What should the agenda be for a startup with $900K annual revenue, 50 customers, and 60% renewal?

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JASON LEMKIN

80% renewal for this year.

You can set the appropriate ARR goal for the year, etc. But a 60% renewal rate will drag you down like a ball-and-chain over time. 40% of the customers you’ve worked so hard to close … evaporate the next year from the ARR “base”.

My learnings are that each quarter, and each year, you should set a core goal, a core KPI to decrease churn and increase net revenue from the customer base.

And incent it. Pay bonuses tied to achieving the quarterly and annual improvements.

And discuss it. At every company meeting.

Then, magic usually happens. Not overnight. But in just a quarter or two, you should see improvement.

In part, because everyone a start-up, not just customer success, can contribute in some small way to customer happiness and retention. Closing a feature gap, fewer bugs, better support, better post-sales marketing, a user summit, a salesteam that doesn’t overpromise too much, etc. Every functional area, every employee, can contribute here.

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Published on May 10, 2017
  • Tom Lay

    ARR is the lifeblood of any SaaS company large or startup. Critcal to growth is retaining, growing and expanding your customer base. This is all based on having a very comprehensive customer journey map that creates a differentieated customer experience from first contact though value realization, optimization and expansion. The sales cost are 6X as much to get a new logo vs existing customers. Multiply this by the fact that existing customer leads are 6X more likely to convert. Creating a differentiating customer experience takes investment in time and money like the product developement and the ROI is even better. 80% is still very low. Targets over 95% are realistic and required for long term success. Yes you need new logos’ but your existing customer are where the growth and profits will come from as your ARR grows exponetially.

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