We developed this tool together with a contributor experienced in Biz Ops at LinkedIn and Harvard Business School.
IF YOU REMEMBER NOTHING ELSE
- Retention is by far the most important measure of product market fit. It drives your business model, and shows if you’re solving a real problem for customers.
- There is no universal rule of thumb for a “good” retention rate. You’ll have to benchmark based on your business model, unit economics and industry.
- Retention can be defined in three ways: revenue, constrained revenue, and logo retention. We’ll tell you when to use each.
- Copy and paste your data to use our retention analysis template!
Unfortunately there is no universal rule of thumb for a “good” retention rate – it should always be measured in the context of your broader unit economics, market size, and industry.
Use our spreadsheet template to calculate revenue, constrained revenue and logo retention, in three steps:
1. Input your raw data
Add your revenue or engagement data, starting in cell C28. You can adjust the time periods manually to reflect months, quarters, or years.
2. Double check what time period you're measuring
The biggest mistake people make with retention analyses is conflating the wrong time periods.
As a default, our template measures month over month retention, but you'll want to match the time periods in this analysis with your typical customer lifecycle. For a consumer app, this may be weekly, for an enterprise software company, this may be monthly.
3. Check the results
The three types of retention at the top of the sheet will calculate automatically, as will the "constrained" retention figures.