Gainsight Glossary

User Retention

What is user retention?

User retention is typically viewed as a rate, which is the percentage of active customers from one time period who are still customers in the next. User retention also can represent the steps that a company can take to encourage continued use of a product, lowering the chances of churn.

When the median gross retention rate — the percentage of revenue coming from repeat customers — is approximately 90%, it is clear that B2B SaaS companies can live or die by how well they are keeping existing customers happy. Throw in the fact that it costs anywhere between five times more to bring on a new customer than to keep an existing one, and the stakes are clear.

Why is user retention rate important?

Your product’s retention rate is a good measure of how well your customers believe your service or product is working for them, resulting in repeat business or subscription renewal. According to one analysis, B2B SaaS companies targeting small- and medium-sized businesses should see 80% as a good benchmark, while those supporting large enterprise companies should look for that 90% mark.

While a retention rate of 100% is obviously the ideal, churn is unavoidable and can occur for voluntary and involuntary reasons. Therefore, it is important to identify and analyze any of the reasons behind churn to determine what can be done to prevent the things in your control and mitigate those that are out of your hands. Given the costs to bring in new customers and the potential for long-term recurring revenue, there is plenty of incentive to do so.

What are some steps to improve user retention rate?

Feel like you have some space to improve when it comes to your company’s user retention rate? While you certainly are not alone — at least 61% of companies say that it is one of their biggest challenges — there are some key steps that you can take to deliver for your customers and bring down churn:

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