What is Cohort Retention?
Cohort retention is the percentage of users/customers from the same start group (a “cohort”) who are still active after a specific number of time units.
It matters because retention is the backbone of value creation in recurring models: it drives LTV, improves CAC Payback Period, stabilizes cash flows, and sets the ceiling for metrics like NRR/GRR and efficient growth (Rule of 40, Burn Multiple).
Formula
Example
A cohort starts with 1,000 customers. After 3 weeks, 650 are still active.