SaaStr

AUGUST 28, 2024

And with that, it seemed a good time to dig in with one of the great SMB leaders Bill. With a super impressive 111% NRR from SMBs. From SMBs. A reminder and a challenge to not settle for < 100% NRR from SMBs. Fast forward to today, and only 20% of its revenue is from software subscriptions.

Payments 238

Payments Payment Solutions SMB Acquisition 238

SaaStr

MAY 27, 2024

To IPO, companies need to triple their market share in their core market and have a churn rate of less than 3-4% per month. In the early stages, the CEO is often better than the CTO, but a 10x feature can help a startup succeed up to a million or two million in revenue before the competition catches up.

CTO Hire 210

CTO Hire Development Team Review Software Review Technical Review 210

SaaStr

NOVEMBER 21, 2020

At least 100% net negative churn (i.e., upsell/account growth + renewals – churn) for very small businesses. Let’s look at some of the top public SaaS companies: Shopify — very SMB: 100%. Hubspot — mostly SMB: 100%. Surverymonkey — fairly SMB, but going more enterprise: 100%. 119% net revenue retention.

Retention 336

Retention SMB SaaS Enterprise 336

SaaStr

JUNE 2, 2022

Two things though did get hit harder — SMB Churn and Upsell s. Customers kept buying more SaaS than ever, which masked all-time high churn in SMB accounts. SMBs just plain went out of business in ’08-’09. So our gross SMB churn spiked to a crazy high of 5.5% Go forth and conquer.

SMB 322

SMB SaaS Churn Enterprise 322

SaaStr

APRIL 26, 2023

Only 32% of Revenue From Websites. The majority of its revenue comes from ecommerce. Their pure website revenue, which they call “Presence”, is just 32% of their revenue. #2. Most of the website / presence growth came from price increases, which saw limited churn as a result. 68% From Ecommerce.

Scale 235

Scale SMB Churn Pricing 235

SaaStr

DECEMBER 3, 2023

Non-Recurring Revenue Doesn’t Count, At Least Not as Much. If your revenue from any stream can go down in a given month or quarter, it’s not recurring. Pass-Through Revenue Simply Doesn’t Count. Is it OK to recognize pass through revenue as “revenue”? Loss-making Hardware Revenue Doesn’t Count.

SaaS Payments 211

SaaS Payments Metrics Payments SMB 211

SaaStr

MAY 20, 2024

Not Jumping on High Churn Some types of churn certainly can be addressed over time. It can take years for some SMB SaaS companies to hit and cross 100% NRR, for example. But if your churn and retention numbers aren’t at least mid-pack for your category, don’t let it lurk.

Trends 285

Trends Scale Sales Hiring Venture Capital 285

User Pilot

JULY 18, 2023

Tracking your customer churn rate will help you keep tabs on business growth. You will have data sets for analyzing your churn/retention history, which will better position you to make intelligent business decisions. Types of churn rates you should calculate: customer churn rate, revenue churn rate , and involuntary churn rate.

Churn 78

Churn Payments SaaS Payments Payment Solutions 78

SaaStr

JUNE 8, 2022

ARR, Zoom was an SMB powerhouse, with Enterprise growing. SMB is now saturated at $4B ARR and not growing, but Enterprise is picking up the slack and growing faster than ever. 5 Interesting Learnings: #1 $100k+ customers are now the engine, not self-serve SMBs. ARR … which it did in just 1 year (!!)

SMB 285

SMB Enterprise Engineering Scale 285

SaaStr

JULY 31, 2022

The Challenge with SMB SaaS: High Growth Can Only Mask High Churn For Just So Long. SMB SaaS has a lot going for it, but one big existential challenge — inherent churn. SaaStr 572: 10 Mistakes in Building Out Your Revenue Organization: A CEO’s Perspective with Insider CEO Hande Çilingir.

New CTO 253

New CTO CTO SMB Venture Capital 253

SaaStr

JANUARY 2, 2021

We can see that NRR for tiny customers is probably about 100%, as it is for other SMB leaders. Again, the latest crop of Cloud IPOs shows SMBs seem to have no limit in terms of TAM, with SMB growth at Shopify and Zendesk keeping up with enterprise, and even at Asana, SMB growth is still impressive at $250m ARR.

SMB 351

SMB Enterprise Cloud Scale 351

SaaStr

JULY 22, 2021

That’s the power of compounding revenue right there: 5 Interesting Learnings: #1. 180,000 revenue per employee. We’ve seen this with sales-drive SMB and SME leaders like Xero as well. If you are selling to SMBs, you have to be very efficient. Gross annual churn of 4%, NRR of 107%.

Scale 315

Scale SMB compliance Churn 315

SaaStr

DECEMBER 26, 2020

And produce a lot less revenue per interaction. That often starts to not feel worth it after just a few million in revenue. Every call takes the same amount of time, but the small ones produce so much less revenue. Small customers churn at a much higher rate. Probably more. ” Which is true. ” Which is true.

SMB 355

SMB Sales Hiring Marketing Enterprise 355

SaaStr

JUNE 22, 2023

My list: Not committing to 24 months upfront to getting to Real Revenues and a Minimum Sellable Product. It takes 7–10 years to build something real, and the first stage is the 18–24 months it takes to get real revenues and something off the ground. SMB folks want to go upmarket because there is too much churn in SMB.

SMB 239

SMB SaaS B2C Interviewing 239

SaaStr

JUNE 7, 2021

If your SMB product requires or has a salesperson involved in closing, that’s a clear sign you also want a human being involved in making sure that customer is a success post-sale, too. Just assign a certain amount of ARR per each SMB customer success manager. Support has to handle a lot of routine SMB issues anyways.

Customer Success 331

Customer Success Scale SMB Sales 331

SaaStr

JULY 24, 2024

Whether the founders have clarity on their market on day zero or they find it around a couple of million in revenue, you have to see their understanding improve over time. Imagine you have two competitors at a million in revenue. Both have crummy products, but they did something well because they have a million in revenue.

Sales Hiring 253

Sales Hiring Startup Scale SMB 253

SaaStr

FEBRUARY 17, 2021

While Wix’s actual churn is a bit unclear, this is a super interesting presentation of CLTV. That’s the power of recurring revenue. Efficient at SMB marketing — an ~8 month CAC. 43% of Revenue Outside the U.S / North America. Quite an incredible SMB success story! Over Next 8 Years. Impressive.

Payment Methods 279

Payment Methods Payment Solutions Payments SMB 279

SaaStr

JANUARY 12, 2021

Xero is a very interesting SaaS case study with (x) the majority of its revenue outside the U.S., Here are a few: All the way until $600m+ ARR, the majority of Xero’s new bookings and revenue still came from Australia and New Zealand! Churn is 1.1% Xero’s SMB churn isn’t zero. So nail a niche!!

Customer Lifetime Value 230

Customer Lifetime Value SMB Churn Scale 230

SaaStr

JUNE 29, 2022

It’s moved beyond its tiniest customers, of an ACV of < $1k, but other than that, it’s going upmarket without giving up its SMB roots. In fact, Q’22 was Zendesk’s highest first-quarter revenue increase in history. Even though Zendesk still has thousands and thousands of SMB customers. #2.

SMB 267

SMB Scale B2B Revenue 267

SaaStr

JULY 28, 2024

An SMB-focused product team is often reluctant to do this, and will push back and see them all as one-offs. Eventually, you’ll figure out how to get better at closing “all the seats”, all the revenue, up front. More on that here: Two SaaS Metrics That Actually Don’t Matter That Much: Absolute Churn and Sales Cycles #6.

Sales Hiring 216

Sales Hiring Scale SaaS SMB 216

SaaStr

OCTOBER 29, 2020

Zendesk’s churn is still a bit higher than pre-Covid, but is almost back to pre-Covid levels. And expansion revenue is higher than pre-Covid. 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. No excuses.

SMB 236

SMB Enterprise Churn Retention 236

SaaStr

APRIL 13, 2023

And so many different strategies, from more enterprise to more SMB, from more tech focused (Asana) to less tech focused (Monday). 135% NRR from larger customers and 120% for $5k+ customers remains top-tier, especially for a vendor with plenty of small SMB customers. 39% of Revenue Outside U.S., 39% of Revenue Outside U.S.,

SMB 244

SMB Outsourced Development Enterprise Scale 244

SaaStr

SEPTEMBER 17, 2023

LIVE from Annual Stage A Masters: How Revenue Leaders at Box, Calendly, and Lattice Created Sales Acceleration Moments The post Top SaaStr Content for the Week: Craft Ventures’ Founder & General Partner, QED’s Partner, Y Combinator’s Managing Director and lots more! The Next Best in About 5 Years.

Scale 224

Scale SMB Management AI 224

Clouded Judgement

JUNE 19, 2024

The charts below show the change in quarterly revenue YoY (so Q1 ‘24 rev - Q1 ‘23 rev) going back to 2017. Q1 Revenue Relative to Consensus Estimates Now let’s dive in to the financial results of Q1 starting with revenue. Beating consensus revenue estimates is the first aspect of a successful quarter.

Cloud 312

Cloud GCP(Google Cloud Platform) Software Azure 312

SaaStr

MARCH 20, 2021

Traditionally, that has meant even 100% Net Revenue Retention can be tough when 20%-30% of your customers may be out of business in a given year! Smartsheet: 123%+ NRR from all customers, so probably ~110% from SMBs : #2. Zendesk: 112% NRR overall, with 40% SMB. So probably again around 100% NRR from SMBs.: #3.

SMB 249

SMB Churn Retention Enterprise 249

SaaStr

JANUARY 4, 2023

Very Few Professional Services — Only 3% of Revenues. ProServ is only 3% of Okta’s revenues. International Revenue Steady at 22% of Revenues — and EMEA is strong. Customer Count Up 22%, While Revenues Up 37%. High NRR leads to revenue growing faster than your new customer count. #7.

Scale 283

Scale Headcount Sales Hiring SMB 283

SaaStr

MARCH 12, 2023

Check out this week’s top blog posts, podcasts, and videos: Top Blog Posts This Week: The Challenge with SMB SaaS: High Growth Can Only Mask High Churn For Just So Long (Updated) The 8 Signs of a Failing Sales Rep. Each week, we round up our most popular content so you can catch up on anything you may have missed.

Scale 208

Scale SMB Sales Scaling 208

SaaStr

OCTOBER 2, 2022

The Challenge with SMB SaaS: High Growth Can Only Mask High Churn For Just So Long (Updated). Check out this week’s top blog posts, podcasts, and videos: Top Blog Posts This Week: Why Your Cost of Sales Generally Doubles As You Scale. State of the Cloud 2022: The Centaur Report With Bessemer Venture Partners (Pod 593 + Video).

Cloud 261

Cloud Scale SMB B2B 261

SaaStr

MAY 19, 2019

What lessons can we learn from this huge Kiwi SMB success, for other founders? Here are a few: All the way until $600m+ ARR, the majority of Xero’s new bookings and revenue still came from Australia and New Zealand! Churn is 1.1% Xero’s SMB churn isn’t zero. subscribers. Zoom, PagerDuty, etc.).

SMB 225

SMB Customer Lifetime Value AWS Churn 225

Clouded Judgement

OCTOBER 3, 2024

Q2 Revenue Relative to Consensus Estimates Now let’s dive in to the financial results of Q2 starting with revenue. Beating consensus revenue estimates is the first aspect of a successful quarter. The formula to calculate this is: (Q2 ’24 revenue) / (Q2 ’23 revenue) - 1.

Cloud 161

Cloud Software Benchmarks Retention 161

SaaStr

NOVEMBER 9, 2019

Churn much past 3% a month IMHO is not really recurring revenue anymore. A lot of tools that sell to individuals and very small businesses do see churn around 7% a month though. You can survive in a very high churn VSB/SMB market, but your CAC has to be super low. You can always decrease churn a bit.

Scale 113

Scale Churn SMB Scaling 113

SaaStr

SEPTEMBER 29, 2022

Channel model and organic approach to SMB and mid-market yields a fairly efficient Sales & Marketing motion. Together, it means they only spend 38% of revenue on Sales & Marketing. Together, it means they only spend 38% of revenue on Sales & Marketing. That’s fairly efficient.

Scale 240

Scale SMB Software Development Cloud 240

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 307

Scale Outsourced Development SMB Cloud 307

Tom Tunguz

MAY 5, 2013

Kenny van Zant drew this diagram for me on white board and I think it’s the best visualization of how SMB SaaS freemium business grow. The diagram highlights a few important mechanics of the SMB SaaS business model. A few of these customers grow into SMBs and become paying customers - they cross the dashed line in this diagram.

SMB 100

SMB Scale SaaS Mobile 100

SaaStr

MAY 25, 2022

If Momentive / SurveyMonkey had stayed 100% self-serve and low end, it likely wouldn’t be growing much at all, with self-serve revenue now only growing 7%. Far forward to today, 1/3 of its revenue is sales-driven, but it’s the core growth driver, up 35%. #2. A different way to look at the prior point.

Scale 247

Scale Payments Payment Solutions Payment Services 247

SaaStr

APRIL 23, 2021

121% NRR from SMBs — up from 110% at IPO. This is pretty impressive, although on reflection, perhaps what one would expect from a mission-critical SMB app. We run a lot of SaaStr on Bill.com and have for years, and won’t churn. Transaction fees (on payments) are now half of revenue and are the key to scaling.

Payment Solutions 325

Payment Solutions Payments SaaS Payments Payment Services 325

SaaStr

APRIL 7, 2021

“SaaStr 415: Fighting Churn with Data featuring, Carl Gold, Chief Data Scientist at Zuora “ A great session from SaaStr on perhaps the #1 more important topic at scale … fighting churn. #3. And how to win in a very competitive market. #7.

Scale 163

Scale SMB Churn Scaling 163