Monthly Logo Retention (Contracted)

What it measures

The count of contracted customer accounts (logos) that remain under contract at the end of the measurement period, divided by the count of contracted logos at the start, expressed as a percentage. A "contracted logo" is a customer account with a binding, active subscription contract during the period; new accounts added during the period and accounts that churned during the period are excluded from both numerator and denominator.

Why it matters

Logo retention is the most direct measure of whether your contracted customer base is shrinking or growing organically. High retention (95%+) allows a much smaller sales and marketing spend to maintain revenue; low retention (< 85%) means you must outrun the churn with new logo acquisition, burning cash faster and limiting profitability. Investors scrutinize logo retention because it reveals whether the business is truly keeping its customers or just replacing them constantly. For contracted revenue (CARR), retention is even more critical because each churned logo represents committed annual revenue — losing contracted logos is a leading indicator of future CARR and ARR decline.

How to read it

Read monthly logo retention as a trend and always pair it with the total starting logos count. A 93% retention rate is concerning, but it could mean either (a) the contract base is eroding (bad) or (b) you've onboarded many small, low-quality logos in the past year and are naturally shedding them (less bad if they're not material to revenue). Compare this month's retention to the same month last year to strip out seasonal effects. A 1–2% month-over-month decline is normal; a sustained 3%+ decline month-over-month or a sudden drop signals a churn event and warrants immediate diagnosis: Are existing customers or logos upgrading to a different tier? Are you losing entire customer accounts to a competitor? Is a large customer churning? Are downgrades pushing contracted logos out (e.g., moving to LARR-only terms)?

What good looks like

Watch-outs

• Confusing logos with seats or subscriptions. A single customer account (1 logo) may have 50 seats and pay $100K annually. Churning that logo loses $100K revenue but only counts as 1 churn in the numerator — always count logos, not users or contract line items, or retention becomes meaningless.
• Counting downgrades as churn if they remain in the contracted category. A customer who downgrades from $10K to $5K CARR remains a contracted logo and should NOT be counted as churn. Only count logos that completely exit the contracted contract base (move to LARR, month-to-month, or fully cancel).
• Ignoring the starting logo count's composition. A logo retention rate of 95% with 50 starting logos is less significant than 95% with 500 starting logos. Statistical noise is much higher in small bases. If your starting contracted logo count is under 50, even one churn can swing retention by 2%; report retention alongside starting logo count.
• Blending CARR and LARR logos. If your system tracks contracted and at-will logos separately, make sure you're not accidentally mixing them in the starting or churned count. CARR retention should only include logos with binding multi-year terms; any logo on month-to-month terms belongs in the LARR retention calculation.

Worked example