SaaStr

JANUARY 12, 2021

Churn is 1.1% Most of the companies in this 5 Interesting Learnings Series have had net negative churn from SMBs (e.g., Xero’s SMB churn isn’t zero. Customer Lifetime Value is 81 months, from SMBs. Inclusive of upsells and churn, their ARPU is $29.25 And the U.K. Zoom, PagerDuty, etc.).

Customer Lifetime Value 226

Customer Lifetime Value SMB Churn Scale 226

SaaStr

JANUARY 24, 2024

How do you diagnose and solve churn? So, Dini came in, looked at the data around churn and usage, talked to customers, defined and narrowed Lattice’s core ICP, and made a few changes: They put a minimum in place not to sell to anyone under $4k. So, Calendly decided to invest in going Enterprise.

Scale 231

Scale Sales Hiring Scaling Revenue 231

SaaStr

OCTOBER 29, 2020

Zendesk’s churn is still a bit higher than pre-Covid, but is almost back to pre-Covid levels. So if you sell to SMBs, or a mix of SMBs and enterprise like Zendesk does (with 160,000 total customers), well … enough with the excuses on churn. Sometimes, you just stay a steady mix of Enterprise and SMB.

SMB 238

SMB Enterprise Retention Churn 238

SaaStr

NOVEMBER 6, 2022

And thus, customers are willing to invest the time. Most SMB SaaS apps are really ERP 2.0 But it ain’t an Instagram-like deployment, even in an SMB. Yes, this will help with churn. . — the things that many of our apps do — is a big deal. And a lot of work. for a vertical or industry.

Business 267

Business B2C SMB Customer Success 267

SaaStr

APRIL 4, 2023

If churn doesn’t grow, your lifetime customer value is at its peak. A Strategic Move Upmarket Another company CIPIO Partners invested in needed to make a strategic move. They had SMB positioning with an unfavorable LTV to CAC ratio. They learned there was no point going after them because they churned too quickly.

Scale 231

Scale Strategy Scaling Outbound Sales Team 231

Clouded Judgement

MARCH 22, 2024

At contract expiration these customers either renew (sign another contract with same annual value), expand (sign another contract with higher annual value), contract (sign another contract with lower annual value), or churn (stop being a customer and spend goes to zero). Altimeter is an investment adviser registered with the U.S.

AI 183

AI Revenue Cloud Technical Advisors 183

SaaStr

DECEMBER 29, 2019

Some take-aways: If You Truly Have Net Negative Churn and High NPS — Then Almost Any Reasonable CAC Makes Sense. But you have to have insane NPS/CSAT + truly high net negative churn (120%-140%) for this math to really work. Customers invest in not just products, but relationships. Invest like that. Measure NPS.

Scale 349

Scale Churn Construction SMB 349

Clouded Judgement

APRIL 11, 2024

The first few months of this year felt like a lot of churning in the market. It is calculated by taking the annual recurring revenue of a cohort of customers from 1 year ago, and comparing it to the current annual recurring revenue of that same set of customers (even if you experienced churn). net retention and CAC payback).

Cloud 177

Cloud Software Azure AWS 177

SaaStr

FEBRUARY 14, 2023

In today’s market, you’ll need to convince investors that you’re a worthwhile investment. To calculate your net dollar retention, take all of your existing ARR at the beginning of the period, add on any cross-sell or upsell, subtract out any churn, and then see the ending ARR. For SMB-facing companies, over 110% should be your goal.

Metrics 214

Metrics Marketing SaaS SMB 214

SaaStr

DECEMBER 27, 2020

Those of us who’ve been around a while think of New Relic as a freemium and almost SMB tool, but today 77% of their revenue comes from accounts greater than $100k. New Relic’s net negative churn / net dollar retention has dropped to 98% in the last quarter, despite a record 77% of revenue being from the enterprise.

Scale 304

Scale Outsourced Development SMB Cloud 304

Sales Hacker

SEPTEMBER 25, 2019

Enterprise sales is hard, which is why most businesses start as an SMB org and grow into an enterprise org. And those that do often struggle through the transition, leaving behind a churn of leadership and sales resources after every funding milestone. 2 rules for transitioning from SMB to enterprise. Invest in a community.

SMB 73

SMB Enterprise Strategy Compensation 73

SaaStr

NOVEMBER 22, 2020

Measure leading indicators and not lagging indicators like churn. All of this will help create value and return on investment capital. SMB to Enterprise, decide which you want to start with and toward which you want to move. There is a deliberate focus on market differentiation vs. market relevance as it relates to investment.

Scale 311

Scale Scaling Technical Review Systems Review 311

SaaStr

APRIL 14, 2023

If you aren’t sure if you have a rock-solid value prop, look at churn, revenue, and even the ability or inability to raise funds. Investors want to know about metrics, the drivers of your business, and whether users are growing, engaged, or churning. Enterprise will likely have a different problem set vs. an SMB.

Development Team Review 224

Development Team Review Technical Review Underperforming Technical Team SMB 224

Tom Tunguz

APRIL 8, 2015

There’s a familiar path now to SaaS companies that start in the SMB (small-to-medium business) part of the market. In short, new startups leverage a distribution advantage to acquire SMB customers at scale. Smaller customers churn at higher rates. Segment Monthly Customer Churn % Annual Customer Churn %.

Innovation 178

Innovation Startup Scale SMB 178

SaaStr

FEBRUARY 9, 2024

They had been building toward an SMB audience, so hiring 50 people in sales against a product that wasn’t ready for a specific audience would’ve been a mistake. So when’s the right time to invest more in sales and marketing when we’re all trying to become radically efficient ? Next, think about product maturity.

Scale 265

Scale Sales Hiring Sales Marketing 265

Clouded Judgement

DECEMBER 21, 2023

It is calculated by taking the annual recurring revenue of a cohort of customers from 1 year ago, and comparing it to the current annual recurring revenue of that same set of customers (even if you experienced churn). I consider >120% best in class for companies selling to SMBs (like Bill.com). Securities and Exchange Commission.

Cloud 177

Cloud Software Benchmarks Retention 177

SaaStr

AUGUST 30, 2023

Many investment banker pitches say that everyone is number one at something. You might not be DocuSign, but for SMBs in France in retail, you are number one. You can filter your search by industry, whether you’re SMB, mid-market, or Enterprise, etc. They have privacy, security, vendor transitions, and acquisition support.

AI Search 201

AI Search AI ChatGPT Software Review 201

SaaStr

APRIL 30, 2024

How do you build GTM efficiency in SMB sales? While this title is SMB-oriented, the advice applies to Mid-Market and Enterprise, too. Early churn was a massive drag on efficiency. They needed to get their hands on early churn. This led to fairly unsustainable levels of churn of early churn.

Scale 252

Scale SMB Sales Hiring Sales 252

SaaStr

JANUARY 12, 2022

You just close more, and churn less, and upsell more, when you show up. Another top mistake SMB folks make trying to sell enterprise. This sounds so basic, but again it often isn’t, especially if you are using less experienced and/or SMB trained sales reps to sell into the enterprise. They don’t show up in person.

CTO Hire 281

CTO Hire Sales Hiring New CTO CTO 281

OPEXEngine

MAY 18, 2021

SaaS metrics are viewed differently at different stages of growth and for different sales models, primarily whether a company is selling into an SMB or enterprise marketplace. The T2D3 model assumes significant investment upfront, requiring at least 20-30x valuations for these unicorns just to pay the investors back.

SaaS Payments 98

SaaS Payments Metrics Payments Payment Services 98

SaaStr

AUGUST 7, 2023

Then the Boom happened, and everyone could justify insane investments, and it warped everything. That works for a hyper-SMB model. Trying to lock companies into multi-year deals quickly can make them less customer-centric until they run into a huge churn wave down the road. The only thing that mattered was revenue.

Metrics 196

Metrics SaaS Sales Hiring Finance 196

Clouded Judgement

SEPTEMBER 12, 2023

Extra pressures around optimizations still exist, however gross churn levels have stabilized, and commentary on earnings calls suggest conversations around new bookings are starting to pick up. For businesses selling predominantly to SMB customers, these benchmarks are all slightly lower given the higher-churn nature of SMBs.

Cloud 169

Cloud Software Benchmarks Retention 169

ChurnZero

JUNE 2, 2021

A [Rob]: That’s more of a question for the earlier stage investing in the public market. A private equity investor once said that he only invests in companies where that’s 40 or higher. Is the bar across the same for a SMB-focused company versus an enterprise-focused company? I will say this much. Growth is king.

Benchmarks 98

Benchmarks B2B SMB SaaS 98

SaaStr

APRIL 28, 2019

Revenue Retention / Net Negative Churn of 143%. All the great SaaS companies IPO’ing now have strong revenue retention, whether SMB or enterprise focused. ” The Slack Fund is tiny. “As of January 31, 2019, Slack Fund has invested $10.1 Even for Slack. A continued them of our 5 Interesting Learnings Series.

Scale 278

Scale Venture Capital SMB Enterprise 278

Clouded Judgement

APRIL 12, 2023

It is calculated by taking the annual recurring revenue of a cohort of customers from 1 year ago, and comparing it to the current annual recurring revenue of that same set of customers (even if you experienced churn). I consider >120% best in class for companies selling to SMBs (like Bill.com).

Cloud 161

Cloud Software Benchmarks Retention 161

Clouded Judgement

DECEMBER 20, 2022

It is calculated by taking the annual recurring revenue of a cohort of customers from 1 year ago, and comparing it to the current annual recurring revenue of that same set of customers (even if you experienced churn). I consider >120% best in class for companies selling to SMBs (like Bill.com).

Cloud 130

Cloud Software Review Software Benchmarks 130

Tom Tunguz

AUGUST 26, 2014

HubSpot is the second fastest SMB SaaS company to IPO yet, achieving the mark within 8 years. Most other SMB companies, defined for this analysis as having an ARPC of less than $15,000, took at least one more year to go public. Impressively, HubSpot has been able to record much faster revenue growth than other SMB SaaS companies.

Benchmarks 111

Benchmarks SMB Metrics SaaS 111

Clouded Judgement

JUNE 20, 2023

It is calculated by taking the annual recurring revenue of a cohort of customers from 1 year ago, and comparing it to the current annual recurring revenue of that same set of customers (even if you experienced churn). I consider >120% best in class for companies selling to SMBs (like Bill.com).

Cloud 161

Cloud Software Benchmarks Scale 161

ChurnZero

DECEMBER 2, 2021

Get Sales invested in NRR by conducting weekly deal reviews and stipulating sales commission based on Customer Success acceptance of customers. If a churn-and-burn deal is important enough that it creates stress among that triumvirate, you’re going to see gradually improvement and you’re going to get more resources.

Customer Success 98

Customer Success Technical Review Scale Compensation 98

SaaStr

MAY 8, 2020

What specific and deliberate things can startups do not just to prevent churn but also to increase usage and upsell? If we dive in a bit, what specific and deliberate things can start-ups do, not just to avoid churn, but also on the upside, to expand the usage and upsell? How should sales teams and CS respond to requests for discounts?

Sales Recruiting 176

Sales Recruiting Technical Review Sales Hiring Outsourced Development 176

ChurnZero

JUNE 19, 2020

It is no secret that customer churn hits recurring revenue businesses hard, but what’s its real impact on their long-term health and valuation? The compounding effects that churn has on your bottom-line. What data you need to get the investment in your Customer Success team. How Customer Success can effectively drive retention.

SaaS Payments 72

SaaS Payments Retention Metrics Payment Solutions 72

ChurnZero

MARCH 18, 2022

Q: Should you be worried if your annual logo churn is between 25% to 30%?*. Their report shares the results from a survey of private SaaS companies which KBCM Technology Group’s software investment banking team conducted in June and July 2021. Then, you can stop counting them as churn. That’s an alarming level churn.

Customer Success 98

Customer Success Metrics SaaS Banking 98

SaaStr

OCTOBER 31, 2019

It was around that time about 12 years ago that Jeff Bezos launched AWS, and some of you may remember that, when he did this, Wall Street analysts were looking at him and saying, “Why would you take what’s already a very unprofitable business and drive it further into the red by investing in this AWS initiative?”

Cloud 100

Cloud Scale AWS Machine Learning 100

SaaStr

DECEMBER 14, 2020

“Churn” is a term we all use in SaaS as a core metric, but its roots, as near as I remember and can tell, come from our B2C colleagues. Folks churn out of their Verizon plan, their Netflix subscription, etc. And sometimes they’ll churn even just for a modestly better deal. the dynamics are similar.

Churn 362

Churn Sales Hiring Systems Review B2C 362

The Angel VC

APRIL 30, 2015

By putting together a comprehensive set of data you can pre-empt 90% of the questions which investors will ask you when they assess a potential investment. That is, a chart that shows your new MRR, expansion MRR, contraction MRR, churn MRR and reactivation MRR for each month since launch. That was a great question.

Software Review 186

Software Review Outsourced Development Acquisition SMB 186

ChurnZero

DECEMBER 9, 2022

It can be hard to convince PE firms to invest in the customer. How did you get your PE colleagues to invest in the customer experience? We had to say: what does SMB want? So, we combined our 20 products into one and said here’s a package for SMB, here’s a package for mid-market, and here’s a package for enterprise.

CTO Coach 52

CTO Coach Customer Success VP of Engineering CTO Hire 52

Intercom, Inc.

MAY 13, 2021

You’re a big part of their tech stack, you’re a big part of their investment strategy, you’re a big part of their spend. Of course, we always excelled in SMB at Slack as well. . “Upmarket customers have different demands of you. You’re no longer a vendor that’s plug-and-play and a small spend.

Scale 177

Scale Customer Success Strategy Sales Hiring 177