Dear SaaStr: What Were Aspects of Your Startup That Were Easier Than Anticipated?

Dear SaaStr: What Were Aspects of Your Startup That Were Easier Than Anticipated?

The part I didn’t originally get as a first-time SaaS founder was how relatively easy it is to grow exising accounts and account size if your customers are happy.

We segmented customer retention by Small, Medium, and Large accounts after about 24 months and saw a pattern that we now know is very common: ~85% revenue retention from our Very Small Businesses, about 105% from Mid-Market; and about 120% from Larger Customers.

And the key is — that 120% revenue growth annually from Larger Customers as a cohort (and even the 105% from Mid-Market) compounds. 3, 4, 5 years out to something really large. In 3–5 years, you can double the revenue from your existing customer base, or at least a segment of it.

And that annual 120% revenue retention is much, much easier to get than a new customer. Not easy. This is why I early became a huge convert for doing Customer Success right. You do have to deliver. But so much easier than starting from scratch with a new prospect — if they are happy.

The challenge here is growing your accounts takes time. It’s tough to see much happen in a quarter or two. Because of that, the organization tends to get focused on the hot, incoming prospects instead. But over several years, it’s your most powerful lever for growth.

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Published on December 21, 2022

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