Retention: what's a good number, and how to read your cohorts
Growth brings customers in; retention decides whether they stay. How to build a cohort table, and what counts as good for your type of product.
You can spend millions acquiring customers, and if they walk out the back door just as fast, you're filling a leaking bucket. Retention is the number that tells you whether your product really solves a problem, and it's the first thing a serious investor asks about after seeing your growth curve.
What exactly is retention?
There are two kinds, and you need to tell them apart:
- User retention: of the people who signed up in a given month, how many still use the product after a period (say six months)? "Use" means doing the core action: ordering, paying, sending. Not just opening the app.
- Net revenue retention (NRR): take a group of customers' revenue a year ago and compare it to their revenue today. If they expanded and bought more, the number goes above 100% even if you lost some of them.
How to build a cohort table
A cohort is a group of customers who started in the same period. The table is simple:
| Signup cohort | Month 1 | Month 2 | Month 3 | Month 6 |
|---|---|---|---|---|
| January | 100% | 45% | 38% | 32% |
| February | 100% | 48% | 41% | 35% |
| March | 100% | 52% | 45% |
These are illustrative numbers, not real company data. Read the table three ways:
- Across: where does the curve flatten? If it drops and then holds at a number, you have a core of customers who want you. If it keeps sliding to zero, you don't have fit yet.
- Down: are newer cohorts better than older ones in the same month? If yes, your product changes are working.
- At the first drop: the biggest loss is usually between month one and two. That's an activation problem: the customer didn't reach value fast enough.
What's a good number?
There's no single number. It depends on the type of product. These are rough six-month user retention figures published by Lenny's Newsletter:
| Product type | Good | Great |
|---|---|---|
| Consumer social | ~25% | ~45% |
| Consumer transactional (ordering, shopping) | ~30% | ~50% |
| SMB / mid-market SaaS | ~60% | ~80% |
| Enterprise SaaS | ~70% | ~90% |
Treat them as a rough reference, not a verdict. If you're early, or your acquisition cost is low, a lower number can be acceptable.
Examples from the market
Unifonic: it reported a 162% net expansion rate over less than three years (September 2021). That means existing customers ended up spending far more than they started with. It's the strongest number you can show an investor in B2B, because it means growth comes from inside the base itself.
Subscriptions as a retention tool: HungerStation has HungerStation Plus with more than 10 million subscribers (June 2025), and Mrsool has Mrsool Black. A subscription turns occasional ordering into a habit, because the customer paid up front and wants to get the value.
Calo: a meal subscription that lets customers pause and switch. That's a smart retention detail: a customer traveling for two weeks pauses instead of cancelling, and it's harder to come back from a cancellation than from a pause.
Noon: in 2019 the average visit lasted more than 60 minutes. Deep engagement isn't retention by itself, but it's an early indicator of it.
Reading mistakes
- Blending cohorts: an average retention across all customers hides the problem. Loyal old cohorts lift the number, and new ones that leave quickly disappear from view.
- A loose definition of "active": if opening the app once counts as active, the number looks great and means nothing.
- The wrong period: a product used once a month shouldn't be measured weekly. Pick the period that matches how often the problem comes up.
How to raise retention
- Speed up time to value: identify the action that makes the customer "get" the product, and get them there in the first session.
- Build a habit: a reminder at the right moment, not random notifications.
- Talk to the ones who left: ask the customer who cancelled why. Five calls teach you more than any dashboard.
- Find your best cohort: which channel, city or customer type has the highest retention? Focus there.
Growth without retention is just marketing spend in another form.
The idea is from Lenny's Newsletter: What is good retention.
