There’s certainly no shortage of SaaS performance metrics leaders focus on. While all SaaS companies do, and must, home in on acquisition metrics, there’s also massive revenue potential within your current customer base.
I think NRR (net revenue retention) is without question the most underrated metric out there. NRR is simply total revenue minus any revenue churn plus any revenue expansion from upgrades, cross-sells or upsells. The greater the NRR, the quicker companies can scale. Simply put: the power of compound math!
One of the biggest and most impactful changes we made was to move new business, retention and account management all under our chief revenue officer.
Over the course of two quarters, Terminus grew its NRR by more than 30 points, opening up incredible new levels of growth opportunities.
To boost our NRR for the better, I focused on three core pillars within our organization.
People
We took a holistic look at the organization and our org structure. One of the biggest and most impactful changes we made was to move new business, retention and account management all under our chief revenue officer. At the end of the day, it just makes a ton of sense to have acquisition and retention living under the same roof — why bother acquiring new customers if you can’t retain them?
We also rolled out a surround-sound team (around three or four people per customer) who onboard and help customers with their account from day one. In total, we have about a quarter of our company dedicated to this 24/7 support and hands-on guidance to ensure we’re enabling customers immediately.
Process
Focusing so heavily on NRR and gross rate of return (GRR) requires a mentality shift companywide, so once the decision was made to go all-in on retention, we made it a point to share that with everyone, from our board to every single employee and customer. This drove every single decision, including investing heavier in existing customers than new business.
We then started to think about retention in the same way we thought about new business, infusing the same level of predictability for retention as we did with new business. One example, marketing — which, in my opinion, is historically massively underfunded for customer marketing efforts. We then created a six-person account management team (that we did not previously have in place) and made internal process changes to follow suit.
We changed our customer success management (CSM) compensation from gross dollar retention to gross logo retention to instill the “save the logo” mindset. We brought on a “red accounts manager” to serve as the single point of escalation and resolution management for at-risk and challenged customers.
We always wanted to do what was right for the customer, to serve current customers in any way needed. Then, we thought about how we really make account-based marketing (ABM) work for our customers and developed a framework for pre-sales to capture the measure of success early, and then carried that through all the way to customer success handoff and quarterly business reviews. This helps to get ahead of retention issues, which most commonly occur during handoff from sales to support.
Product
It’s difficult for single-product companies to move any lever on net retention, so we became a multiproduct company — there is now simply more to sell. We listened to our customers on what complementary or adjacent products they wished were part of our platform. There are different ways to go about this, but we ended up acquiring three companies in a year, all of which are highly complementary to ABM and expanded our platform based on what we heard about our customers’ needs. This enabled our team to truly build a muscle for cross-selling and upselling opportunities within our base.
But, we didn’t stop there. We also created a product audit that had nothing to do with selling. Instead, it mapped every single customer need against the product to uncover the five things customers could do better with our product to create higher adoption rates. Then, we took what we learned to our customers and had dedicated meetings with customer success, services and enablement to bring customers up to speed to ensure they were getting the most out of our platform.
There’s no silver bullet for fixing retention issues. Contributing factors are different for every company and every industry, but getting your company and team to live and breathe the mindset of “retention is the new acquisition” is critical. We made fundamental changes to our company across people, processes and product. Put simply: Play the long game with your customers; it’ll make all the difference.