Retention

Retention measures whether the customers, users, or revenue you acquired in one period are still present in a later period. It is the inverse of churn and the single most-watched metric in SaaS, consumer apps, and marketplaces, because long-run growth is mathematically impossible without it.

Three flavors

• User retention: of the users active in week N, how many are still active in week N+K? Common in consumer products and freemium SaaS.
• Customer retention: of the paying customers at the start of a period, how many are still paying at the end? Common in B2B SaaS.
• Revenue retention: of the revenue at period start, how much remains at period end (after churn, contraction, and — for net revenue retention — expansion)?

Net Revenue Retention (NRR) above 100% means existing customers grow your revenue faster than churn shrinks it — a hallmark of best-in-class SaaS.

Retention curves

The standard visualization is a retention curve: a cohort's percentage active over time. Three shapes are common:

• Smile curve (good): drops at first, then stabilizes or recovers — the product found its core users
• Decay curve (bad): drops monotonically and asymptotes near zero — no users find lasting value
• Flat curve (rare and great): stays near 100% — strong product-market fit and habit formation

The shape matters more than the absolute level — a 20% retained cohort that's flat for 12 months can be more valuable than a 50% cohort that decays steeply.

Related

• Churn — the leakage measured by retention's inverse
• Cohort Analysis — how retention curves are built
• Product-Market Fit — what good retention is evidence of