most customers who leave in month six decided the product was not working for them in week two. Trial-to-paid conversion and early activation predict retention better than anything else you can measure.

Separate involuntary churn. A failed card is not a decision to leave. Recovering those payments through dunning lifts retention without changing a thing about the product.

Move customers to annual billing. Annual subscribers churn at a fraction of the monthly rate, partly because the commitment window is longer and partly because paying upfront changes how much effort people invest in getting value out.

Segment before you act. An aggregate retention rate averages together customers you should be fighting to keep and customers you should probably never have sold to. Segment by plan, acquisition channel and company size, and the number usually tells you where to spend.

How Do You Track Customer Retention?

Chartsy calculates customer retention directly from your Stripe, Paddle or BigCommerce records, so new signups are excluded from the ending count automatically and the number cannot drift the way a spreadsheet does. Retention curves by cohort show how each month's intake behaves over time, and the same breakdowns available elsewhere - plan, country, any metadata field - apply here too.

How Chartsy calculates this

Chartsy derives Customer Retention Rate directly from your Stripe, Paddle or BigCommerce records. The exact definition it uses - and where it can differ from another tool's - is written out in the metrics reference.

Frequently asked questions

What is the difference between customer retention and net revenue retention?

Customer retention counts people and caps at 100%. Net revenue retention counts money and can exceed 100%, because expansion revenue from customers who stayed can more than replace revenue from customers who left. A business can have mediocre customer retention and excellent NRR if the customers it keeps keep growing.

Is customer retention just the inverse of churn?

Yes, over the same period and the same population. Retention = 100% − churn rate. They are two framings of one measurement, and which you use is mostly a matter of what you want the team looking at.

Should I measure retention monthly or annually?

Measure monthly if you bill monthly, because that is when the decision to stay is actually made. Report annually when comparing against benchmarks, since most published figures are annual. Convert carefully: 95% monthly retention is not 95% annual, it is roughly 54%.

Why does my retention rate look worse when I segment it?

Because the aggregate was hiding the weak segment behind a strong one. This is the normal and useful result of segmenting. A blended 88% built from 95% enterprise and 72% SMB is two different businesses being averaged into one misleading number.

Does excluding new customers really matter that much?

Yes. In a fast-growing business it is the difference between a meaningful number and nonsense. If you grew from 500 to 540 customers while acquiring 80, the honest retention figure is 92% - but counting the new arrivals gives you 108%, which would tell you that you gained customers you never lost.

About the author

Written by

Serena Prifti

Founder of Chartsy

Serena Prifti is the founder of Chartsy and writes about analytics, growth, and subscription metrics. She focuses on helping founders and operators turn raw data into clear insights that drive better decisions.

Serena Prifti