What’s the best way to calculate LTV for a SaaS business with negative MRR churn (MRR retention greater than 100%)?

At least segment your customers.

Here’s my most recent learnings, look at our 11+ year customers: The 11 Year Customer | SaaStr

I’m not personally sure how you calculate net LTV if you have > 100% revenue retention. But:

  • You can still calculate churn & gross retention easily. And try to drive those down, quarter by quarter.
  • Often, if you segment your customers, you’ll have a segment with lower retention. E.g., SMBs vs. Enterprise. Also, track cohorts and see how they perform over time.
  • Your first year bookings will still be a critical metric to understand how much to spend on sales + marketing. Spending a lot of year 2’s and year 11’s revenue on year 1 sales and marketing costs isn’t sustainable.

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Published on August 31, 2018

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