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Find Your Leading Indicator of Retention

The question to answer before you scale: Which customer behaviors predict retention? 

Find Your LIR
What is an LIR?

Revenue tells you what happened in the past.

It’s always the goal, but for early-stage companies it’s not the best way to predict future performance.

That’s where your leading indicator of retention comes in.

In order to predict customer retention and future revenue, you need to know the customer actions that are consistent across most accounts that renew. Those are your leading indicators of retention.

 

Not sure about your company’s LIRs?

Tell us a little about your company and get recommended leading indicators of retention to start testing in your business.

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Find your LIR  →

What is a Leading Indicator of Retention?

How do you know you have product-market fit? Most people point to a revenue number, a customer count, or a steady flow of inbound leads. At Stage 2, we use a simpler test: are most of the customers who try your product getting the value you promised them?

An LIR identifies the behavior you expect customers to demonstrate when they’re receiving enough value to stick around.

 

The specific behavior will be different for every business but the goal is the same: identify an observable signal that customers are getting real, repeatable value from your product.

The Sciene of Scaling framework expresses it simply:

P% of customers achieve E event(s) every T days.

P  is the percentage of customers who demonstrate the behavior

E  is the specific event or action that signals value

T  is the timeframe in which it happens

Why LIR matters

ARR, renewals, and churn are important metrics, but they’re lagging indicators. By the time they move, the customer behavior that caused them may have happened months earlier.

An LIR gives you something you can measure sooner, and can help you:

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Understand whether customers are reaching value

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Identify customers who may be at risk

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Test and refine your ideal customer profile

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Build a more quantitative view of product-market fit

Find the signals that matter for your business.

Find Your LIR  →

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Want to go deeper?

Read From Customer Level to Cohorts: The LIR Journey to learn how to track LIR as your customer base grows.

Or explore The Science of Scaling framework to see how leading indicators of retention fit into Stage 2’s data-driven approach to determining when and how fast to scale.