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12 customer retention metrics to track & how to measure them

The right customer metrics can tell you who is leaving your product, when they're churning, and (most importantly) why.
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Churn is a fire alarm.

Like the loud screech of a blaring alarm, a high churn rate indicates something’s gone (or going) wrong. But for SaaS companies looking to keep users around, it’s necessary to look beyond the simple formula of customers out versus customers to fix a churn problem.

If your company’s churning users, you need to understand the customer retention metrics that tell you who is churning, when they’re churning, and why. Figuring this out will help you focus on the improvements that matter most: those impacting the long-term health of your business.

Below, we’ll look at how to find the source of that fire and put it out before things burn down. Here are 12 essential metrics you can use to help you find the answers you need for better customer retention.

How to measure customer retention rate

Learning to calculate customer retention rate is pretty easy to do once you know the formula: customer retention rate = (number of customers at the end of a given time period – number of new customers)/number of customers at the beginning of that time period. It looks more complicated when it’s all laid out like that…but it’s all pretty basic and obvious when you see an example.

  • Your company had 200 customers at the beginning of the quarter and 230 customers at the end of the quarter
  • 50 customers are new (starting during the quarter)
  • (230–50)/200 = 0.90 or 90%

In this example, of the 200 customers who started the quarter with you, 90% stayed, and 10% churned. You can run this math over consecutive quarters to see how your customer retention efforts affect growth. For example, if your customer retention rate dips to 60% for two straight quarters, it might be time to see what’s going wrong and how you can rectify the problems.

Although useful, the customer retention rate is too high-level to get the complete picture. It might tell you that more people are churning, but it doesn’t get at the why behind it. These 12 other customer retention metrics will help you learn more about how well your product retains customers and halts churn.

The 12 customer retention metrics you should be measuring

If you want to get a grasp on your customer retention—look no further. With these customer retention metrics, you can zoom in on every aspect of customer retention, so you’ve got the data you need to help your business grow.

1. Monthly customer churn rate

Monthly customer churn rate is a high-level metric that tells you what percent of your customers are churning every month. It’s the inverse of your customer retention rate—and favored by those pesky glass-half-empty people.

monthly customer churn rate

Monthly customer churn rate formula: (number of customers churned in a month/total number of customers at the start of the month) × 100 = Monthly customer churn rate

Example: If Disney+ has a million paid subscribers at the beginning of the month, and of those one million, 10,000 churned, then its churn rate would be 1%.

The monthly customer churn rate by itself won’t tell you a lot—everyone has the occasional good or bad month. However, churn and retention trends become apparent when you look at them over 6 months or a year. Tracking this metric helps you determine whether all of your retention efforts are working and is a great macro customer retention KPI for your business.

2. Customer retention rate by cohort or segment

Your customer retention rate can be refined down to the cohort or segment level (if you have that data). Cohort retention rates give you quick feedback on how optimizations have increased (or decreased) your overall retention rates. So, if you’ve overhauled your onboarding, those first cohorts using it should give you important data on how well those changes are working.

Segment retention rates are best used to see how well those same optimizations are playing with different segments of your user base. For example, changes to your UI may play well with beginners and turn off power users at the same time.

customer retention rate by cohort

Customer retention rate formula by cohort: (number of customers in a cohort at the end of a time period/number of customers in a cohort at the beginning of a time period) × 100 = Customer retention rate by cohort

Example: If Trello has 150 customers starting on May 4th and a week later only has 110 of those customers remaining, its week 1 customer retention rate is 73%.

customer retention rate by cohort

Customer retention rate formula by segment: [(number of customers in a segment at the end of a time period – number of new customers in that segment)/number of customers in a segment at the beginning of a time period] × 100 = Customer retention rate by segment

Example: If Trello has 200 customers in its small business segment at the beginning of May, gains 10 more through the month, and ends the month with 205, then its customer retention rate is 97.5%: [(205–10)/200] × 100

Don’t forget that nothing stops you from mixing and matching these two metrics. If you’ve got a couple of key segments you’re actively personalizing for, why not see how new cohorts of those segments react to your efforts? This data tells you how well those flows are performing, so you can dive into why those flows are or aren’t working. That way, you better understand this key segment and can try to replicate any success in other segments and cohorts.

3. MRR and revenue churn rate

Monthly recurring revenue (MRR) is simply the sum of all of your recurring revenue sources in a month (so pennies found in the office couch don’t count). Your revenue churn rate shows you how much of your MRR is heading for the exit each month.  

revenue churn rate formula

Revenue churn rate formula: {[(MRR at the beginning of the month – MRR at the end of the month) –  upsells]/MRR at the beginning of the month} × 100 = Revenue churn rate

Example: If Buffer’s MRR at the beginning of the month was $1 million, it had $50,000 in upsells, and it ended the month with $900,000 in MRR, then its revenue churn rate would be 5%. {[($1 million – $900,000) – $50,000]/$1 million} × 100 = 5%

The advantage of calculating churn in terms of revenue instead of customers is that it appropriately weights the value of each customer. Customer retention rates value each customer equally, so an influx of smaller accounts can hide that you’re losing the big contracts that drive revenue. Tracking your MRR and revenue churn rate is one way to make sure you don’t get blindsided by deceptive growth numbers.

4. Reactivation MRR and reactivation rate

For good companies, churn isn’t the end for their customers. They fight to get them back, and it’s nice to have a metric to see just how much MRR you’ve returned. Reactivation MRR helps you by tracking how much of your recurring revenue comes from previously churned and returned sources.

It’s also nice to know what percentage of your churned customers eventually return—something you can find this out by tracking your reactivation rate.

reactivation monthly recurring revenue (MRR) formula

Reactivation MRR formula: Sum of all monthly revenue from customers that formerly churned = Reactivation MRR

Example: SpyFu currently has 12 customers who have reactivated. 4 of them are on an average plan worth $50 a month, while 8 of them are on an advanced plan worth $80 a month. The company’s total reactivation MRR would be $840.

reactivation rate formula

Reactivation rate formula: (number of reactivated users/number of churned users) × 100 = Reactivation rate

Example: Ubersuggest had 10,000 churns last year. Of those churns, 200 have reactivated, so its reactivation rate is 2%.

Use these metrics to gauge how well your efforts to win back old customers are working. Also, take good reactivation rates as a win for the quality of your SaaS product. Sometimes customers churn for reasons other than you. If they come back, take it as a vote of confidence in what you’re doing.

5. Customer lifetime value (CLTV)

Customer lifetime value (CLTV or CLV) is another canary in a coal mine for your customer retention metrics. It’s a top-level metric indicating how well you’re keeping your customers. The longer they stay, the more months they pay for your subscription, and the higher their average overall lifetime value is.

Calculating CLTV is simply the average value of your customers multiplied by your average customer lifespan to get the average lifetime worth of one of your customers.

Customer lifetime value (CLTV) formula

CLTV formula: Average value of customer (monthly or annual basis) × average customer lifespan = CLTV

Example: Netflix’s average customer value is $15 a month. If the average subscriber stays for one year, then their CLTV would be $180 ($15 × 12 months).

CLTV is great to track because it helps you diagnose where things are going wrong (or right) for your retention. When tracking CLTV, keep a record of average value and lifespan to see how these two inputs fluctuate. For example, if your CLTV drops due to lower value, you can start working on optimizing your upselling efforts. Or, if the problem is lifespan, optimizations to your aha moment may be just what the doctor ordered.

6. Cumulative cohort revenue (CCR)

OpenView has come up with an even more comprehensive formula for understanding the value of your users. The company recommends looking at cumulative cohort revenue (CCR) and comparing that against the customer acquisition cost (CAC). The CCR is the total amount of revenue you earned from a chunk of customers acquired within a certain time period (usually 12 months).

CCR formula: Total cumulative revenue for a specific cohort over a 12-month span/sales and marketing spent in the cohort’s initial month = CCR

Example: Semrush has earned $500,000 a year from the cohort of users that started in January. The company spends $100,000 on this cohort in the first month. The 12-month CCR ratio of that cohort is 5x. In other words, this cohort is earning the company 5x on its initial investment in only a year.

You’ll notice that the above formula includes a span of time. This formula ensures that you’re comparing the actual total revenue of any given cohort against the amount of money you spent to acquire them. No false assumptions for this one, and it gives clear insight into where you break even with your CAC. Comparing your CCR versus CAC across different cohorts will show you whether you’re improving over time and how quickly you can recoup the amount of money you spend acquiring customers.

7. Daily/Weekly/Monthly active users (DAU/WAU/MAU)

Instead of looking at just retention, you should also be looking at behavioral analytics. This will give you a sense of who’s active and who just hasn’t gotten around to unsubscribing.For that, you need to look at your activity levels. Depending on your product, you need to pay close attention to one of these metrics:

  • Daily Active Users (DAU)
  • Weekly Active Users (WAU)
  • Monthly Active Users (MAU)

If your product’s core value hinges on daily use (a messaging app, a workflow organizer, etc.), you have to look at daily activity numbers.

If, however, your product’s core value hinges on infrequent check-ins, keep track of the WAU or even the MAU.

Users don’t just wake up one day and decide to leave your app. Churn is usually preceded by a decline in activity. Set activity benchmarks for your users—if they don’t reach them, start re-engaging before it’s too late.

DAU/WAU/MAU formula: No formula, just let the computers do the work : ). Instead, we leave you with a happiness formula: Pizza + People = Happy

8. Net promoter score (NPS) and Customer Satisfaction Score (CSAT)

NPS and CSAT are two different ways to measure how much a customer likes your product. NPS asks them how likely they are to recommend a product on a scale from 1 to 10. CSAT asks them how satisfied they are with the product on a scale from 1 to 5.

Using the results from these surveys, you get an idea of how positively your customers view their experience with your product. The formulas for determining your NPS and CSAT scores are as follows:

Net promoter score (NPS) formula

NPS formula: % who are promoters (score 9 or 10) – % who are detractors (score 6 or less) = NPS score

Example: Canva tabulates its NPS scores and finds that of 100 respondents, 12 gave the company a 9 or 10, 30 gave the company a 7 or 8, while 58 gave the company a 6 or less. This would make their NPS score a -46 (ouch).

CSAT formula: (number of 4 and 5 responses) ÷ (number of responses) × 100 = CSAT

Example: Canva tabulates its CSAT scores and finds that of 200 respondents, 112 gave the company a 4 or 5. This would make its CSAT score a 56 (much better).

NPS and CSAT are important because they allow you to keep your finger on the pulse of your customers. Positive trends help justify recent optimizations, while negative trends might send you scrambling for the drawing board to try something new.

They also let you collect data on customers' feelings after important interactions with your company, like after they complete onboarding. This way, you can narrow in on how your most crucial flows are actually performing and what impression they’re leaving on your customers.

9. Average session duration

Average session duration is a metric that signals how engaged your users are. While it’s common for your software to calculate this one for you, why not include it? We’ve come this far.

average session duration formula

Average session formula: Total time across all sessions/total number of sessions = Average session duration

Example: Officely’s time across all sessions is 500,000 hours this year. Its total number of user sessions is 1,000,000. Its average session duration would be 30 minutes.

Good average session durations depend on the purpose of your product. If your product is meant to help people quickly, like Shazam, then a longer session duration may not indicate “more engaged.” On the other hand, if you’re running a banking app and people pop on and off in 30 seconds on average, they’re only checking their balances and leaving.

Experimenting with new ways to increase the adoption of investing or budgeting features could increase your average session duration, lead to more upsell opportunities, and create more value for your users.

10. Feature adoption rates

You’ve gone through the hassle of building cool features for your customers. It’d be a shame if they didn’t use them. Feature adoption rates measure what percentage of your users take advantage of each of your features so you can push underutilized ones or put your top draws in the spotlight.

Feature adoption rate formula: (number of users of a specific feature in the last month/total number of product users) × 100 = Feature adoption rate

Example: Ahrefs has 1,000,000 users, and last month only 200,000 used its backlink tool. Its feature adoption rate for the backlink tool would be 20%.

Get more out of this metric by digging into which segments love which features. This practice will educate you about your segments and will help you predict what other features they might love. So, if segment 1 likes features A and B, and segment 2 likes feature A, then it’d be worth your time pushing feature B, too.

11. Renewal rate

If your product is on a subscription model, you need to track your renewal rate.  The renewal rate tracks what percentage of customers choose to renew their contract. Not only is this good info to have, but it also gives you direct insight into how successful you are at retaining your current customers.

renewal rate formula

Renewal rate formula: (number of customers who renew that month/total number of customers up for renewal) × 100 = Renewal rate

Example: Office 365 has 200,000 customers up for renewal in January. Of those customers, only 150,000 renewed. Therefore, its renewal rate that month was 75%: (150,000/200,000) × 100.

Use renewal rate to get out ahead of negative trends that yearly churn KPIs might miss. You can also get more micro by looking at key segments to gauge their health individually. That way, you never miss the proverbial pebble that kicks off a landslide of churn.

12. Engagement rate by channel, segment, and cohort

Understanding how engaged your users are is a key metric to track while gauging your overall customer retention efficacy. An engaged customer is one that is actively using your product regularly. If they’re signing in and using your product every day, there’s a far better chance that they’re getting value and will choose to stick around longer.

Engagement rates can be calculated based on channel, segment, or cohort.

Engagement rate by channel: (Total number of active users from a specific channel over a defined time period/total number of users from a specific channel) × 100 = Engagement rate by channel

Engagement rate by segment: (Total number of active users from a specific segment over a defined time period/total number of users from a specific segment) × 100 = Engagement rate by segment.

Engagement rate by cohort: (Total number of active users from a specific cohort over a defined time period/total number of users from a specific cohort) × 100 = Engagement rate by cohort.Example: If Spotify has 100 users that started on January 1st and only 10 of them used the service once in the last week of January, that cohort’s engagement rate would be 10%. [(10/100) × 100]Looking at engagement rate by segment and cohort has the obvious value of checking in on how well your product is doing at retaining users. What’s less obvious is why you’d track it by channel. Tracking engagement by channel lets you see where your most engaged customers are coming from. If you’re getting the same number of sign-ups from SEO and PPC, but SEO has a far higher engagement rate, it’s more valuable for your company to invest in SEO.

How to boost customer retention rates

If your customer retention metrics aren’t where you’d like them to be, you don’t have to just sit there and accept it. It’s time for an all-out (charm) offensive to win over those tough customer holdouts. Here are 4 places to start.

1. Personalized onboarding

Customer retention starts with the first interaction. Customized onboarding flows give you the best chance to make a memorable first impression on all of your customers—not just your average ones.

Start by finding out what the segment’s expectations are. Once you know what they’re looking for, tailor your onboarding to deliver that expectation (and more) gift-wrapped with a bow on it.Once you’ve got your first win for your new users, don’t take your foot off of the pedal. Continue racking up wins and you’ll see that group’s retention numbers climb. Now repeat with all of your segments and wait for the results to roll in.

Learn more about personalized onboarding flows.

2. In-app messaging and email campaigns

Engagement is a clear way to improve customer retention. Customers might be excited about your product in the first week, but what about after the first month? First year? Use in-app messaging and email campaigns to pump your users up. Share new insights, educate them on new features, and remind them why they were excited about your platform in the first place.

In-app messaging is particularly good for this because you can speak directly to users, so they never miss one of your messages because it got lost in a spam folder.

Learn more about in-app messaging.

3. Great customer service

Customers remember lousy service. In fact, Zendesk found that 61% of customers would change to a competitor after just one bad experience. The bottom line? Investing in your customer service is an easy way to improve retention metrics and fight off churn. It may not be as sexy as AI-powered this or automated that—but it might just be what boosts your customer retention rates.

Learn more about making your business more customer-centric.

4. Better customer retention tools

Tools aren’t everything, but they sure can help. Customer retention tools help you build better onboarding flows, improve your messaging, and boost customer service records. So they’re kind of like a superpower, helping you level up your customer retention through automation, data, and product integrations.

Learn more about the best customer retention tools on the market.

These are just some places you need to start if you want to keep your customers longer. Want more strategies to mull over? Here are eight customer retention strategies that top companies use every day.

Diagnose before treating symptoms

It’s tempting to blindly apply any and all retention strategies to your user base—whether you have a churn problem or not. But this can spread you thin and, ultimately, achieve little.

Instead, use these metrics we’ve selected. They equip you with the insights necessary to pinpoint your churn problem in order to make the most impact ASAP.

And once these metrics show you great results, you can buckle down and start focusing on getting even more value out of all those users.

Author's picture
Lyla Rozelle
Sr. Customer and Lifecycle Marketing Manager at Appcues
Lyla is a marketer working on growth at Appcues. She works remotely from the hilltowns in Western Massachusetts where's she usually hiking with her hound dogs or researching antiques.
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Churn is a fire alarm.

Like the loud screech of a blaring alarm, a high churn rate indicates something’s gone (or going) wrong. But for SaaS companies looking to keep users around, it’s necessary to look beyond the simple formula of customers out versus customers to fix a churn problem.

If your company’s churning users, you need to understand the customer retention metrics that tell you who is churning, when they’re churning, and why. Figuring this out will help you focus on the improvements that matter most: those impacting the long-term health of your business.

Below, we’ll look at how to find the source of that fire and put it out before things burn down. Here are 12 essential metrics you can use to help you find the answers you need for better customer retention.

How to measure customer retention rate

Learning to calculate customer retention rate is pretty easy to do once you know the formula: customer retention rate = (number of customers at the end of a given time period – number of new customers)/number of customers at the beginning of that time period. It looks more complicated when it’s all laid out like that…but it’s all pretty basic and obvious when you see an example.

  • Your company had 200 customers at the beginning of the quarter and 230 customers at the end of the quarter
  • 50 customers are new (starting during the quarter)
  • (230–50)/200 = 0.90 or 90%

In this example, of the 200 customers who started the quarter with you, 90% stayed, and 10% churned. You can run this math over consecutive quarters to see how your customer retention efforts affect growth. For example, if your customer retention rate dips to 60% for two straight quarters, it might be time to see what’s going wrong and how you can rectify the problems.

Although useful, the customer retention rate is too high-level to get the complete picture. It might tell you that more people are churning, but it doesn’t get at the why behind it. These 12 other customer retention metrics will help you learn more about how well your product retains customers and halts churn.

The 12 customer retention metrics you should be measuring

If you want to get a grasp on your customer retention—look no further. With these customer retention metrics, you can zoom in on every aspect of customer retention, so you’ve got the data you need to help your business grow.

1. Monthly customer churn rate

Monthly customer churn rate is a high-level metric that tells you what percent of your customers are churning every month. It’s the inverse of your customer retention rate—and favored by those pesky glass-half-empty people.

monthly customer churn rate

Monthly customer churn rate formula: (number of customers churned in a month/total number of customers at the start of the month) × 100 = Monthly customer churn rate

Example: If Disney+ has a million paid subscribers at the beginning of the month, and of those one million, 10,000 churned, then its churn rate would be 1%.

The monthly customer churn rate by itself won’t tell you a lot—everyone has the occasional good or bad month. However, churn and retention trends become apparent when you look at them over 6 months or a year. Tracking this metric helps you determine whether all of your retention efforts are working and is a great macro customer retention KPI for your business.

2. Customer retention rate by cohort or segment

Your customer retention rate can be refined down to the cohort or segment level (if you have that data). Cohort retention rates give you quick feedback on how optimizations have increased (or decreased) your overall retention rates. So, if you’ve overhauled your onboarding, those first cohorts using it should give you important data on how well those changes are working.

Segment retention rates are best used to see how well those same optimizations are playing with different segments of your user base. For example, changes to your UI may play well with beginners and turn off power users at the same time.

customer retention rate by cohort

Customer retention rate formula by cohort: (number of customers in a cohort at the end of a time period/number of customers in a cohort at the beginning of a time period) × 100 = Customer retention rate by cohort

Example: If Trello has 150 customers starting on May 4th and a week later only has 110 of those customers remaining, its week 1 customer retention rate is 73%.

customer retention rate by cohort

Customer retention rate formula by segment: [(number of customers in a segment at the end of a time period – number of new customers in that segment)/number of customers in a segment at the beginning of a time period] × 100 = Customer retention rate by segment

Example: If Trello has 200 customers in its small business segment at the beginning of May, gains 10 more through the month, and ends the month with 205, then its customer retention rate is 97.5%: [(205–10)/200] × 100

Don’t forget that nothing stops you from mixing and matching these two metrics. If you’ve got a couple of key segments you’re actively personalizing for, why not see how new cohorts of those segments react to your efforts? This data tells you how well those flows are performing, so you can dive into why those flows are or aren’t working. That way, you better understand this key segment and can try to replicate any success in other segments and cohorts.

3. MRR and revenue churn rate

Monthly recurring revenue (MRR) is simply the sum of all of your recurring revenue sources in a month (so pennies found in the office couch don’t count). Your revenue churn rate shows you how much of your MRR is heading for the exit each month.  

revenue churn rate formula

Revenue churn rate formula: {[(MRR at the beginning of the month – MRR at the end of the month) –  upsells]/MRR at the beginning of the month} × 100 = Revenue churn rate

Example: If Buffer’s MRR at the beginning of the month was $1 million, it had $50,000 in upsells, and it ended the month with $900,000 in MRR, then its revenue churn rate would be 5%. {[($1 million – $900,000) – $50,000]/$1 million} × 100 = 5%

The advantage of calculating churn in terms of revenue instead of customers is that it appropriately weights the value of each customer. Customer retention rates value each customer equally, so an influx of smaller accounts can hide that you’re losing the big contracts that drive revenue. Tracking your MRR and revenue churn rate is one way to make sure you don’t get blindsided by deceptive growth numbers.

4. Reactivation MRR and reactivation rate

For good companies, churn isn’t the end for their customers. They fight to get them back, and it’s nice to have a metric to see just how much MRR you’ve returned. Reactivation MRR helps you by tracking how much of your recurring revenue comes from previously churned and returned sources.

It’s also nice to know what percentage of your churned customers eventually return—something you can find this out by tracking your reactivation rate.

reactivation monthly recurring revenue (MRR) formula

Reactivation MRR formula: Sum of all monthly revenue from customers that formerly churned = Reactivation MRR

Example: SpyFu currently has 12 customers who have reactivated. 4 of them are on an average plan worth $50 a month, while 8 of them are on an advanced plan worth $80 a month. The company’s total reactivation MRR would be $840.

reactivation rate formula

Reactivation rate formula: (number of reactivated users/number of churned users) × 100 = Reactivation rate

Example: Ubersuggest had 10,000 churns last year. Of those churns, 200 have reactivated, so its reactivation rate is 2%.

Use these metrics to gauge how well your efforts to win back old customers are working. Also, take good reactivation rates as a win for the quality of your SaaS product. Sometimes customers churn for reasons other than you. If they come back, take it as a vote of confidence in what you’re doing.

5. Customer lifetime value (CLTV)

Customer lifetime value (CLTV or CLV) is another canary in a coal mine for your customer retention metrics. It’s a top-level metric indicating how well you’re keeping your customers. The longer they stay, the more months they pay for your subscription, and the higher their average overall lifetime value is.

Calculating CLTV is simply the average value of your customers multiplied by your average customer lifespan to get the average lifetime worth of one of your customers.

Customer lifetime value (CLTV) formula

CLTV formula: Average value of customer (monthly or annual basis) × average customer lifespan = CLTV

Example: Netflix’s average customer value is $15 a month. If the average subscriber stays for one year, then their CLTV would be $180 ($15 × 12 months).

CLTV is great to track because it helps you diagnose where things are going wrong (or right) for your retention. When tracking CLTV, keep a record of average value and lifespan to see how these two inputs fluctuate. For example, if your CLTV drops due to lower value, you can start working on optimizing your upselling efforts. Or, if the problem is lifespan, optimizations to your aha moment may be just what the doctor ordered.

6. Cumulative cohort revenue (CCR)

OpenView has come up with an even more comprehensive formula for understanding the value of your users. The company recommends looking at cumulative cohort revenue (CCR) and comparing that against the customer acquisition cost (CAC). The CCR is the total amount of revenue you earned from a chunk of customers acquired within a certain time period (usually 12 months).

CCR formula: Total cumulative revenue for a specific cohort over a 12-month span/sales and marketing spent in the cohort’s initial month = CCR

Example: Semrush has earned $500,000 a year from the cohort of users that started in January. The company spends $100,000 on this cohort in the first month. The 12-month CCR ratio of that cohort is 5x. In other words, this cohort is earning the company 5x on its initial investment in only a year.

You’ll notice that the above formula includes a span of time. This formula ensures that you’re comparing the actual total revenue of any given cohort against the amount of money you spent to acquire them. No false assumptions for this one, and it gives clear insight into where you break even with your CAC. Comparing your CCR versus CAC across different cohorts will show you whether you’re improving over time and how quickly you can recoup the amount of money you spend acquiring customers.

7. Daily/Weekly/Monthly active users (DAU/WAU/MAU)

Instead of looking at just retention, you should also be looking at behavioral analytics. This will give you a sense of who’s active and who just hasn’t gotten around to unsubscribing.For that, you need to look at your activity levels. Depending on your product, you need to pay close attention to one of these metrics:

  • Daily Active Users (DAU)
  • Weekly Active Users (WAU)
  • Monthly Active Users (MAU)

If your product’s core value hinges on daily use (a messaging app, a workflow organizer, etc.), you have to look at daily activity numbers.

If, however, your product’s core value hinges on infrequent check-ins, keep track of the WAU or even the MAU.

Users don’t just wake up one day and decide to leave your app. Churn is usually preceded by a decline in activity. Set activity benchmarks for your users—if they don’t reach them, start re-engaging before it’s too late.

DAU/WAU/MAU formula: No formula, just let the computers do the work : ). Instead, we leave you with a happiness formula: Pizza + People = Happy

8. Net promoter score (NPS) and Customer Satisfaction Score (CSAT)

NPS and CSAT are two different ways to measure how much a customer likes your product. NPS asks them how likely they are to recommend a product on a scale from 1 to 10. CSAT asks them how satisfied they are with the product on a scale from 1 to 5.

Using the results from these surveys, you get an idea of how positively your customers view their experience with your product. The formulas for determining your NPS and CSAT scores are as follows:

Net promoter score (NPS) formula

NPS formula: % who are promoters (score 9 or 10) – % who are detractors (score 6 or less) = NPS score

Example: Canva tabulates its NPS scores and finds that of 100 respondents, 12 gave the company a 9 or 10, 30 gave the company a 7 or 8, while 58 gave the company a 6 or less. This would make their NPS score a -46 (ouch).

CSAT formula: (number of 4 and 5 responses) ÷ (number of responses) × 100 = CSAT

Example: Canva tabulates its CSAT scores and finds that of 200 respondents, 112 gave the company a 4 or 5. This would make its CSAT score a 56 (much better).

NPS and CSAT are important because they allow you to keep your finger on the pulse of your customers. Positive trends help justify recent optimizations, while negative trends might send you scrambling for the drawing board to try something new.

They also let you collect data on customers' feelings after important interactions with your company, like after they complete onboarding. This way, you can narrow in on how your most crucial flows are actually performing and what impression they’re leaving on your customers.

9. Average session duration

Average session duration is a metric that signals how engaged your users are. While it’s common for your software to calculate this one for you, why not include it? We’ve come this far.

average session duration formula

Average session formula: Total time across all sessions/total number of sessions = Average session duration

Example: Officely’s time across all sessions is 500,000 hours this year. Its total number of user sessions is 1,000,000. Its average session duration would be 30 minutes.

Good average session durations depend on the purpose of your product. If your product is meant to help people quickly, like Shazam, then a longer session duration may not indicate “more engaged.” On the other hand, if you’re running a banking app and people pop on and off in 30 seconds on average, they’re only checking their balances and leaving.

Experimenting with new ways to increase the adoption of investing or budgeting features could increase your average session duration, lead to more upsell opportunities, and create more value for your users.

10. Feature adoption rates

You’ve gone through the hassle of building cool features for your customers. It’d be a shame if they didn’t use them. Feature adoption rates measure what percentage of your users take advantage of each of your features so you can push underutilized ones or put your top draws in the spotlight.

Feature adoption rate formula: (number of users of a specific feature in the last month/total number of product users) × 100 = Feature adoption rate

Example: Ahrefs has 1,000,000 users, and last month only 200,000 used its backlink tool. Its feature adoption rate for the backlink tool would be 20%.

Get more out of this metric by digging into which segments love which features. This practice will educate you about your segments and will help you predict what other features they might love. So, if segment 1 likes features A and B, and segment 2 likes feature A, then it’d be worth your time pushing feature B, too.

11. Renewal rate

If your product is on a subscription model, you need to track your renewal rate.  The renewal rate tracks what percentage of customers choose to renew their contract. Not only is this good info to have, but it also gives you direct insight into how successful you are at retaining your current customers.

renewal rate formula

Renewal rate formula: (number of customers who renew that month/total number of customers up for renewal) × 100 = Renewal rate

Example: Office 365 has 200,000 customers up for renewal in January. Of those customers, only 150,000 renewed. Therefore, its renewal rate that month was 75%: (150,000/200,000) × 100.

Use renewal rate to get out ahead of negative trends that yearly churn KPIs might miss. You can also get more micro by looking at key segments to gauge their health individually. That way, you never miss the proverbial pebble that kicks off a landslide of churn.

12. Engagement rate by channel, segment, and cohort

Understanding how engaged your users are is a key metric to track while gauging your overall customer retention efficacy. An engaged customer is one that is actively using your product regularly. If they’re signing in and using your product every day, there’s a far better chance that they’re getting value and will choose to stick around longer.

Engagement rates can be calculated based on channel, segment, or cohort.

Engagement rate by channel: (Total number of active users from a specific channel over a defined time period/total number of users from a specific channel) × 100 = Engagement rate by channel

Engagement rate by segment: (Total number of active users from a specific segment over a defined time period/total number of users from a specific segment) × 100 = Engagement rate by segment.

Engagement rate by cohort: (Total number of active users from a specific cohort over a defined time period/total number of users from a specific cohort) × 100 = Engagement rate by cohort.Example: If Spotify has 100 users that started on January 1st and only 10 of them used the service once in the last week of January, that cohort’s engagement rate would be 10%. [(10/100) × 100]Looking at engagement rate by segment and cohort has the obvious value of checking in on how well your product is doing at retaining users. What’s less obvious is why you’d track it by channel. Tracking engagement by channel lets you see where your most engaged customers are coming from. If you’re getting the same number of sign-ups from SEO and PPC, but SEO has a far higher engagement rate, it’s more valuable for your company to invest in SEO.

How to boost customer retention rates

If your customer retention metrics aren’t where you’d like them to be, you don’t have to just sit there and accept it. It’s time for an all-out (charm) offensive to win over those tough customer holdouts. Here are 4 places to start.

1. Personalized onboarding

Customer retention starts with the first interaction. Customized onboarding flows give you the best chance to make a memorable first impression on all of your customers—not just your average ones.

Start by finding out what the segment’s expectations are. Once you know what they’re looking for, tailor your onboarding to deliver that expectation (and more) gift-wrapped with a bow on it.Once you’ve got your first win for your new users, don’t take your foot off of the pedal. Continue racking up wins and you’ll see that group’s retention numbers climb. Now repeat with all of your segments and wait for the results to roll in.

Learn more about personalized onboarding flows.

2. In-app messaging and email campaigns

Engagement is a clear way to improve customer retention. Customers might be excited about your product in the first week, but what about after the first month? First year? Use in-app messaging and email campaigns to pump your users up. Share new insights, educate them on new features, and remind them why they were excited about your platform in the first place.

In-app messaging is particularly good for this because you can speak directly to users, so they never miss one of your messages because it got lost in a spam folder.

Learn more about in-app messaging.

3. Great customer service

Customers remember lousy service. In fact, Zendesk found that 61% of customers would change to a competitor after just one bad experience. The bottom line? Investing in your customer service is an easy way to improve retention metrics and fight off churn. It may not be as sexy as AI-powered this or automated that—but it might just be what boosts your customer retention rates.

Learn more about making your business more customer-centric.

4. Better customer retention tools

Tools aren’t everything, but they sure can help. Customer retention tools help you build better onboarding flows, improve your messaging, and boost customer service records. So they’re kind of like a superpower, helping you level up your customer retention through automation, data, and product integrations.

Learn more about the best customer retention tools on the market.

These are just some places you need to start if you want to keep your customers longer. Want more strategies to mull over? Here are eight customer retention strategies that top companies use every day.

Diagnose before treating symptoms

It’s tempting to blindly apply any and all retention strategies to your user base—whether you have a churn problem or not. But this can spread you thin and, ultimately, achieve little.

Instead, use these metrics we’ve selected. They equip you with the insights necessary to pinpoint your churn problem in order to make the most impact ASAP.

And once these metrics show you great results, you can buckle down and start focusing on getting even more value out of all those users.

Author's picture
Lyla Rozelle
Sr. Customer and Lifecycle Marketing Manager at Appcues
Lyla is a marketer working on growth at Appcues. She works remotely from the hilltowns in Western Massachusetts where's she usually hiking with her hound dogs or researching antiques.
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