Customer retention rate
Customer retention needs a fixed starting group. A SaaS report must count customers distinctly and separate new accounts from reactivated ones.
Track a fixed customer group
Customer retention rate describes the share of a starting customer group remaining at the end of a period. Software reports must define what counts as one customer, the activity rule and the measurement dates. Customer retention and revenue retention are different metrics.
A fictional SaaS report counts an account as active if it has at least one ongoing paid-plan subscription. It first groups subscriptions by customerId; multiple subscriptions for the same customer do not create another customer. Start and end use the same time zone and activity rule.
| Active subscriptions at start | Active subscriptions at end |
|---|---|---|
| 2 | 2 |
| 1 | 0 |
| 1 | 1 |
| 1 | 1 |
| 0 | 1 |
| 0 | 1 |
Separate new and reactivated accounts
There are 4 active customers at the start and 5 in total at the end. However, only C-1, C-3 and C-4 remain from the original group: (3 / 4) × 100 = 75 %. N-1 is new; R-1 was a customer before the period but was inactive at the start and was reactivated.
Simply subtracting new customers from the ending total wrongly includes R-1 in the starting group here. The report must therefore identify the original customer IDs again instead of relying only on aggregate counts. This point-in-time metric proves neither uninterrupted use throughout the period nor revenue development. An empty starting group has no calculable rate.
Sources
Related terms
- Average order valueAverage order value needs an order-level calculation. An import with multiple line items per order must not inflate the order count.
- Event trackingEvent tracking records selected actions on websites or in apps. A clearly defined trigger explains what a counted event actually establishes.
- UTM parametersUTM parameters label a campaign link with information such as source, medium and campaign.
- Repeat purchase rateRepeat purchase rate is the share of customers who buy again. A report needs an explicit period, customer identity and distinct orders.
Articles on this topic
Your project with ASES
Describe your project to us. We will get back to you with an initial assessment.