What is SaaS Customer Retention Rate?

SaaS customer retention is the continuous ability of the business to have many long-term paying customers using SaaS business products. This is a critical indicator of SaaS success because the main source of revenue within this business model is derived through subscriptions.

Customer retention rate or CRR, is another important SaaS metric that calculates the percentage of customers retained for a given period. It is determined using the following formula:

CRR = (Number of customers at the end of a period – Number of customers acquired during the period) / Number of customers at the start of the period * 100

A good customer retention rate may differ depending on the nature of the business, the market segment chosen, and even the type of product. But, for SaaS businesses, it could be good to have a CRR of 35% in a period of eight weeks and above.

A 35% CRR over 8 weeks is good. Nonetheless, there’s no universal index for SaaS customer retention. What constitutes an ideal CRR will closely depend on your unique situation. The best way to go about it is to monitor your own CRR trend over time and compare it to that of your competitors or industry.

Net Revenue Retention (NRR) is the percentage of original recurring customer subscription revenue plus upsell/cross-sell revenue retained for a period within a certain time frame. The NRR in SaaS companies is normally expected to exceed 100%.

• Focus on customer satisfaction:  Achieving maximum customer satisfaction requires creating substantial new value for the target customer.
• Proactive customer engagement: Maintain regular communication with customers and offer support.
• Data-driven decision-making: It’s relevant to perform regular key metric measurements and changes based on data in terms of pricing strategies. 
• Continuous product improvement: Update your product based on customer feedback. 
• Invest in customer success: Establish a dedicated team to help customers with their goals when using your product.

Loyal and satisfied customers are the basis of any SaaS enterprise; therefore, customer satisfaction remains a critical factor.