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Logo Retention

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

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Stage Conversion Rate

Stage Conversion Rate is the While Pipeline Value sums the total ARR of active opportunities in pipeline, weighted pipeline is weighted based on the current deal stage. Weighted pipeline value is a more accurate estimate of Closed Won ARR based on the current pipeline value.

How do I calculate pipeline?

Let's assume we have the following list of opportunities currently active in our sales process:

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Deal Name

Sales Owner

Stage

ARR

ACME Corp. - New Business
Bugs Bunny
Stage 1
$10,000
Bonner Books - Upsell
Bugs Bunny
Stage 2
$25,000
CHOAM - New Business
Daffy Duck
Stage 2
$15,000
Daedalus Research - Upsell
Daffy Duck
Stage 3
$30,000
Bugs Bunny
Electric Enterprise - New Business
Stage 3
$50,000
$20,000
Fabulous Factories - New Business
Daffy Duck
Closed Lost

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The total pipeline for these opportunities is $130,000. Additionally, we can also get pipeline totals for our two sales reps: Bugs Bunny ($85,000) and Daffy Duck ($45,000).

Note that Fabulous Factories - New Business is omitted from this sum, as the stage is marked as "Closed Lost".

We can summarize our pipeline by Stage to understand how much ARR is in each step of the sales process. To summarize the Pipeline ARR by Stage, we generate the following ARR table:

Stage 1 Pipeline

Stage 2 Pipeline

Stage 3 Pipeline

Total Pipeline

$10,000
$40,000
$80,000
$130,000

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While we have the total pipeline value here, we can apply the weightings to more accurately estimate how much of the pipeline ARR will be Closed Won.

What is probability to close?

Probability to Close is a percentage that estimates how much of the ARR that is in a particular stage of a pipeline is expected to be Closed Won. Typically, Probability to Close will be lower in earlier stages of the sales process and higher in later stages of the sales process.

If we multiply the probability to close by the Pipeline ARR, we'll get the Weighted Pipeline ARR value in each stage.

Stage 1

Stage 2

Stage 3

Pipeline ARR ($)

$10,000

$40,000
$80,000

Probability to Close (%)

25%
40%
65%
$2,500
$16,000
$52,000

Weighted Pipeline ARR ($)

Probability to Close assumptions for each stage assume that deals in different stages have a different chance of being won. Deals in Stage 1 are 25% likely to be won, while deals in Stage 2 are 40% likely to be won, and deals in Stage 3 are 65% likely to be won.

After applying the probability to close to the Pipeline ARR, we now have $2,500 in Stage 1, $16,000 in Stage 2, and $52,000 in stage 3, for a total weighted pipeline value of $70,500. This estimate is closer to the real value we expect to have in Closed Won ARR.