Cohort Retention

The share of customers from a given signup period who are still active or paying after a set time.

Example

Of 100 customers who joined in January, 62 still pay after 12 months: 62% retention.

Important

Looking at separate cohorts shows whether retention is improving; a single blended figure can hide deterioration.

Related terms

  • Churn Rate — The share of customers or revenue lost over a period.
  • Product-Market Fit — The point at which a product clearly satisfies strong demand from a defined group of customers, shown by retention, organic growth and willingness to pay.

Lessons that explain it

  • Consumer businesses live or die on acquisition cost and repeat purchase - and some questions apply everywhere — Consumer companies depend on the relationship between customer lifetime value and acquisition cost, brand and channel. Across all sectors, unit economics, retention, capital needs and time to revenue are the questions that travel. (12 min)
  • Retention and unit economics say more than the growth chart — Growth can be bought. Retention shows whether customers get lasting value, and unit economics show whether each customer is worth what it costs to win. (13 min)
  • Product-market fit shows up in behaviour, not in enthusiasm — Product-market fit means a specific group of customers needs the product badly enough to keep using it, pay for it and recommend it. It is visible in retention and organic demand, not in praise. (10 min)

All 578 terms in the Investing glossary