Topic
SaaS Metrics
Key SaaS metrics, benchmarks, and what good looks like.
Related episodes
SaaS
SaaS
NRR
company, and and it's a 10,000 foot tree. And and I just don't believe it. I have to ask. You said about NRR earlier. For those that don't know, can you explain NRR before we dive into this? Sure. NRR net, retention rate, it's a metric that...
From your experience, do cats go up or down over time? So my experience, they should go down. Startups have this tendency to believe in what I would call the low hanging fruit problem, which is, oh, darn, the CAC has to go up over time because we...
is basically take a set of customers from one year ago, take their ARR a year ago, put that on bottom, take their ARR today, put it on top, divide the two, and that's in our Got you. Okay. You said before though that actually we need to focus on GRR...
This metric isn't really that it's something we say publicly because it has marketing benefit or something. But here are the metrics we really look at. And, like, it they may be different in all businesses. I don't wanna give some prescriptive...
It doesn't include upsell, doesn't include cross sell, doesn't include upgrades. It just includes the bad things that could happen. Now, if you look at it in the same benchmark data, we have your gross retention, and this is a little bit more...
And as ARR scale has risen, the ARR year over year growth has remained around this 40 to 60% year over year range over the same period of time, with the exception of 2024. But we expect that this trend will come back up to the median slash average...
slower growing software because, yes, the costs are higher, but the the cost for that incremental dollar of ARR is often lower. Right? And you can see at a 100,000,000 ARR, the the burn multiple falls to o point four x for AI negative companies...
One thing I'll show you is net retention rates in general year over year have gone down because it's a harder environment to sell and to renew and so on. Now speaking of that, we just did a recent survey, separate surveys, not the benchmark data,...
Down sell might be because they have economic pressure at the customer, they want a discount. So the basic idea is each of these has a different strategy. So net retention is something people will probably ask you about, but every savvy investor...
Now I said cohort level gross retention. Right? What does that mean? The traditional calculation of gross retention is pretty simple. It's one minus looking at your churn and your downgrades and downsell over your starting point. Right? So if you...
Again, we have this great data set to do that. And we looked at this year versus last year. On average, gross attention is down one point. But again, this includes a lot of big companies with more sticky products. For smaller companies, gross...
I think it's increased churn most of the time. When I look at companies, it's usually increased churn. That that they're still expanding reasonably well. I mean, I've seen companies where it's both. And by the way, if you asked, like, the most...
So, certainly, it's tougher now than it's been with with the CFO doing their best to to keep budgets under control. I think for a SaaS company, efficient growth to me, it ultimately means I mean, on Metrix personally, you know that. We gotta look at...
All about net retention, which I'll describe, gross attention, early warning indicators, a lot of the best practices in customer success, but applied to what your investors might ask about. So let's click in. Net retention rate. And I'll say upfront...
varies between, I'd say, 70 and a 180 and a 100, but theoretically, it can never be greater than a 100. So what's good NRR in your mind and what's good GRR? Just so we have a benchmark. Yeah. This has changed. So if you'd asked me two years ago, I...
So cohort level analysis, it's basically looking at for a given, let's say month or quarter, you bring customers on. Let's say you bring a 100 customers on in a month or quarter. Okay. In that month or quarter, over the next year, two years, three...
And so if you're already on $10,000,000 of revenue, if we think that it used to be the threshold for IPO was like, oh, let's get to a $100,000,000 of ARR, you actually have entire waves of companies which are now reaching those thresholds. What is...
It's good to track it. Also, you often don't get good response rates. You also get random people filling it out. So most people don't find this super valuable. The second thing people will do is come up with some way to track early signs of...
So how much many pay subscribers do we get and how many of them are we capable of renewing? There's also very important aspect of it is how many of them can we expand. Because if you can get positive or above a 100% net dollar retention, which is...
You can check-in with them to help them with data points to share in the reference, things like that. So these are the, for me, a checklist of what you might consider as you think about getting great advocates. Number eight, what's the cost...
Have a podcast?
Run your podcast through Clypt
Get ranked clips, hooks, and ready-to-post copy from your own episodes. Free to try.