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Anwesha Mishra
You boost profit rates by 95% just by retaining 5% more customers!
Imagine the profits you could gain just by focusing correctly on your retention strategies.
But, hold on! Strategizing is just half the battle won.
To skyrocket your profit rates just by retaining five percent more from your customer base requires meticulous tracking, measuring, and refining. Well, you can’t possibly improve what you don’t measure, can you?
Get ready to crunch some numbers!
We’re diving into 11 critical metrics that will turn your retention efforts from mere speculation into guaranteed growth.
P.S. You don’t need a PhD in math to calculate retention and SaaS metrics, but it does call for a quick refresh of your basic arithmetic. You're good to go with some good old subtraction, division, and a dash of multiplication to calculate your retention stats.
11 Key Customer Retention & SaaS Growth Metrics
A customer retention rate (CRR) is a metric used to calculate the number of customers the company retains over a given period of time.
It’s a feedback metric helping you understand how your decisions directly affect your business by showing cause and effect—the changes you make, and the corresponding way that customers retain (or churn).
Here’s a step-by-step guide to calculating customer retention rates.
First, decide your retention tracking period. Are you looking at a month, quarter, year, or something else? Fast-moving SaaS companies often analyze this daily, while others may stick to monthly or quarterly reviews. Choose what works for your business pace.
For example, let’s analyze customer retention over one quarter.
You’ll need three key metrics:
Let’s say, the numbers for the quarter are:
Start by taking your total customer count at the end of the period (N) and subtract the number of new customers you acquired during the same period (E).
550 - 150 = 400
400 ÷ 500 = 0.8
0.8 × 100 = 80%
In this case, our CRR is 80%. This means 80% of your customers stayed loyal throughout the quarter. While that’s solid, it also highlights an opportunity to investigate why 20% churned—and how to improve retention further.
P.S. In a perfect world, SaaS businesses would boast 100% retention, with customers acting as enthusiastic brand ambassadors. But in reality, a typical customer retention rate hovers around 76-81% (as cited by Forrester).
The only way you can have a negative retention rate is to lose lots of new customers (acquired during the period). Although CRR is a solid starting point for measuring success, it’s far from the full picture. It can only tell you how many customers stick around, not shedding light on their value, engagement, or potential profitability. To truly understand and optimize retention strategies, you need to dig deeper by analyzing other key retention metrics.
Customer churn rate measures how many customers leave your product over a specific period. A high churn rate signals trouble, as it leads to revenue churn and negatively impacts your bottom line. The higher the churn, the more customers you’re losing.
The below customer churn rate formula tracks customer loss and helps you gauge the health of your business. The lower the churn, the more sustainable your growth.
Revenue churn tracks the monthly recurring revenue (MRR) loss from customers who cancel or downgrade their subscriptions. It’s a crucial metric for SaaS and subscription-based businesses.
The gross revenue churn rate measures how much revenue is lost without considering new customer acquisition. It helps you see the impact of churn on your revenue in isolation. To get your churn rate percentage, divide your churned revenue by last month’s MRR and multiply by 100.
NPS indicates how likely customers are to refer your business to others, qualitatively measuring their general satisfaction and loyalty to your offerings. A high NPS suggests happy customers who are ready to advocate for your brand, boosting referrals and potentially fueling growth.
To calculate NPS, ask your customers: “How likely are you to recommend us to a friend or colleague on a scale from 0 to 10?”
To calculate your NPS, subtract the percentage of detractors from promoters.
RPR measures the percentage of customers who return after their first purchase. It is crucial for businesses like ecommerce where repeat business drives growth.
The repeat purchase rate can be tracked weekly, monthly, or quarterly to give valuable insights into customer behavior. In B2B, it’s important to remember that purchasing frequency may vary by customer, so always benchmark per customer, not just overall. This metric can help your team identify trends, spot loyal customers, and fine-tune retention strategies.
For an extra boost, you can track Loyal Customer Rate, focusing on those who make more than two purchases.
Loyal Customer Rate shows the percentage of customers who keep coming back. These are the buyers who fuel your business, making repeat purchases and driving sales.
Here’s how you can calculate your loyal customer rate:
Customer Lifetime Value measures the total profit a customer brings to your business over their entire relationship. It’s a key metric for understanding whether you should focus more on acquiring new customers or retaining existing ones.
Or, for a more detailed view:
(Transactions per period x Order value x Gross margin x Customer lifespan) ÷ Total customers
A higher CLV means you can invest more in customer acquisition. To boost a low CLV, focus on encouraging repeat purchases, enhancing loyalty programs, and improving satisfaction. Rather than applying one CLV to all customers, segment your data for more tailored insights into your most valuable customers.
CAC tells you exactly how much you’re spending to win new customers. It’s crucial to ensure your business model is sustainable when paired with CLV.
To calculate your CAC, simply divide your total sales and marketing spending (including salaries) by the number of new customers gained in a specific period.
For example, if you spend $100,000 in a month and acquire 100 customers, your CAC is $1,000.
Tracking CAC helps you manage growth and fine-tune your acquisition strategy, especially for new businesses looking to make every dollar count.
CAC-to-LTV compares your CLV to CAC and is a key SaaS growth metric for understanding your marketing ROI and ensuring you’re not overspending on customer acquisition.
Here’s the rule of thumb: a healthy business should have a CLV at least 3 times greater than its CAC. If your ratio is 1:1, you're overspending. If it's 5:1, you might be leaving money on the table by not investing enough. In short, this metric keeps your marketing budget in check and helps prioritize high-ROI efforts.
Customer Engagement Score is your tool for personalized customer success strategies that foster loyalty and improve retention. It measures how engaged your customers and trial users are with your product, reflecting their actions (or lack thereof). The higher the score, the more engaged and satisfied the customer.
A low CES during a trial could signal a need for intervention to boost engagement and improve conversion rates. Similarly, a sudden dip in engagement could point to churn risk, prompting proactive outreach to retain customers.
CES helps you identify happy, engaged users who are prime for upselling or cross-selling, driving revenue growth. To calculate it:
Modern CRMs like HubSpot simplify customer engagement score tracking by automatically assigning engagement scores to customers, where:
This scorecard helps you quickly assess which customers need attention and which are ready for upsell opportunities.
The customer health score is your early warning system, predicting whether a customer is at risk of churning. It gives your customer success team the insights needed to act before it's too late—before a customer decides to cancel.
Like customer engagement scores, health scores track different signals of loyalty or churn. These signals could be usage patterns, support tickets, or product interactions, helping you spot unhappy customers early and offer proactive support.
The way brands analyze their customer health score varies. The score is typically built using data points like the volume of interactions, recency of engagement, and depth of activity.
Customer satisfaction is important, but loyalty is what truly sets your brand apart. A business that tracks and understands the right retention metrics can seamlessly align its marketing, customer service, and retention efforts. By regularly gathering customer feedback and tracking key metrics, you can create a richer, more personalized experience that encourages customer loyalty and repeat business.
As you build and grow your SaaS business, it's easy to let metrics slip through the cracks. But by automating analytics and making data-driven decisions, you can turn your retention strategy into a growth machine. Tracking and optimizing the right metrics will not only keep customers coming back but will also fuel long-term success.
You boost profit rates by 95% just by retaining 5% more customers!
Imagine the profits you could gain just by focusing correctly on your retention strategies.
But, hold on! Strategizing is just half the battle won.
To skyrocket your profit rates just by retaining five percent more from your customer base requires meticulous tracking, measuring, and refining. Well, you can’t possibly improve what you don’t measure, can you?
Get ready to crunch some numbers!
We’re diving into 11 critical metrics that will turn your retention efforts from mere speculation into guaranteed growth.
P.S. You don’t need a PhD in math to calculate retention and SaaS metrics, but it does call for a quick refresh of your basic arithmetic. You're good to go with some good old subtraction, division, and a dash of multiplication to calculate your retention stats.
11 Key Customer Retention & SaaS Growth Metrics
A customer retention rate (CRR) is a metric used to calculate the number of customers the company retains over a given period of time.
It’s a feedback metric helping you understand how your decisions directly affect your business by showing cause and effect—the changes you make, and the corresponding way that customers retain (or churn).
Here’s a step-by-step guide to calculating customer retention rates.
First, decide your retention tracking period. Are you looking at a month, quarter, year, or something else? Fast-moving SaaS companies often analyze this daily, while others may stick to monthly or quarterly reviews. Choose what works for your business pace.
For example, let’s analyze customer retention over one quarter.
You’ll need three key metrics:
Let’s say, the numbers for the quarter are:
Start by taking your total customer count at the end of the period (N) and subtract the number of new customers you acquired during the same period (E).
550 - 150 = 400
400 ÷ 500 = 0.8
0.8 × 100 = 80%
In this case, our CRR is 80%. This means 80% of your customers stayed loyal throughout the quarter. While that’s solid, it also highlights an opportunity to investigate why 20% churned—and how to improve retention further.
P.S. In a perfect world, SaaS businesses would boast 100% retention, with customers acting as enthusiastic brand ambassadors. But in reality, a typical customer retention rate hovers around 76-81% (as cited by Forrester).
The only way you can have a negative retention rate is to lose lots of new customers (acquired during the period). Although CRR is a solid starting point for measuring success, it’s far from the full picture. It can only tell you how many customers stick around, not shedding light on their value, engagement, or potential profitability. To truly understand and optimize retention strategies, you need to dig deeper by analyzing other key retention metrics.
Customer churn rate measures how many customers leave your product over a specific period. A high churn rate signals trouble, as it leads to revenue churn and negatively impacts your bottom line. The higher the churn, the more customers you’re losing.
The below customer churn rate formula tracks customer loss and helps you gauge the health of your business. The lower the churn, the more sustainable your growth.
Revenue churn tracks the monthly recurring revenue (MRR) loss from customers who cancel or downgrade their subscriptions. It’s a crucial metric for SaaS and subscription-based businesses.
The gross revenue churn rate measures how much revenue is lost without considering new customer acquisition. It helps you see the impact of churn on your revenue in isolation. To get your churn rate percentage, divide your churned revenue by last month’s MRR and multiply by 100.
NPS indicates how likely customers are to refer your business to others, qualitatively measuring their general satisfaction and loyalty to your offerings. A high NPS suggests happy customers who are ready to advocate for your brand, boosting referrals and potentially fueling growth.
To calculate NPS, ask your customers: “How likely are you to recommend us to a friend or colleague on a scale from 0 to 10?”
To calculate your NPS, subtract the percentage of detractors from promoters.
RPR measures the percentage of customers who return after their first purchase. It is crucial for businesses like ecommerce where repeat business drives growth.
The repeat purchase rate can be tracked weekly, monthly, or quarterly to give valuable insights into customer behavior. In B2B, it’s important to remember that purchasing frequency may vary by customer, so always benchmark per customer, not just overall. This metric can help your team identify trends, spot loyal customers, and fine-tune retention strategies.
For an extra boost, you can track Loyal Customer Rate, focusing on those who make more than two purchases.
Loyal Customer Rate shows the percentage of customers who keep coming back. These are the buyers who fuel your business, making repeat purchases and driving sales.
Here’s how you can calculate your loyal customer rate:
Customer Lifetime Value measures the total profit a customer brings to your business over their entire relationship. It’s a key metric for understanding whether you should focus more on acquiring new customers or retaining existing ones.
Or, for a more detailed view:
(Transactions per period x Order value x Gross margin x Customer lifespan) ÷ Total customers
A higher CLV means you can invest more in customer acquisition. To boost a low CLV, focus on encouraging repeat purchases, enhancing loyalty programs, and improving satisfaction. Rather than applying one CLV to all customers, segment your data for more tailored insights into your most valuable customers.
CAC tells you exactly how much you’re spending to win new customers. It’s crucial to ensure your business model is sustainable when paired with CLV.
To calculate your CAC, simply divide your total sales and marketing spending (including salaries) by the number of new customers gained in a specific period.
For example, if you spend $100,000 in a month and acquire 100 customers, your CAC is $1,000.
Tracking CAC helps you manage growth and fine-tune your acquisition strategy, especially for new businesses looking to make every dollar count.
CAC-to-LTV compares your CLV to CAC and is a key SaaS growth metric for understanding your marketing ROI and ensuring you’re not overspending on customer acquisition.
Here’s the rule of thumb: a healthy business should have a CLV at least 3 times greater than its CAC. If your ratio is 1:1, you're overspending. If it's 5:1, you might be leaving money on the table by not investing enough. In short, this metric keeps your marketing budget in check and helps prioritize high-ROI efforts.
Customer Engagement Score is your tool for personalized customer success strategies that foster loyalty and improve retention. It measures how engaged your customers and trial users are with your product, reflecting their actions (or lack thereof). The higher the score, the more engaged and satisfied the customer.
A low CES during a trial could signal a need for intervention to boost engagement and improve conversion rates. Similarly, a sudden dip in engagement could point to churn risk, prompting proactive outreach to retain customers.
CES helps you identify happy, engaged users who are prime for upselling or cross-selling, driving revenue growth. To calculate it:
Modern CRMs like HubSpot simplify customer engagement score tracking by automatically assigning engagement scores to customers, where:
This scorecard helps you quickly assess which customers need attention and which are ready for upsell opportunities.
The customer health score is your early warning system, predicting whether a customer is at risk of churning. It gives your customer success team the insights needed to act before it's too late—before a customer decides to cancel.
Like customer engagement scores, health scores track different signals of loyalty or churn. These signals could be usage patterns, support tickets, or product interactions, helping you spot unhappy customers early and offer proactive support.
The way brands analyze their customer health score varies. The score is typically built using data points like the volume of interactions, recency of engagement, and depth of activity.
Customer satisfaction is important, but loyalty is what truly sets your brand apart. A business that tracks and understands the right retention metrics can seamlessly align its marketing, customer service, and retention efforts. By regularly gathering customer feedback and tracking key metrics, you can create a richer, more personalized experience that encourages customer loyalty and repeat business.
As you build and grow your SaaS business, it's easy to let metrics slip through the cracks. But by automating analytics and making data-driven decisions, you can turn your retention strategy into a growth machine. Tracking and optimizing the right metrics will not only keep customers coming back but will also fuel long-term success.
