What is Customer Retention Rate?

Customer retention rate (CRR) is the percentage of existing customers you keep over a period, excluding any new ones you acquired. It's the inverse of churn and a direct measure of how well you hold onto the customers you already have — usually far cheaper than winning new ones.

Why you exclude new customers

The formula deliberately subtracts customers acquired during the period, because retention is about keeping the customers you started with — not masking losses with new growth. Mixing in new acquisitions would inflate the number and hide a retention problem.

Why retention beats acquisition

Retaining a customer typically costs a fraction of acquiring a new one, and retained customers tend to spend more over time. A high retention rate compounds: it lifts lifetime value, stabilizes revenue, and is one of the clearest signals that your product and support are delivering ongoing value.

Formula

CRR % = ((Customers at end − New customers acquired) ÷ Customers at start) × 100

Example: Start with 500, end with 520 after adding 40 new: ((520 − 40) ÷ 500) × 100 = 96% retention.

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Questions about Customer Retention Rate

What's a good customer retention rate?

It varies by industry, but healthy SaaS businesses often retain 90%+ of customers annually. Compare to your sector and watch the trend; the right benchmark is your own improvement over time.

How is retention rate related to churn?

They're complements over the same period: retention rate + churn rate = 100%. If you retain 96%, you churned 4%.

Related terms

Churn Rate

Churn rate is the percentage of customers (or revenue) you lose over a period. It's the inverse of retention and one of the most important health metrics for any subscription business — small differences in churn compound dramatically over time, so even a point or two matters.

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV, also written LTV) is the total revenue you can expect from a single customer over the entire relationship. It reframes customers as long-term assets rather than one-time sales — and it's the number that tells you how much you can afford to spend acquiring and supporting them.

Net Revenue Retention (NRR)

Net Revenue Retention (NRR) is the percentage of recurring revenue you retain from existing customers over a period, including expansion (upgrades) and net of contraction and churn. An NRR above 100% means your existing customers grow your revenue even before you add a single new one.

Browse the full customer support glossary →