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Dear SaaStr: What are Some Tricks Software Companies Use to Manipulate Churn Metrics?

SaaStr

Q: What are some tricks software companies use to manipulate churn metrics? Churn” is a surprisingly imprecise term. Some ways saas companies “manipulate” churn, which may be 100% legitimate in some cases: Not counting churn until after 90 days. If a customer churns in a week, why count them? Every quarter.

Churn 255
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I Was Wrong. NPS is A Great Core Metric.

SaaStr

It created a lot of discussions and was more controversial then — that NPS was a great core metric. Back then, I wrote that when I was a SaaS founder, I thought Net Promoter Score (“NPS”) was a somewhat dumb, Big Company metric. NPS isn’t tied to upsells, churn, or revenue. I wanted to see the future.

Metrics 283
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15 Signs You Have A SaaS Metrics Problem (and How to Fix it) with Dave Kellogg, EIR at Balderton Capital

SaaStr

Dave Kellogg, EIR at Balderton Capital and 25-year C-level veteran, shares the top 14 signs that you have a SaaS metrics problem, the five reasons those symptoms exist, and a SaaS metrics maturity model with five layers to help you move the needle at every stage. The 15 Types of Misuse and Abuse of SaaS Metrics #1: Bludgeoning.

Metrics 316
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A Guide to Customer Retention: Importance, Strategies & Metrics

User Pilot

You will also learn how to build a retention strategy, what metrics to track, and 10 bulletproof retention tactics for SaaS companies. Key metrics to measure customer retention include customer retention rate , customer churn rate , customer acquisition cost, and customer effort score. Let’s dive right in! To prevent it.

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Most SaaS Metrics Really Only Work if You Have 75%+ Gross Margins and 100%+ NRR

SaaStr

So over the past decade-and-a-half we’ve come up with a lot of yardsticks, metrics and rules for SaaS companies. E.g.,: CAC of < 12 months is Good-to-Great Paying sales reps 25%-30% of what they close is Good A burn ratio of 1 or less is Good These metrics do sort of work, if you have some capital to spend (i.e., They don’t.

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

SaaStr

Don’t need as much sales experience on sales team. 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. And then 3% a month churn cuts your growth in half.

SMB 362
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What Core Metric Should Your VP of Sales Be Responsible For? It Really Matters What You Pick.

SaaStr

Congratulations on finally hiring your VP of Sales! There are 3 general options: Your VP of Sales is responsible for net new revenue only. Churn is not her responsibility, nor is there any material credit for multi-year deals. Post-sales, other than upsell which adds to net new revenue for this year, is someone else’s job.