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The Challenge with SMB SaaS: High Growth Can Only Mask High Churn For Just So Long

SaaStr

But beyond all the other Pros and Cons of SMB vs enterprise, there’s one looming issue with SMB SaaS: Churn. Endemic churn. The type of churn you almost can’t do anything about. Net net, most true SMB SaaS products often churn on the order of 3% per month almost no matter what you do. And measuring it.

SMB 361
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The Most Important SaaS Metrics In 2023 with monday.com CEOs and Co-Founders Eran Zinman and Roy Mann, and SaaStr Founder Jason Lemkin

SaaStr

As you’ll learn further down in this article, ARR now means any type of software-related revenue with 100%+ Net Revenue Retention (NRR), even if it’s not truly recurring. No one gets in right in sales and marketing, but if you can put a little more budget into growth vs. new acquisition, magic can happen. How Is CAC Calculated In SaaS?

Metrics 208
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Phil Libin, CEO of mmhmm and Evernote on How to Lower Your “Bounce Rate”, High vs. Low Value Churn, and More

SaaStr

At Evernote, they conflated bounce with churn — and Phil challenges us not to. They aren’t both retention per se. Retention is 3 things mashed together, “bounce, low-value churn, and high-value churn”, and you have to measure them separately. We have all seen this :). A lot of us see this.

Churn 214
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5 Interesting Learnings from LegalZoom at $660,000,000 in ARR

SaaStr

LegalZoom has pushed more and more customers to subscribe to its legal services vs. just purchasing one-off products like incorporation. #5. 62% Logo Retention Rate. The ultimate challenge with a lot of low-end self-service businesses is they often see inherent churn of around 3% a month.

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CRO Confidential: Bringing Product-Led and Sales-Led Growth Together For Go-To-Market Success with Giancarlo Lionetti, CRO of Zapier

SaaStr

GC thinks about building out your Go-To-Market team in 3 ways: Short vs. long-term needs Product maturity Experimental vs. scale Short-term vs. long-term needs. Experimental vs. Scale. So, they were hiring a more experimental role vs. one ready to scale. They had two salespeople and one customer success person.

Scale 283
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5 Metrics Every SaaS Company Should Care About In Any Market Environment with Salesforce Ventures Investor Jessica Bartos (Video)

SaaStr

Because of the interest rate increase by the Fed. When the overall interest rate is higher, you need to discount those future cash flows to the present to understand the value of the company today. A higher interest rate means a higher discount rate. Gross margin is the telltale sign of true SaaS vs. “fake” SaaS.

Metrics 228
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SaaStr CEO Jason Lemkin and Amias Gerety Partner at QED on Fintech Beat (Podcast 685)

SaaStr

The magic of a SaaS model is: Very high logo retention. Net dollar retention is ideally over 120%. The public markets love this trifecta of 90% logo retention, 80% gross margins, and 120% net revenue retention. As an entrepreneur, Lemkin never found that to be true… the idea of vitamins vs. painkillers.