High NRR Can Scale Infinitely. Invest More There.

Twilio’s NRR since 2019. Pretty consistent.

A question so many of us had in the earlier days of SaaS was … will we max out all our bigger customers?  We all saw especially larger customers buying more and more each year, but most of us founders a generation or so ago in SaaS worried we’d max out our larger accounts.  That at some point, NRR might settle down closer to 100% for bigger customers, and maybe much lower for SMBs.

Well, it turns out we were wrong.  Not only would high NRR not hit a ceiling at say $20m-$30m NRR, it didn’t hit only at $100m, not even now as we can see $1B+ ARR.  Twilio, Slack, Zendesk, HubSpot, Shopify and so many SaaS leaders at or well past $1B in ARR are seeing NRR that is just as high as ever, more or less.

You probably can roughly sense this looking at the data we now have after so many SaaS IPOs, but I thought it would be helpful to put some data in one simple table here:

It’s all across the board.  Even Zendesk, which sells to a lot of SMBs and SMEs, has seen its NRR expand after $1B ARR.  Bill.com sells to SMBs and it also saw its NRR expand post-IPO.  Zendesk’s NRR here:

There will be exceptions, of course.  But the vast majority of the top SaaS and Cloud companies have shown top-tier NRR can scale forever.  Probably even to $10B+ in ARR.

So there are no excuses.  And even more importantly, triple down on customer success, customer marketing, and customer happiness.  They not only will stay a decade or longer.  But they’ll likely grow 3x-10x in size.  Almost like clockwork.  No matter how big you get.

You Aren’t Doing Enough Customer Marketing

Published on August 25, 2021

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