What is Month-1 Retention & How to Increase It? + Benchmark Report 2024
According to our benchmark, the average month-1 retention rate in SaaS companies is 46.9%. But how does your business compare to others in the same stage and industry? Let’s explore our findings on product metrics and learn:
– What month-1 retention rate is and why it matters.
– Average month-1 retention statistics for different segments.
– Strategies to improve your month-1 retention rate.
– Companies analyzed in our report.
Month-1 retention rate measures the percentage of users who continue using a product one month after sign-up. It’s crucial for gauging early engagement and sustained value.
Month-1 retention rate is important because it shows how well onboarding processes work and demonstrates product value—both of which predict long-term retention and increase CLV.
Here are some key takeaways from our benchmark report (based on data from 83 B2B SaaS companies):
– The average retention rate is 46.9%, with a median of 45.25%.
– Retention rates vary significantly by industry:
– Fintech and Insurance: 57.6%
– Healthcare: 34.5%
– Company size also affects retention rates:
– Companies with $1M-$10M revenue: 47.9% to 49.3%
– Growth model impacts retention too:
– Product-Led Growth (PLG): 48.4%
– Sales-Led Growth (SLG): 39.1%
How to Improve Month-1 Retention Rates
Provide Seamless Onboarding Experience: Personalized onboarding through welcome surveys and tailored onboarding flows enhances early user retention.
Offer Consistent Customer Support: An in-app resource center and well-organized knowledge base reduce friction and prevent churn.
Trigger In-App Guidance with Interactive Walkthroughs: Interactive, real-time, and progressive onboarding enhances user understanding and retention of core features.
Use Gamification to Engage Users: Incorporating badges, levels, daily quests, and progress bars motivates and retains users through engaging and rewarding experiences.
Average Month-1 Retention Rate for SaaS companies
Our benchmark report for 2024 covered 83 B2B SaaS companies to understand their performance. Here’s what we found:
– Average month-1 retention rate: 46.9%
– Median month-1 retention rate: 45.25%
Average Month-1 Retention Rate by Industry
Retention rates vary significantly by industry due to different challenges and user engagement strategies within each sector. Here are some averages:
– Martech: 44.7%
– CRM & Sales: 52.5%
– Fintech and Insurance: 57.6%
– Healthcare: 34.5%
– HR: 41.4%
– AI & ML: 53.6%
Average Month-1 Retention Rate by Company Size
Retention rates also differ based on company size, reflecting the impact of resources and strategies on user engagement:
– $1,000,000 – $5,000,000 annual revenue: 47.9%
– $5,000,001 – $10,000,000: 49.3%
– $10,000,001 – $50,000,000: 45%
– $50,000,001+: 44.7%
Smaller companies tend to have higher retention rates due to their ability to personalize product experience and foster closer customer relationships.
Average Month-1 Retention Rate by PLG and SLG
Retention rates differ based on the growth strategy employed:
– Product-Led Growth (PLG): 48.4%
– Sales-Led Growth (SLG): 39.1%
PLG strategies are generally more effective at retaining users in the first month due to their user-centric experiences and self-service approach.
Strategies to Improve Month-1 Retention
Provide Seamless Onboarding Experience: Segment your user base and create relevant onboarding sequences for each segment. Gather user information through welcome surveys and craft onboarding paths that address their specific needs.
Consistent Customer Support: Create an in-app resource center to keep users engaged and prevent churn. Identify common issues, create help resources, and organize them effectively for easy access.
Interactive Walkthroughs: Use interactive walkthroughs to guide users through core features. This progressive approach helps users understand the product better and enhances retention.
Gamification: Add elements such as badges, levels, daily quests, and progress bars to make the experience more engaging. Reward users for completing onboarding tasks to keep them motivated and involved.
Conclusion
Exploring the significance of the month-1 retention rate for SaaS businesses, analyzing benchmarks, and considering strategies to improve retention rates can help in achieving long-term growth. By providing seamless onboarding, consistent customer support, interactive walkthroughs, and gamification, you can enhance early user engagement and retention.
Book a Userpilot demo today to see how you can personalize the onboarding experience, provide self-service support, and retain more users.