Retention rate is the percentage of users who return to use a product or website again within a defined period after their initial visit, calculated as the number of users still active in a given window divided by the number who started in the original cohort.
Retention is usually measured over standardized windows — day 1, day 7, and day 30 are common benchmarks for apps — and is almost always analyzed through cohorts, since a single blended retention figure across all users tends to hide whether retention is actually improving or worsening for newer users specifically. It's considered one of the most important indicators of product value because, unlike traffic or signups, high retention is hard to fake or buy.
If 1,000 users sign up for an app in a given week and 350 of them are still active 30 days later, the 30-day retention rate for that cohort is 35%.
It varies enormously by product category and time window — consumer mobile apps often see steep early drop-off with 30-day retention in the low double digits, while subscription software can retain the large majority of users, so benchmarks need context.
They're complementary — retention rate measures the percentage of users who stay, while churn rate measures the percentage who leave over the same period; in a simple model, the two add up to 100%.
Because a single blended retention rate mixes long-time loyal users with recent signups, masking whether a product change actually improved how well new users stick around — cohort analysis isolates that by comparing groups with the same starting point.