Renewal Rate in SaaS: How to Track & Improve It

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1. What is Renewal Rate?

Renewal rate is the percentage of customers who choose to continue their subscription after the end of their billing cycle. It's a key metric for SaaS companies to understand customer retention, predictable revenue, and the overall health of the business.

2. Why Is Renewal Rate Important in SaaS?

How does it relate to customer retention?

A high renewal rate signals customer satisfaction and product value. It’s a strong indicator of long-term success. A drop in renewal rate is a red flag for potential churn issues, poor onboarding, or misalignment with customer needs.

What’s the difference between renewal rate and churn rate?

They’re two sides of the same coin. Renewal Rate = 100% – Churn Rate. If your churn rate is 15%, then your renewal rate is 85%. Both are crucial for retention strategy, but renewal rate focuses on who stays rather than who leaves.

Why should you segment renewal rate?

Looking at renewal rate by customer segment (e.g. ICP vs non-ICP, plan type, industry) helps you understand where your product fits best and where your retention risks lie. Customerscore.io lets you track and compare renewal rates across segments automatically.

3. How to Calculate Renewal Rate

Formula:

Renewal Rate = (Number of Customers Renewed / Number of Customers Up for Renewal) × 100

Example: If 80 out of 100 customers up for renewal in a given period choose to renew, your renewal rate is 80%.

4. How to Improve Renewal Rate

  • Track renewal dates early – engage 30–90 days before expiration
  • Monitor customer health – use a health score to flag risk early
  • Run QBRs or check-ins – prove ROI ahead of the renewal conversation
  • Automate reminders – especially for low-touch or SMB segments
  • Address support issues quickly – unresolved issues reduce renewal likelihood

FAQ

Is renewal rate more important than churn rate?

They are equally important, but renewal rate gives a more positive spin and is often easier to track in high-volume SaaS businesses.

Can I calculate renewal rate by revenue?

Yes, that’s called Gross Revenue Retention (GRR). It shows the percentage of recurring revenue that renews, regardless of upsells or expansion.

What’s a good benchmark for renewal rate?

It depends on your model, but typically 85–90%+ is solid for SMB SaaS. For enterprise, 90–95%+ is expected.

How does Customerscore.io help?

We help you track renewal dates, monitor customer health, and trigger alerts so you can act before churn happens.