Customer retention rate is the percentage of existing customers a business keeps over a given period. It is calculated as ((Customers at end − New customers) ÷ Customers at start) × 100. For SaaS, monthly retention above 95% is considered good. Retention rate and churn rate are complementary metrics that sum to 100%.
Retention Rate = ((End customers − New customers) ÷ Start customers) × 100
New customers are excluded so the formula measures only whether existing customers stayed.
Retention rate measures what percentage of your existing customers stayed with you during a period. A 95% monthly retention rate means 5% of customers churned that month. Because retention compounds over time, even small improvements in retention have an outsized impact on ARR and LTV. A company going from 90% to 95% monthly retention doesn't just reduce churn by 5% — it more than doubles average customer lifespan.
Retention rate and churn rate measure the same phenomenon from opposite directions. Retention rate = 100% − churn rate. Tracking both can be useful: churn rate is easier to contextualize for investors and executives ("we lost 3% of customers"), while retention rate aligns better with goal-setting ("we want to retain 97% of customers").
Net Revenue Retention (NRR) measures revenue retained from existing customers, including expansion. NRR above 100% means existing customers are generating more revenue this period than last period — even before counting new customer revenue. World-class SaaS companies like Snowflake and Datadog have achieved NRR above 130%, meaning they grow purely from their existing base.
| Level | Customer Score |
|---|---|
| World-class (monthly) | 99%+ |
| Excellent (monthly) | 97–99% |
| Good (monthly) | 95–97% |
| Needs work (monthly) | <95% |
FeedbackJar captures user feedback directly in your product. Improve Customer by acting on what users actually tell you.
Start Free Trial