What is Retention Rate?

Customer Retention Rate

DEFINITION

Retention Rate is the percentage of customers who remain customers over a given period. Opposite of churn.

FORMULA

Retention Rate = 100% − Churn Rate

BENCHMARKS

Ecommerce 30-day repeat: 15-30% · SaaS annual: 85-95% · DTC subscription: 60-80% month 2

Quick Answer

Retention Rate is the percentage of customers who remain customers over a given period. Opposite of churn. Clear definition with practical examples for marke.

DEFINITION

Retention Rate: Retention Rate is the percentage of customers who remain customers over a given period. Opposite of churn.

Why Retention Rate matters

Retention compounds into LTV. A 2x improvement in month-2 retention often doubles LTV. For ecommerce, first-90-day repeat purchase rate is the most actionable metric.

Worked example

Plug a real number into the formula to see Retention Rate in action:

// Formula

Retention Rate = 100% − Churn Rate

// Example calculation

2,280 retained ÷ 2,400 starting = 95% retention

Numbers are illustrative. Try our Customer LTV Calculator for your real numbers.

Common mistakes with Retention Rate

1
Looking at single-channel ROAS in isolation instead of blended MER. Last-click attribution overweights bottom-funnel channels and starves top-of-funnel.
2
Setting a uniform target across products with different margins. A 2× ROAS is profitable on 80% margin and unprofitable on 20%.
3
Optimizing CAC without measuring LTV. Cheap customers with bad retention destroy unit economics.

How to improve Retention Rate

Run incrementality tests every quarter to validate which channels actually drive new revenue vs steal credit.
Build a unit economics dashboard separating CAC, LTV, contribution margin, and payback by channel and cohort.
Establish a contribution margin floor for each channel, pause spend when margin drops below threshold for 14 days.

Common questions about Retention Rate

What is Retention Rate?▾

Retention Rate is the percentage of customers who remain customers over a given period. Opposite of churn.

How is Retention Rate calculated?▾

Retention Rate = 100% − Churn Rate

What is a good Retention Rate benchmark?▾

Ecommerce 30-day repeat: 15-30% · SaaS annual: 85-95% · DTC subscription: 60-80% month 2

Why does Retention Rate matter for marketing teams?▾

Retention compounds into LTV. A 2x improvement in month-2 retention often doubles LTV. For ecommerce, first-90-day repeat purchase rate is the most actionable metric.