What is retention rate?

Retention rate is the percentage of customers, users or subscribers who stay with your business over a given period. In B2B and e commerce this metric shows how well you keep the customers you already worked hard and paid to acquire.

In practice, retention rate answers a simple question. Of the customers you had at the start of a period, how many are still active at the end. A high retention rate means your product, pricing and experience are strong enough to keep people coming back. A low rate signals churn problems and wasted acquisition spend.

How to calculate retention rate

The basic formula for retention rate is straightforward and can be applied monthly, quarterly or yearly:

Retention rate = ((Customers at end of period − New customers during period) ÷ Customers at start of period) × 100

For example, you start the quarter with 200 customers and end with 230. During the quarter you acquired 50 new customers. Your retention rate is ((230 − 50) ÷ 200) × 100 = 90%. This tells you that 90 percent of your existing customers stayed with you during that period.

Retention rate, churn rate and revenue impact

Retention rate is the opposite of churn rate. If your quarterly retention rate is 90 percent, your churn rate for that same base of customers is 10 percent. Both metrics are core inputs in SaaS and subscription models, because they drive customer lifetime value, payback time on acquisition and overall growth potential.

For B2B SaaS teams, retention rate is often tracked alongside expansion and contraction revenue. You can see how it fits into formulas like net revenue retention in our guide on how to calculate B2B SaaS metrics. Strong retention allows you to scale paid media and sales confidently, because you recover acquisition costs faster.

Why retention rate matters for B2B and e commerce

For growth minded companies in Belgium and across Europe, retention rate is a leading indicator of whether your marketing and product are working together. High retention means your positioning, onboarding and ongoing communication align with what customers actually value. It also means each extra euro you put into acquisition has a compounding effect on revenue.

  • Improves unit economics by increasing customer lifetime value.
  • Reduces pressure on constant new acquisition to hit targets.
  • Exposes product gaps and experience issues when retention rate dips.
  • Makes paid media and SEO investments more profitable over time.
  • Helps forecast growth more accurately for investors and leadership.

Together these effects make retention rate one of the few metrics that influences almost every part of your growth model, from performance marketing to product roadmap.

How to improve your retention rate

Improving retention rate starts with understanding why customers leave, then closing those gaps fast. For digital businesses this often means tightening onboarding, clarifying the value proposition, improving support and using lifecycle communication to keep customers engaged. Regular feedback loops and simple experiments, such as A/B testing onboarding flows, can quickly reveal what moves the needle.

For SaaS companies, pairing a clear retention strategy with focused growth support can unlock sustainable expansion. If you want a partner that thinks beyond acquisition and helps you build compounding revenue, explore our marketing solutions for SaaS companies, where retention rate is treated as a first class KPI.