Peter Smyrniotis’ Post

Understanding and optimizing net dollar retention (NDR) is essential for any startup or established company aiming to ensure sustainable growth. ⠀ Here’s a quick dive into what NDR is, why it matters, and how you can improve it to boost success. ⠀ NDR focuses on the revenue retained from existing customers over a given period, accounting for downgrades, upgrades, and customer churn. It is expressed as a percentage and is calculated by dividing the revenue at the end of the period by the revenue at the start of the period. 📈 ⠀ NDR over 100% indicates that the revenue from existing customers has grown, perhaps due to upsells or cross-sells exceeding any revenue lost from downgrades or churn. Plus, focusing on increasing NDR can reduce the need to spend heavily on acquiring new customers, thus improving profitability. ⠀ On the other hand, a low NDR will mean you'll be spending a lot of extra money on sales and marketing to try to continue to grow, which brings down your overall profitability. ⠀ According to Meritech Capital, a good median NDR to shoot for, at least in the vertical SaaS industry, is 114%. ⠀ So how can you improve your NDR? 💡 ⠀ First, look for ways to ensure your product is a genuine need for your customers, not just a want. Is your product solving the true pain point? Go straight to the source of truth by speaking with the customers directly. Ask them what they're experiencing, or what challenges they have. ⠀ Next, analyze customer behavior to identify upsell and cross-sell opportunities that add value to the customer journey. ⠀ Lastly, dedicated customer success programs can help in proactively addressing potential issues, leading to higher satisfaction and reduced churn. ⠀ By prioritizing NDR, you not only solidify your existing customer base but also set the stage for scalable, long-term growth. Whether you're a fledgling startup or a seasoned player, optimizing NDR is a powerful strategy to elevate your business. ⠀ Got questions? Ask them below 👇🏼 and we'll answer them -- or send us a DM! ⠀ #BusinessGrowth #CustomerSuccess #NDR #Startups #ProductManagement

Tired of watching your hard-earned customers disappear faster than a beer at a frat party? You're not alone. Most startups are obsessed with chasing new customers, but the real secret to growth is keeping the ones you already have. Look, I get it. New customers are like shiny objects. They're exciting, they're alluring, and they make you feel like you're on top of the world. But here's the problem: acquisition is expensive. And if you're not careful, it can become a bottomless pit that drains your resources and leaves you with nothing but a hangover. The real money is in retention. Loyal customers are the backbone of any successful business. They spend more, they refer their friends, and they're more forgiving when you screw up. Churn is the Silent Killer of Startups. ProfitWell Has the Antidote. So, how do you build customer loyalty? One word: 𝗘𝗱𝘂𝗰𝗮𝘁𝗶𝗼𝗻. ProfitWell, the subscription analytics platform, has mastered the art of Educational Retention Marketing (ERM). They're not just selling software; they're building a community of loyal advocates who are invested in their success. Here's how they do it: 1. Give It Away Now, Get Paid Later: ProfitWell offers a free version of their product, giving customers a taste of the value they provide before asking for a dime. 2. Data is Your Crystal Ball: They provide in-depth subscription metrics and insights, helping businesses understand their customers and make data-driven decisions to reduce churn. 3. Become the Yoda of Your Industry: ProfitWell's blog is a wealth of information on subscription business models, pricing strategies, and customer retention tactics. 4. Build a Tribe: Their "Recurring Revenue" podcast fosters a community of subscription experts, educating listeners and creating a sense of belonging. 5. Don't Just Sell, Support: ProfitWell offers personalized onboarding and customer success services, ensuring that customers get the most out of their product. ProfitWell is living proof that investing in your customers' education is the key to building a loyal following and a sustainable business. So, stop chasing the next shiny object and start building relationships that last. Ditch the acquisition addiction and embrace the power of ERM. Remember, in the game of business, it's not about how many customers you have; it's about how many customers you keep. #Startups #Growth #ContentMarketing #EducationalRetentionMarketing #Profitwell

I modeled 3% & 15% churn for a $2M SaaS company over 3 years. 🚨 Spoiler Alert: 💲Millions. A lot of things keep SaaS founders up at night. But forecasting an increase in churn is horrifying.👹 The best way to reduce churn is to pick up the phone and talk to your customers in a quarterly review at a minimum. But a lot of founders get this wrong because they treat it as an upsell call. It’s not. This is truly a customer success quarterly review call. *Pro Tip: Don't just do these with your Decision Makers. FOCUS ON YOUR POWER USERS Yes, the Decision Makers are the people who can pull the plug. They have contract control. But they listen to your Power Users. These are the people who use your software the most. Their complaints and praise roll up to your Decision Makers. They're the ones who are going to tell the Decision Makers to pull the plug or not. UNDERSTAND THE IMPACT OF YOUR CHURN The difference between 3% and 15% churn could be costing you millions in enterprise value. In the video, I model the difference for a $2M ARR company over 3 years with a $40K ACV. The deficit in millions is ridiculous. **Bonus Tip** NPS scores are garbage. It’s a vanity metric. At best, it might help you understand if the majority of your customer base is happy or pissed off. It won’t help you uncover the silent killer: Your quiet quitters. This is why you must talk to your customers on the phone. ☎ Prioritize your Power Users. They hold the keys to your kingdom. 🗝 🏰 If you can satisfy them, you hold the account, you hold your churn, and you increase your enterprise value. 📈 #SaaS #startups #GoToMarket #entrepreneurship #sales 

A superpower for any revenue leader is to never stop talking to your customers ⚡ It’s something a lot of revenue leaders fail to prioritize, and I think they’re missing out. In the early stages of building a business, founders constantly talk to customers to get feedback and build new features or functionality based on the needs of their install base. But that typically starts to wane as the company grows. That’s a massive miss in my opinion. I’ve added regular meetings with both current power users and churned users into my monthly schedule (I’m averaging about 10-15 interviews a month at this point). The power user interviews give me insights into how we can leverage their favorite features for marketing and finding more users like them, as well as making them even bigger fans of Sendspark because they feel appreciated. Similarly, meeting with churned customers is even more important. I want to know why they signed up initially, where we failed to meet their expectations, and what we should be investing in from a product perspective to win them back. Yes, it’s a big use of my time. Yes, it’s not always fun to do a 30-minute call where things can get negative. But those conversations are critical for making informed decisions about where the product should go and help you better understand who absolutely loves your product, which is gold for marketing and demand gen efforts. S/O to all the customers I was able to chat with this week: Melissa Cafagna Sarah Abdo Who else does this regularly? #saas #startups

Is your "churn problem" actually an acquisition problem in disguise? A client once mentioned to me that their churn rates had spiked out of the blue. After doing a deep dive with them into their situation, here's what we uncovered: ↳ Most their churning customers were converting from a new lead source. Turns out, it's a pretty common situation for maturing SaaS companies to find themselves in. When given lofty growth targets, it's easy to feel the pressure to expand your TAM and target different types of customers. Sometimes, the investment pays off. Sometimes, it doesn't. And that's totally fine! What's not fine is is *continuing* to target and advertise to customers for months (sometimes years!) on end who aren't the right fit for your product. This is why cohort analysis is invaluable. In my client's case, it served as stop-loss insurance against their acquisition investments, and probably saved them tens of thousands of dollars in the long run. As a recurring revenue business, having these feedback loops in place is absolutely critical. Without them, you'll never be 100% certain you're not just filling up a leaky bucket. #b2b #saas #churn #revenuegrowth #startups

𝐎𝐯𝐞𝐫 𝐭𝐡𝐞 𝐥𝐚𝐬𝐭 𝐟𝐞𝐰 𝐰𝐞𝐞𝐤𝐬, 𝐈'𝐯𝐞 𝐛𝐞𝐞𝐧 𝐚𝐬𝐤𝐞𝐝 𝐭𝐢𝐦𝐞 𝐚𝐧𝐝 𝐚𝐠𝐚𝐢𝐧—"𝐖𝐡𝐚𝐭 𝐝𝐨𝐞𝐬 Vouch 𝐝𝐨?" Being an early-stage startup means moving fast and adapting quickly, but it also means I haven’t always had the perfect answer. So, here's my attempt! 𝐖𝐡𝐲 𝐕𝐨𝐮𝐜𝐡? Throughout my journey in Edtech, one thing became crystal clear: referrals are the best channel for growth. But here's the kicker—they rarely deliver at scale because : 1️⃣ Traditional referrals are 𝐛𝐫𝐨𝐤𝐞𝐧! 2️⃣ They’re only used for discounts after discovery has already happened (if at all). 3️⃣ The process is clunky—people forget codes, sharing is hard, or it’s just plain cumbersome. 4️⃣ Despite all this, 𝒚𝒐𝒖𝒓 𝒏𝒆𝒕𝒘𝒐𝒓𝒌 𝒓𝒆𝒎𝒂𝒊𝒏𝒔 𝒕𝒉𝒆 𝒎𝒐𝒔𝒕 𝒕𝒓𝒖𝒔𝒕𝒆𝒅 𝒘𝒂𝒚 𝒕𝒐 𝒅𝒆𝒄𝒊𝒅𝒆. So, 𝐇𝐨𝐰 𝐝𝐨 𝐰𝐞 𝐮𝐧𝐥𝐨𝐜𝐤 𝐭𝐡𝐞 𝐩𝐨𝐰𝐞𝐫 𝐨𝐟 𝐫𝐞𝐟𝐞𝐫𝐫𝐚𝐥𝐬 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐧𝐞𝐰 𝐚𝐠𝐞? And that’s where the idea of reversing the referral flow came about, instead of customers shoving the referrals codes down their network.. 🌟What if a prospect could find who in their network has bought from a brand before!🌟 🌐 Enter Vouch flips the traditional referral model on its head, unlocking a brand’s most valuable growth channel: 𝐢𝐭𝐬 𝐜𝐮𝐬𝐭𝐨𝐦𝐞𝐫 𝐧𝐞𝐭𝐰𝐨𝐫𝐤. 🔍 𝐇𝐨𝐰 𝐝𝐨𝐞𝐬 𝐢𝐭 𝐰𝐨𝐫𝐤?Instead of asking your customers to push referral codes to everyone they know, Vouch makes it easy for your leads to discover who in their 𝐧𝐞𝐭𝐰𝐨𝐫𝐤 has already bought from your brand. 💡 Now, your happy customers become your most effective advocates—without lifting a finger. Prospective customers get to connect with them directly, ask questions, and build trust based on authentic experiences. 🚀 Excited to help brands transform how they win and retain customers. More updates soon! #TrustRedefined #ReferralInnovation #BrandGrowth #CustomerNetwork #SaaS #StartupLife #GrowthHacking #ProductInnovation #CustomerSuccess #MarketingStrategy #B2BSaaS #SalesEnablement #TechForGrowth #NetworkEffect #Vouch

Product-led growth is a lot of fun. Until it isn't. When you're getting 100s of signups a month, it's really easy to ignore churn—you know it's there, but it's not the big problem (yet). You should be optimizing for acquisition as a growth-stage startup. At the same time, you can't afford to keep churn on the back burner for too long... I see it happen all the time. One morning, the founders wake up and find their startup at the following inflection point: > Revenue lost from canceling customers is *completely* offsetting revenue gained from incoming customers < Even scarier, they don't even know the main drivers of churn... Why? Since their customers are acquired in a hands-off way, they never learned the finer details about their needs and pain points. Suddenly, runaway growth has turned into runaway churn... The quickest way to begin mitigating this problem? → Implementing a cancellation flow with customer exit surveys and retention offers to stay. It'll help your business in two key areas: 1️⃣ You'll begin to understand WHY customers aren't renewing - Is your pricing out of whack? - Is marketing attracting the wrong buyers? - Has a new lower-cost competitor emerged? - Is there a lack of functionality in the product? - Is there a season where more customers tend to churn? 2️⃣ Then you can take that data, run effective win-back campaigns with it, and begin reducing churn "I left because of price" → 30% off for 3 months "Temporary cancellation" → 90-day account pause "Lacking feature 'X'" → reach out when gap is filled Done right, you can cut cancellations by up to 40%. Better yet: what you don't save, you'll learn from—enabling you to make better product, pricing, and re-marketing decisions. And with ProsperStack, we can get this up and running for you in a matter of hours or days. Not months. Although there's no "silver bullet" to churn, this is a quick-win—and it drives long-term value. #b2b #saas #churn #productledgrowth #startups

Another lesson learned from my first 8 months at Churnkey: Move fast and break things (but fix them quickly)… One of the first things we worked on when I came to Churnkey was our pricing model. We needed a way to simplify quoting for prospects and customers in a clear, concise way as we transitioned from founder-led sales and cs to employee-led. When we landed on our revised pricing model, I was adamant that we roll it out to our pricing page on the website. The result? Confusion on the part of site visitors that impacted our inbound lead flow. The pricing page was too complex and it was constraining inbound MQLs. While our pricing page increased confidence in how we quoted our larger prospects, we interrupted the flow of our velocity business. We looked at the data and quickly made the decision to simplify. When we went back to a simpler pricing page, inbound lead volume recovered and we were back to the races. Maybe this is less of a startup issue versus an issue of how seemingly small changes changes to your website affect high-velocity customer acquisition. But the fact you can make changes like this so quickly in a startup is both a blessing and a curse. There are fewer gates to making a change that can break something. On the other hand, making the next change to revert back or simplify is just as easy. An early mentor gave me the following advice: “You’re going to make some mistakes as a leader. But the best thing you can do when you realize that you’ve made a bad decision is to move forward and make another decision.” Anyone else learning lessons like this transitioning to a startup from a larger co? #saas #plg #sales #customersuccess Churnkey

On every $1 ARR, monday.com Market Value is 5.13 times that of Similarweb. 😵 𝗛𝗼𝘄 𝗰𝗮𝗻 𝗶𝘁 𝗯𝗲? Both Monday and SimilarWeb are: 1. Public 2. Growing 3. Profitable! 4. B2B SaaS 5. Market Leaders 6. Rocking an amazing culture 💙 𝗧𝗵𝗲 𝘀𝗵𝗼𝗿𝘁 𝗮𝗻𝘀𝘄𝗲𝗿: How effectively a startup generates ARR is just as important as how much ARR it generates. 💛 𝗧𝗵𝗲 𝗹𝗼𝗻𝗴 𝗮𝗻𝘀𝘄𝗲𝗿: In this blog post, I explore why Monday.com’s market value per $1 in ARR is 5.13 times that of SimilarWeb’ by analyzing the following metrics and benchmarks using public IR (investor relations) data from Q2FY24: 1. Gross Margin (Non-GAAP) 2. Operating Margin (Non-GAAP) 3. Free Cash Flow (FCF) 4. CAC Payback 5. Net Revenue Retention (NRR) 6. ARR Growth (%) 7. Rule of 40 (Ro40) 🩷 𝗪𝗵𝘆 𝘀𝗵𝗼𝘂𝗹𝗱 𝘆𝗼𝘂 𝗰𝗮𝗿𝗲? 1. To truly call yourself the ‘CEO of the product,’ you need to think like one. This involves approaching ARR through the lens of Product and wearing the VC/CFO hat to ensure you spin the revenue flywheel effectively and sustainably.  2. The insights from this exploration are applicable to any B2B SaaS startup. 👉 P.S 1. The blog post is free (check out the comments section). 2. Repost to help my blog grow. #ARR #ProductManagement #VC #Growth

🔴 You can't outrun churn by forcing CS teams to drive revenue through upsells, cross-sells, and referrals. Startups are missing are missing the forest for the trees. Chasing a 120% NRR? Good luck if you're bleeding customers left and right. If you were as obsessed with stopping the bleeding as you are with hitting sales quotas, you'd be far better off. 🤯 Here’s the brutal truth: even the best CS team can't save you if have a high churn rate. Reaching a 1-2% monthly churn rate takes discipline, effort, and consistency. Many startups struggle with this because they: ❌ Don't invest in better discovery. BANT and MEDDIC is not the answer. ❌ Think Customer = Company. Companies dont buy, people do. ❌ Confuse Initial Company Profile for Ideal Company profile. ❌ Deliver customer onboarding are like a 42km hurdle race. ❌ Rely too heavily on Buyer Personas and not JTBD. ❌ They lack the courage to stick 6 months to a plan. ❌ Build ICP from a acquisition pov, not retention. ❌ Fail at refining the Initial Company Profile. ❌ Don't delivery recurring outcome/values. ❌ Have short visioned sales incentives. ❌ Can't say no to bad-fit customers. 💡 Why should you focus on reducing churn? ✅ Lost referral opportunities. ✅  It shrinks your target market. ✅ Drives up your CAC as you fill up the sales funnel. ✅ A 5% increase in customer retention = 25% to 95% increase in profits. ✅ High churn rates can tank your startup’s valuation. ✅ Compounding revenue loss. The bottom line? 💡 You can’t outrun churn. Prove me wrong. PS: 👇 Do you think high churn rates are more a product issue or a sales issue? What strategies have you found effective in reducing churn? #customersuccess #saas #startups #careercoaching  #CS #CSM #SuccessHacks #customersuccessmanager #saas