Boost Net Revenue Retention: How We Achieved 30% Growth

The Significance of Net Revenue Retention in SaaS Growth

SaaS leaders consistently monitor a wide array of performance metrics. While acquiring new customers is vital for all SaaS businesses, substantial revenue opportunities also reside within the existing customer base.

Net Revenue Retention (NRR) is arguably the most undervalued metric available. It's calculated by subtracting revenue churn from total revenue and then adding any revenue increases stemming from upgrades, cross-selling, or upselling initiatives.

A higher NRR directly correlates with a faster rate of company scaling. This is fundamentally due to the benefits of compounding growth.

Terminus's NRR Improvement

Over a two-quarter period, Terminus successfully increased its NRR by over 30 percentage points. This improvement unlocked significant new avenues for growth.

Three Pillars for Enhancing NRR

To positively influence our NRR, a focused strategy centered around three key organizational pillars was implemented.

• Customer Success Investment: Proactive customer success management is crucial.
• Product-Led Growth: Enhancing the product to drive self-service expansion.
• Sales Alignment: Ensuring sales teams actively identify expansion opportunities.

These pillars were designed to foster stronger customer relationships and maximize the lifetime value of each account.

Customer Success as a Growth Driver

Investing in a robust Customer Success function is paramount. Dedicated customer success managers can proactively identify and address potential churn risks.

Furthermore, they are instrumental in uncovering opportunities for upselling and cross-selling, thereby contributing directly to revenue expansion.

Leveraging Product-Led Growth

Product-Led Growth (PLG) strategies empower customers to expand their usage and spend organically. This is achieved through intuitive product features and self-service upgrade paths.

By making it easy for customers to realize additional value from the product, PLG minimizes reliance on sales intervention for expansion.

The Importance of Sales and Customer Success Alignment

Close collaboration between Sales and Customer Success teams is essential. Sales should actively qualify for expansion potential during the initial sales process.

Customer Success can then seamlessly transition these opportunities into actionable expansion plans, ensuring a cohesive and customer-centric growth strategy.

People

A comprehensive review of the organization and its structure was undertaken. A significant and impactful adjustment involved consolidating new business development, customer retention, and account management functions under the leadership of the chief revenue officer.

Ultimately, aligning customer acquisition and retention within a single organizational unit is a logical step. Investing in acquiring new customers is ineffective if existing customers are not successfully retained.

Furthermore, a dedicated support team – typically comprising three to four individuals – has been implemented for each customer. This team provides onboarding assistance and ongoing support from the initial stages of engagement.

Approximately 25% of the company’s workforce is now focused on delivering this round-the-clock support and proactive guidance. This ensures customers are quickly empowered to realize value from our offerings.

Customer success is prioritized through dedicated teams and a unified revenue structure.

This approach aims to maximize customer lifetime value and drive sustainable growth.

Shifting Focus to Customer Retention

A comprehensive commitment to Net Revenue Retention (NRR) and Gross Rate of Return (GRR) necessitates a fundamental change in organizational thinking. Following the decision to prioritize retention, we ensured transparent communication of this strategy to all stakeholders, encompassing the board of directors, every employee, and our customer base.

This commitment subsequently influenced all strategic choices, notably leading to increased investment in our existing clientele rather than solely pursuing new acquisitions.

Reimagining Retention Strategies

Subsequently, we began to approach retention with the same analytical rigor applied to new customer acquisition, striving for comparable predictability in both areas. Historically, customer marketing has often been under-resourced compared to efforts focused on attracting new business.

To address this, we established a dedicated account management team of six individuals – a structure previously absent within our organization – and implemented corresponding internal process adjustments.

Incentivizing Retention & Proactive Support

Our Customer Success Management (CSM) compensation structure was modified, shifting the emphasis from gross dollar retention to gross logo retention, thereby fostering a culture centered on preserving customer relationships.

A specialized “red accounts manager” was appointed to function as the primary escalation point and resolution facilitator for customers facing challenges or at risk of churn.

Account-Based Marketing & Seamless Handoffs

While always prioritizing customer satisfaction and providing comprehensive support, we refined our approach to Account-Based Marketing (ABM). A framework was developed to define and measure customer success metrics during the pre-sales phase.

This framework extends through the customer success handoff and into quarterly business reviews, enabling proactive identification and mitigation of potential retention issues, which frequently arise during the transition from sales to support teams.

Expanding Offerings for Enhanced Customer Retention

For companies focused on a single product, influencing net retention can be challenging. Consequently, we transitioned to a multiproduct strategy, effectively increasing our potential sales avenues.

Our approach involved actively soliciting feedback from our customer base, identifying complementary or adjacent products they desired within our platform. Several expansion strategies were considered, ultimately leading us to acquire three companies over a twelve-month period.

These acquisitions were strategically chosen for their synergy with our existing ABM offerings, broadening the scope of our platform based directly on expressed customer requirements. This expansion fostered the development of robust cross-selling and upselling capabilities within our existing customer base.

Proactive Product Assessment

Beyond acquisitions, we implemented a comprehensive product audit, deliberately separate from sales initiatives. This audit meticulously mapped each customer need against our product features.

The goal was to pinpoint five specific areas where customers could improve their utilization of our product, thereby driving increased adoption. The insights gained were then shared with customers through dedicated sessions.

These meetings involved collaboration between our customer success, services, and enablement teams, ensuring customers maximized their value from our platform.

A Holistic Approach to Retention

Resolving retention challenges lacks a universal solution. The underlying causes vary significantly across companies and industries.

However, instilling a company-wide mindset that prioritizes “retention as the new acquisition” is paramount. We implemented substantial, foundational changes across our organization, encompassing personnel, procedures, and product development.

Ultimately, cultivating long-term customer relationships is key. Prioritizing sustained engagement will yield significant benefits.