The Retention Rate Illusion - Understanding the Relationship between Retention Rates and the Strength of Subscription-Based Businesses

Abstract

This article discusses five important pitfalls when using customer-centric metrics and offers suggestions
for adjustment to these metrics in order to make them more useful for various stakeholders. Furthermore,
the article introduces an innovative framework that uses multiple customer-centric metrics to assess the
strength of a subscription-based business model.

Keywords: Retention Rate, Renewal Rate, Churn, NPS, Net Promotor Score, Subscription, Business Models, SaaS

JEL Classification: g11, m21, m31