Retention Rate
Measures the percentage of users who continue using your product over time. Strong retention indicates product-market fit and sustainable growth.
Formula
Example: Started with 1000 users, gained 200 new, ended with 950. Retention = (950-200)/1000 = 75%
Industry Benchmarks
- SaaS (B2B): 90-95% monthly, 70-80% annual
- Consumer Apps: 20-40% Day 1, 10-20% Day 7
- E-commerce: 25-35% monthly repeat purchase
- Gaming: 40-50% Day 1, 15-25% Day 7
How To Improve
- Optimize onboarding to demonstrate value quickly
- Implement email or push notification campaigns
- Build habit-forming features users need regularly
- Address feedback from churned user interviews
- Create cohort analyses to identify drop-off patterns
Churn Rate
The percentage of customers who stop using your product during a given period. Lower churn means better product stickiness and customer satisfaction.
Formula
Example: Started month with 500 customers, lost 25. Churn = 25/500 = 5% monthly churn
Industry Benchmarks
- SaaS (B2B): 3-7% monthly acceptable
- SaaS (B2C): 5-10% monthly typical
- Streaming Services: 4-6% monthly average
- Subscription Box: 8-12% monthly common
How To Improve
- Conduct exit surveys to understand why users leave
- Identify at-risk users with predictive analytics
- Offer proactive support before cancellation
- Create win-back campaigns for churned users
- Improve product value perception through education
CAC / LTV Ratio
Compares Customer Acquisition Cost to Lifetime Value. This ratio reveals whether your business model is sustainable and how efficiently you're acquiring customers.
Formula
LTV = Average Revenue Per User × Average Customer Lifespan
Ratio = LTV / CAC
Example: Spent £50,000 on marketing, acquired 500 customers (CAC = £100). Average customer pays £30/month for 24 months (LTV = £720). Ratio = 720/100 = 7.2x
Industry Benchmarks
- Healthy Ratio: 3:1 or higher (£3 LTV per £1 CAC)
- Excellent Ratio: 5:1 to 7:1 range
- Warning Signs: Below 2:1 unsustainable
- CAC Payback: Should be under 12 months ideally
How To Improve
- Optimize conversion funnel to reduce CAC
- Increase retention to extend customer lifespan
- Implement upselling to boost revenue per user
- Focus on high-performing acquisition channels
- Improve product value to justify price increases
DAU / MAU Ratio
Daily Active Users divided by Monthly Active Users shows how "sticky" your product is. Higher ratios indicate users find value frequently enough to return daily.
Formula
Example: 15,000 users active today, 50,000 active this month. DAU/MAU = 15,000/50,000 = 30%
Industry Benchmarks
- Social Networks: 50-65% excellent stickiness
- Messaging Apps: 60-80% very high engagement
- Productivity Tools: 20-40% typical range
- E-commerce: 10-20% purchase frequency dependent
How To Improve
- Add features that require daily check-ins
- Implement notifications for time-sensitive content
- Create streaks or rewards for consecutive usage
- Build social features that drive daily interaction
- Personalize content to increase relevance
Activation Rate
Percentage of new users who complete key actions that indicate they've experienced your product's core value. Critical for converting signups into engaged users.
Formula
Example: 1000 signups, 450 completed first project. Activation = 450/1000 = 45%
Industry Benchmarks
- SaaS Products: 40-60% within first week
- Mobile Apps: 25-40% complete onboarding
- Marketplaces: 30-50% make first transaction
- Social Platforms: 60-75% connect with others
How To Improve
- Simplify onboarding to reduce friction
- Use progressive disclosure rather than overwhelming users
- Provide templates or starter content
- Send targeted prompts guiding toward activation
- Test different activation milestones to optimize
Feature Adoption Rate
Tracks how many users are using a specific feature. Helps validate whether new features deliver value and which capabilities drive the most engagement.
Formula
Example: 3,200 users tried new export feature, 10,000 total active users. Adoption = 3,200/10,000 = 32%
Industry Benchmarks
- Core Features: 70-90% adoption expected
- Secondary Features: 30-50% good adoption
- Advanced Features: 10-25% power user segment
- New Features: 20-40% within first 3 months
How To Improve
- Announce features through multiple channels
- Add in-app tooltips highlighting new capabilities
- Create use case documentation and tutorials
- Make features more discoverable in UI
- Track non-adopters and send targeted education