Logo tracks the percentage of customers who remain active customers over time. Unlike dollar retention, logo retention only tracks the impact churn has on a business.
Logo Retention = count of customers who are currently active and were active at a certain point in the past ÷ count of customers who were active at that point
There are three methods of calculating logo retention:
Trailing Period: Count of customers at a certain point (eg October 2023) is compared to the count of those customers still active 1, 3, 6, or 12 months later.
Cohorted: Customers are grouped by cohort (sign-up period). The number of customers in the cohort is compared to the count of customers from the cohort who are still active a fixed amount of time (eg 12 months) later.
Renewal: The number of customers up for renewal is compared to the count of customers who renew by signing a new contract.
All three methods give unique insights: trailing period helps show the most recent trend for the customer base as a whole, cohorted retention shows how a customer may behave at a certain age, and renewal retention is good guidance for customers who are coming up for renewal.
No matter how you measure, it’s important to remember that logo retention solely tracks the percent of customers that remain active. That means that recurring revenue from the customer base may be growing nicely even with low logo retention if there is lots of expansion. Conversely, if there is little expansion and lots of contraction, existing customer revenue may be dwindling even if logo retention is relatively strong. However, holding onto customers is very important in the long run: acquiring customers is normally far more expensive than servicing them, and as a company matures and existing customers make up a larger percentage of the customer base, having low churn rates is vital to keeping the business on good footing.
Benchmarks:
Good: 85%
Great: 90%
Excellent: 95%
SMB customers (with lower SMBs) tend to have logo churn rates. Ideally, this is offset by also having lower CAC and high organic expansion potential.
Settings: Segments, Date Range, Date Aggregation, Trailing Period, Revenue Type, Cohort Retention Baseline
