Earlier this week I appeared on a webinar with You Mon Tsang, founder and CEO of ChurnZero, a SaaS application aimed at helping subscription businesses reduce churn.
In this post, I will share the video of event, provide a link to the slides, provide a link to the Q&A wrap-up they posted, embed the video below, embed the slides below that, and finally provide a quick summary below that.
Here’s the video:
Here’s a copy of the slides:
Here’s a quick list of the topics we discussed:
- ARR and MRR, and when to use which
- Logo retention rate, why a count-based rate works best when your customers are more or less “all the same” on deal size, and that you should use a dollar-based rate when they’re not.
- Available-to-renew (ATR) logo retention rate, which factors in only those customers who had a chance to renew or not. If you’re an ARR-based company but do multi-year contracts not every customer has the chance to get out every year.
- Gross revenue retention rate, and why it’s gathering steam as an important metric. (Sometimes great expansion is hiding major churn and just looking at churn before expansion will reveal that.)
- Net revenue retention (NRR), aka net dollar retention (NDR) for those who work only in dollars, which is probably the hottest SaaS metrics after ARR and ARR growth.
- Lifetime value (LTV), and its fairly severe limitations. I gave a talk on this at SaaStr two years back.
- Customer acquisition cost (CAC) and the CAC ratio. How it differs for new customer and expansion ARR.
- LTV/CAC ratio. An attempt to measure what something costs against what it’s worth, but one that has generally failed and is now being replaced by NRR.
- Benchmarks for many of these metrics from the KeyBanc 2021 SaaS Survey.
Thanks to all those who attended and thanks to You Mon for inviting me and Cori for executing it so well.