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Question about churn rates and expansion revenue tradeoffs
I was reading through the latest SaaS Benchmarks report from KeyBanc and found something that surprised me. For companies under $10M ARR, the ones with the lowest logo churn (under 2% monthly) actually had slower net revenue retention growth than those with churn around 3-4%. It seems like the low churn companies were so focused on keeping everyone that they never pushed expansion revenue hard enough. Has anyone else seen this pattern play out in their own metrics?
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leo_black761mo ago
Read a piece by Jason Lemkin about this exact thing last week. He said those low churn companies basically have a 'customer for life' mindset but forget to raise prices or upsell because they're scared of losing anyone. The sweet spot seems to be around 3% monthly churn with aggressive expansion pushes since you're losing some dead weight but still growing fast. Saw a founder on Twitter say they went from 1% to 4% churn after jacking prices 30% and net revenue retention jumped from 90% to 130% in six months.
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foster.jordan1mo ago
I think that "sweet spot" argument ignores how different customer types respond way differently to pricing changes.
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