Logo Retention vs Dollar Retention

Logo retention and dollar retention measure retention from fundamentally different angles—and the gap between them reveals critical insights about your business health. A company with 90% logo retention but 115% dollar retention is expanding successfully with existing customers; a company with 95% logo retention but 85% dollar retention is keeping customers but losing revenue. According to SaaS benchmarking data, companies that optimize for dollar retention over logo retention achieve 2-3x higher valuations because revenue growth from existing customers is the most efficient growth available. This guide explains exactly what each metric measures, when to prioritize which, and how to interpret the gap between them for strategic decision-making.

Understanding Logo Retention

Logo retention measures what percentage of customers (accounts, companies, "logos") remain active over a period. It answers a simple question: how many customers did you keep?

The Logo Retention Formula

Logo Retention Rate = (Customers at End of Period - New Customers) / Customers at Start of Period × 100%. If you started with 100 customers, added 20 new ones, and ended with 110, your logo retention is (110-20)/100 = 90%. You lost 10 of your original 100 customers.

What Logo Retention Reveals

Logo retention shows whether customers find enough value to stay. It's a proxy for product-market fit and customer satisfaction. High logo churn signals fundamental problems—customers are leaving, not just paying less.

Logo Retention Benchmarks

SMB SaaS: 85-90% annual logo retention is good. Mid-market: 90-95% annual is standard. Enterprise: 95%+ annual is expected. Monthly logo retention should exceed 97-98% for healthy SaaS businesses.

The Customer Count Perspective

Logo retention matters for capacity planning, support scaling, and market penetration analysis. Losing 20% of customers annually means replacing 20% just to stay flat—an expensive treadmill that limits growth.

Warning Sign

Logo retention below 80% annually signals serious product or market issues. Customers aren't finding enough value to justify continued payment regardless of price point.

Understanding Dollar Retention (NRR)

Dollar retention, also called Net Revenue Retention (NRR) or Net Dollar Retention (NDR), measures what percentage of revenue from existing customers you retain and grow over time.

The Dollar Retention Formula

NRR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100%. If you started with $100K MRR from a cohort, they expanded to $110K but $5K churned and $3K contracted, NRR = ($100K + $10K - $3K - $5K) / $100K = 102%.

Why Dollar Retention Can Exceed 100%

When expansion revenue from existing customers exceeds lost revenue from churn and contraction, NRR exceeds 100%. This means your existing customer base grows without acquiring new customers—the holy grail of SaaS economics.

Dollar Retention Benchmarks

Good SaaS: 100%+ NRR (flat to growing). Strong SaaS: 110%+ NRR. Best-in-class: 120%+ NRR. Public SaaS median: 114% NRR. Enterprise-focused companies regularly achieve 130%+ NRR through expansion.

The Revenue Growth Perspective

NRR directly determines base-case growth. A company with 120% NRR grows 20% annually from existing customers alone—before any new sales. This compounds dramatically and makes growth predictable.

Valuation Driver

NRR is the single strongest predictor of SaaS company valuation. Each 1% improvement in NRR correlates with meaningful valuation multiple increases. Investors obsess over this metric.

The Gap Between Logo and Dollar Retention

The relationship between logo retention and dollar retention reveals your expansion and monetization health. Four scenarios exist, each with different implications.

High Logo + High Dollar: Ideal State

90%+ logo retention with 110%+ dollar retention means you're keeping customers AND growing their value. Strong product-market fit, effective expansion motion, and satisfied customers. This is the goal state for mature SaaS.

Low Logo + High Dollar: Dangerous Territory

Losing many customers but growing revenue from survivors suggests you're dependent on a few large accounts. Concentration risk is high. One large churned account could devastate results. Diversify customer base urgently.

High Logo + Low Dollar: Stagnant Growth

Keeping customers but not growing their value suggests pricing issues, missing upsell paths, or product limitations. Customers are satisfied enough to stay but not engaged enough to expand. Build expansion playbooks.

Low Logo + Low Dollar: Crisis Mode

Losing customers and losing revenue from those who stay indicates serious product or market problems. Focus on understanding why customers leave and why remaining customers shrink before optimizing either metric.

Diagnostic Tool

Plot logo retention on X-axis and dollar retention on Y-axis over time. Trends reveal whether your business is improving or deteriorating across both dimensions.

When to Prioritize Which Metric

Different business stages and models should weight logo vs dollar retention differently. Context determines which deserves more focus.

Early Stage: Logo Retention Priority

Pre-product-market-fit companies need logo retention signal—are customers finding enough value to stay? If logos are churning rapidly, expansion revenue doesn't matter. Fix the core retention problem first.

Growth Stage: Dollar Retention Priority

Once logo retention stabilizes above 85-90%, shift focus to dollar retention. Building expansion revenue from existing customers is more efficient than acquiring new ones. Optimize upsell and cross-sell motions.

SMB Focus: Balance Both

SMB customers have higher natural churn rates but lower expansion potential. You need high volume (good logo retention) since individual accounts contribute less expansion. Track both equally.

Enterprise Focus: Dollar Retention Priority

Enterprise deals have natural expansion through seat additions, feature upgrades, and multi-product adoption. Dollar retention is the key metric because one enterprise expansion equals many SMB acquisitions.

Resource Allocation

If logo retention is strong but dollar retention weak, invest in customer success and expansion. If logo retention is weak, invest in product improvements and onboarding before expansion plays.

Calculating and Tracking Both Metrics

Accurate measurement requires clear definitions, consistent time periods, and proper exclusions. Common errors distort both metrics.

Cohort-Based Calculation

Calculate retention by cohort (customers acquired in the same period) to separate acquisition quality from retention quality. Month 1, 3, 6, and 12 cohort retention reveals how retention evolves over customer lifetime.

Time Period Standardization

Monthly retention compounds to annual differently than you'd expect. 97% monthly logo retention = 69% annual. 99% monthly = 89% annual. Calculate both monthly and annual but compare appropriately to benchmarks.

Handling Reactivations

Customers who churn and return create calculation complexity. Standard approach: treat reactivation as new customer for logo retention but track separately for dollar retention. Document your methodology.

Revenue Timing Issues

For dollar retention, use MRR at period end vs period start. For annual contracts, spread revenue recognition across months. Don't count annual prepayment as one month's revenue spike—it distorts NRR.

Calculation Consistency

The specific methodology matters less than consistency. Pick an approach, document it, and apply it uniformly. Changing methodology breaks trend analysis.

Improving Both Retention Metrics

Different strategies improve logo retention vs dollar retention. The most effective approaches address the underlying drivers of each metric.

Improving Logo Retention

Better onboarding increases time-to-value and first-month retention. Proactive support catches at-risk customers before they churn. Product improvements address why customers leave. Win-back campaigns recover churned customers.

Improving Dollar Retention

Usage-based pricing expands revenue as customers grow. Multi-product strategies create cross-sell opportunities. Seat expansion playbooks capture organic growth. Premium tier development gives customers upgrade paths.

The Expansion Revenue Engine

Build systematic expansion into customer journey: onboard to basic features, educate on advanced capabilities, identify expansion triggers, propose upgrades proactively. Don't wait for customers to ask.

Reducing Contraction

Contraction (customers paying less) hurts dollar retention as much as churn. Understand why customers downgrade—often it's unused features. Right-size plans proactively rather than forcing downgrades.

Quick Win

Price increases improve dollar retention immediately (existing customers pay more). A 10% price increase with 5% additional churn still improves NRR. Model the tradeoff carefully.

Frequently Asked Questions

Can dollar retention exceed logo retention?

Not only can it—it should for healthy SaaS businesses. If you lose 10% of customers but grow remaining customers by 20%, dollar retention (110%) exceeds logo retention (90%). This is the expansion revenue model that top SaaS companies achieve.

Which metric do investors care about more?

Dollar retention (NRR) is the primary metric investors evaluate. It directly predicts revenue growth trajectory and business efficiency. Logo retention matters as a secondary indicator of product-market fit, but NRR drives valuation.

How do I calculate retention for annual contracts?

For annual contracts, calculate retention at renewal periods or normalize to monthly by dividing annual value by 12. Track annual cohorts for logo retention (how many renewed vs churned) and dollar retention (renewal value vs original value).

Should I count price increases as expansion revenue?

Yes, price increases on existing contracts count as expansion for NRR calculation. The customer is paying more for your product—that's revenue expansion. Just ensure you're tracking organic expansion vs price-driven expansion separately for operational insights.

What causes the gap between logo and dollar retention?

The gap comes from customer-level revenue changes. Expansion (upsells, seat additions) increases dollar retention vs logo retention. Contraction (downgrades, seat removals) decreases dollar retention. Uneven revenue distribution amplifies effects of specific customer changes.

How often should I measure retention metrics?

Track monthly for operational monitoring and quarterly for board/investor reporting. Calculate both trailing 12-month retention (smoother trend) and current month/quarter (leading indicator of changes). Cohort retention should be calculated at fixed intervals from acquisition.

Disclaimer

This content is for informational purposes only and does not constitute financial, accounting, or legal advice. Consult with qualified professionals before making business decisions. Metrics and benchmarks may vary by industry and company size.

Key Takeaways

Logo retention and dollar retention measure different dimensions of customer health—keeping customers vs growing their value. The best SaaS businesses achieve both: 90%+ logo retention proving product-market fit, and 110%+ dollar retention proving expansion capability. Focus on logo retention first to establish stable base, then optimize dollar retention for efficient growth. QuantLedger automatically calculates both metrics from your Stripe data, segments by cohort and customer type, and identifies which accounts are expanding vs contracting so you can focus retention efforts where they matter most.

Claire Dunphy