What is Retention Rate?
Customer Retention Rate
Retention Rate is the percentage of customers who remain customers over a given period. Opposite of churn.
Retention Rate = 100% − Churn RateEcommerce 30-day repeat: 15-30% · SaaS annual: 85-95% · DTC subscription: 60-80% month 2
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:
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?▾
How is Retention Rate calculated?▾
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Related terms
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