Client retention rate is the percentage of clients an agency keeps over a set period, after you remove the clients you won during that period. An agency that starts a year with 24 clients and still has 18 of those same 24 at the end retained 75%.
While the calculation is simple, the more difficult question is what a good rate looks like. Your rate depends on how you sell, what you sell, and where your clients come from. Our digital agency growth guide covers the broader picture, but we'll dig into some of the details from our recent surveys here.
In our survey, we measured how long agency clients stay. Among 165 agency leaders, 42% reported average retainer tenures above two years, while about a quarter reported typical retainer engagements under one year. Below you will find the formula, a worked example, that tenure data, and a way to judge your own agency against the averages.
How to Calculate Client Retention Rate
The formula we use to calculate client retention rates is: CRR = ((E − N) ÷ S) × 100
- S is the number of clients you had at the start of the period.
- N is the number of new clients you won during the period.
- E is the number of clients you had at the end of it. Subtract the new clients from your ending count, divide that by your starting count, and multiply by 100.
This gives you the percentage of the clients you started with who were still clients at the end.
Here is a worked example over 12 months. An agency starts the year with 24 clients, wins 9 new clients during the year, and ends the year with 27. So E is 27, N is 9, and S is 24.
((27 − 9) ÷ 24) × 100 = 75
That agency retained 75% of the clients it started the year with.
Subtracting the new clients is the step that many people skip. Without it, the agency above would divide 27 by 24 and report 112%, a growth number rather than a retention number.
Pick your time period before you calculate anything, and make sure that you don't change it throughout your checks. Most agencies use 12 months, because it syncs up nicely with their financial metrics, and most agencies don't have hundreds of clients, so a few clients leaving in a month would throw the percentage off significantly. Those with larger client bases will sometimes use quarterly retention rates. Just make sure that you keep the period the same when doing your comparisons.
Retention rate analysis also requires two more distinctions:
- First, decide what counts as a client, because a dormant account that has not paid you in five months either counts or it does not.
- Second, decide whether you are counting clients or counting revenue. We separate those two below.
Read the result beside the rest of the financial metrics marketing agencies use. A high retention rate on unprofitable accounts is not a win.
What Is a Good Client Retention Rate for an Agency?
Because agencies are so different in how they operate, there isn't a single number that fits every agency.
- Start with how you sell. An agency selling 12-month retainers and an agency selling one-off website builds report very different retention rates. In our research, projects often run 6 to 12 months while retainers frequently run past 24. A project shop reporting 55% with a full pipeline is healthy. A retainer shop reporting 55% is losing over half of their relationships each period and is in crisis mode.
- Then look at what you sell. In our research, performance-based tactical services tend to have longer natural lifespans than strategic work. An agency weighted toward those services will show less turnover than an agency running long tactical engagements, at the same standard of delivery.
- Then look at where your clients came from. Clients who arrived through referrals and word of mouth stayed 1.9 times longer than clients agencies won through events, networking, or outbound sales.
So judge your rate three ways. Compare it to your own rate last year, the only like-for-like comparison you will get. Compare it to what an agency selling the way you sell should expect. Then compare your average client tenure to the distribution below, which our survey captured directly.
Agency Client Retention Benchmarks
We asked 165 agency leaders how long their average retainer engagement lasts. We did not ask them to calculate a retention rate, so we report tenure below, meaning how long clients stay. Asking how long clients stay gets at the same thing from the other direction, and it is the number our respondents actually track.
| Average retainer tenure | Share of agency leaders |
|---|---|
| Less than 6 months | 5% |
| 6 to 12 months | 18% |
| 13 to 24 months | 25% |
| 25 to 36 months | 12% |
| More than 36 months | 30% |
| Not applicable | 10% |
42% of agency leaders reported average retainer tenures above two years, and 30% reported an average above three years. About a quarter reported typical retainer engagements under one year. The agencies at the top of this table keep clients several times longer than the agencies at the bottom.
To check how your own agency compares, list the clients who left you in the last two years, note how many months each one stayed, and average those numbers. That average is directly comparable to the rows above. If you'd like a full picture of how your agency compares to the industry, use our digital agency benchmarking tool.
Logo Retention vs. Revenue Retention
When you calculate logo retention, you count clients. When you calculate revenue retention, you count dollars. The formula above is logo retention, because you counted clients in and clients out.
The same formula can be used to calculate revenue retention, just with money in place of client counts. Take the revenue your existing clients paid you last year, take the revenue those same clients paid you this year, divide the second figure by the first, and multiply by 100. Leave out every client you signed this year.
An agency that loses two small clients and expands one large one can report 80% logo retention and 110% revenue retention in the same year. Revenue retention above 100% is common in this industry: 49% of agencies upsell clients multiple times a year, and another 38% do it occasionally.
From logo retention, you learn how many relationships you keep. From revenue retention, you learn whether the relationships you keep are growing.
How to Improve Your Client Retention Rate
In our research, agencies with formal onboarding, quarterly business reviews, dedicated account managers, and agreed client KPIs retain clients longer than the rest. We cover each one in full in our guide to client retention strategies for agencies.
- Fix onboarding. 62% of agency leaders say delays in getting access to systems during onboarding hurt client confidence, and 60% say those delays damage the relationship if nobody resolves them quickly.
- Run formal quarterly business reviews. Agencies that run them, especially for high-value or long-term clients, see the longest tenures. Agencies relying on informal reviews or none see significantly shorter engagements.
- Give every account a named owner. Agencies with a dedicated account manager, or one embedded in the delivery team, retain clients longer.
- Agree success metrics at the start, then watch them. Setting KPIs at the beginning of an engagement aligns expectations on both sides, and 88% of agencies already track at least one measure of client health, such as engagement levels, contact turnover, feedback surveys, or payment timeliness.
FAQ: Client Retention Rate
What is client retention rate?
Client retention rate is the percentage of clients an agency keeps over a set period, after you remove the clients you won during that period. Agencies usually calculate it over 12 months. Use it to answer one question: of the clients you had at the start of the year, how many were still clients at the end?
How do you calculate client retention rate?
Use CRR = ((E − N) ÷ S) × 100. S is your client count at the start of the period, N is the new clients you won during it, and E is your client count at the end. An agency that starts with 24 clients, wins 9, and ends with 27 calculates ((27 − 9) ÷ 24) × 100, or 75%.
What is a good client retention rate for a marketing agency?
There is no single good rate, because how you sell changes what a good rate looks like. A project-based agency and a retainer agency can both run healthy businesses at very different rates. Compare your rate to your own rate last year, then compare your average client tenure to the industry distribution above. 42% of agency leaders reported average retainer tenures above two years, and about a quarter reported typical engagements under one year.
What is the average client retention rate for SEO agencies?
We have not published an average retention rate for SEO agencies, and we publish only what we measured. What we did find is that performance-based tactical services tend to have shorter natural lifespans than strategic work, so SEO agencies selling monthly tactical retainers should expect shorter tenures than agencies selling long strategy engagements. Measure your own rate over 12 months, and calculate a second rate covering only your first-year clients.
See Where Your Agency Stands
The numbers on this page come from our own research into how digital agencies grow. To find out which practices your agency should build next, take the free Growth Diagnostic. You answer a short set of questions about how your agency runs today, and you get back a scored view of where to spend your effort. Owners use it before they set the next year's growth plan.
