Logo retention is a fundamental metric that tracks the percentage of customers a business retains over a specific period. It is distinct because it treats every customer equally regardless of their contract value.
In this calculation, a customer paying five dollars a month holds the same weight as a customer paying five thousand dollars a month. The metric focuses strictly on the count of active accounts or “logos” remaining at the end of a period compared to the beginning.
This is often the first place a founder looks to understand if the product is actually working for the people who bought it.
The Mechanics of the Metric
#To calculate logo retention, you take the number of customers at the end of a period and subtract the new customers acquired during that period. You then divide that number by the total customers you had at the start of the period.
The result is a percentage that tells you how many of your original customers are still with you.
It removes the noise of upsells, cross-sells, and expansion revenue. It provides a raw look at customer loyalty.
Logo Retention vs. Net Revenue Retention
#It is common for founders to confuse logo retention with Net Revenue Retention (NRR). While both measure health, they tell very different stories.
NRR tracks the dollar value. If you lose ten small customers but one large customer doubles their spend, your NRR might look positive. You made more money than you started with.
However, your logo retention would be poor in that scenario.
Comparing these two metrics allows you to spot underlying issues. High revenue retention coupled with low logo retention often suggests you are moving upmarket or that you have a problem retaining smaller accounts. High logo retention with low revenue retention might mean your customers love the product but are not finding reasons to spend more money.
Interpreting the Data in a Startup
#For a startup, logo retention acts as a proxy for product-market fit. If people are leaving, it usually means the value proposition is not landing or the product is broken.
When you see a dip in logo retention, you have to ask difficult questions.
Is the churn coming from a specific cohort of users? Are these customers leaving voluntarily because they found a better solution, or involuntarily due to failed payments or business closures?
If you are losing logos, you are losing market share. In the early stages, losing a logo is also losing a source of feedback and data.
Strategic Considerations
#There are times when low logo retention is acceptable.
If a startup intentionally pivots to enterprise sales and offboards small legacy clients, logo retention will drop. This is a strategic decision rather than a failure of the product.
However, if the strategy is to grow a user base, this metric is the ultimate truth-teller.
Founders should use this number to start investigations rather than end them. It signals where to look but does not tell you exactly what is wrong. It forces the team to look at the product experience rather than just the bank account.