Product metrics. Part 3- retention metrics

Retention Metrics

1. Churn Rate

Definition: The percentage of users who stop using a product/service over a time period.
Formula:
Churn Rate = (Lost Customers During Period / Total Customers at Start) × 100

Examples:

  • SaaS: 100 users cancel out of 2,000 in a month →
    = (100 / 2000) × 100 = 5%
  • Gym Memberships: 50 cancellations out of 500 members.
  • Online Learning: 200 dropouts from 2,500 enrolled users.

2. User Retention Rate

Definition: The percentage of users still active after a certain time.
Formula:
Retention Rate = (Active Users at End of Period / Total Users at Start) × 100

Examples:

  • Mobile App: 800 out of 2,000 users active after 30 days →
    = (800 / 2000) × 100 = 40%
  • Banking App: 75% users still active 90 days after signup.
  • E-commerce Loyalty Program: 60% of users still shopping after 6 months.

3. Cohort Retention Analysis

Definition: Tracking retention of user groups (cohorts) over time.
Use Case: See how April users behave vs. March users over 3 months.

Examples:

  • SaaS CRM: April cohort shows 50% active in Month 1, 30% in Month 2.
  • Telemedicine App: January cohort retains 60% after 1st consult, 40% after 3rd.
  • Streaming Service: February cohort's 7-day retention = 25%, 30-day = 10%.

4. User Renewal Rate

Definition: % of users who renew subscriptions after expiry.
Formula:
Renewal Rate = (Renewed Subscriptions / Total Eligible for Renewal) × 100

Examples:

  • B2B SaaS: 400 of 500 annual licenses renewed →
    = (400 / 500) × 100 = 80%
  • Fitness App: 600 monthly users out of 1,000 renewed.
  • Cloud Storage: 70% of 3-month subscribers extend.

5. Customer Lifetime

Definition: Average time a customer stays active.
Formula:
Customer Lifetime = 1 / Churn Rate (if churn rate is monthly and constant)

Examples:

  • SaaS: Churn rate = 5% →
    Lifetime = 1 / 0.05 = 20 months
  • Telehealth: Avg. patient stays for 1.5 years.
  • Streaming App: Retained average = 9 months.

6. Product Adoption Rate

Definition: % of users who adopt a feature/product over time.
Formula:
Adoption Rate = (Users of Feature / Total Users) × 100

Examples:

  • Collaboration App: 2,000 of 5,000 users start using chat →
    = (2000 / 5000) × 100 = 40%
  • Banking App: 25% start using investment dashboard.
  • Learning Platform: 70% begin using the mobile app instead of desktop.



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