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Logo Retention
Logo Retention Overview
Alternative Metric(s) Name: Customer Logo Retention
Definition
Logo Retention, or Customer Logo Retention, measures the percentage of customers that are retained as customers over a specific period of time.
Business Value and Insights
Logo Retention is the most basic retention measure and does not consider the revenue associated with the customers included in this calculation. Logo retention can provide additional insight into the stability of a company’s customer base because it is not subject to distortion from larger revenue companies which can mask an underlying customer churn problem.
Calculation Formula
Logo retention calculation should follow the same cohort-based construct as the Net Revenue Retention and Gross Revenue Retention standards.
# of customers at the end of the period who were customers
at the beginning of the period
# of active customers at the beginning of the measurement period
Data Inputs Required
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Data Input #1: Number of customers at beginning of the period
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The number of customers should be limited to include those customers that are currently on contract and generating revenue. Freemium, Free Trial and Trial customers should not be included in this calculation
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Data Input #2: Number of customers at the end of the period
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The number of customers should be limited to include those customers that are currently on contract and generating revenue. Freemium, Free Trial and Trial customers should not be included in the number of customers for this calculation
This data is typically found in the Customer Relationship Management system, subscription billing system and/or contract management system
Recommended Calculation Timing
The metric is typically calculated every month for the prior 12 month period.
Nuances to Consider
Nuance #1:
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There may be some judgment calls regarding the specific criteria to determine when a customer has churned. For example, a customer may be current on their invoices and verbally committed to renew, but the renewal contract was not signed by the renewal date or prior to the end of the reporting period.
Nuance #2:
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Usage-based companies may have customers whose usage is highly variable and goes to zero for some months.As in #1 above, a standard company policy should be defined as to what criteria is used for a customer to be counted as a churned customer in the Logo Retention calculation.
Nuance #3:
Each company will need to come up with standard rules regarding these type of retention definition edge cases and then properly disclose and consistently apply those rules.
Sample Calculation(s)
List of Input Values:
Number of Customers on January 1, 2022 = 350
Number of Customers from Jan 1, 2022 still active on January 1, 2023 = 320
Calculation Formula:
320 Active Customers from 1/1/22
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350 Active Customers on 1/1/21
= 91.4% Logo Retention Rate
Links to related Standards
Net Revenue Retention: Click Here
Gross Revenue Retention: Click Here