Net Dollar Retention: NDR, Net Revenue Retention: NRR
A growth metric that investors, business leaders, and customer success teams emphatically agree on is the Net Revenue Retention (NRR). NRR, similar to Net Dollar Retention (NDR), makes a non-linear contribution to the growth of a business. And is a straightforward determiner of whether the business is a growth business.
Lengthy rundown on a ton of the “Emerson” metrics. Well worth the time invested. Will be reading it again.
They do a ton of time bashing LTV, and I agree with basically all of their points. That led me to really question whether we should hang out our shingle around LTV or not. I’d like to share more details on that later, but the short version is that I think we can say “do LTV, but in a non-stupid way” rather than throwing out the conceptual foothold entirely. Very open to your thoughts on that.
NDR: Grow 10x in 5 Years Without Adding a Customer | Variance
Compound interest has long been a point of fascination for the world. There's a misattributed Einstein quote in which he supposedly called it "the eighth wonder of the world" ( it was almost certainly actually from a bank ad), and in his philanthropic pledge, famed investor Warren Buffett said, "My wealth has come from a combination of living in America, some lucky genes and compound interest."
What is Expansion Revenue?
When it comes to generating revenue for your business, we typically think of sales closing deals to bring in new business. Marketing and sales get to high-five when you bring in that shiny new inbound lead, nurture them through the funnel and eventually sign the contract to close the deal.
Decent overview. The strategies are weaksauce in terms of “how can I tell if it’s working or not?”
Understanding The Impact Expansion Revenue Has on Your Business Growth
No matter what industry your business is in, expansion revenue should be something you put time into tracking and improving. After all, expanding upon the customers you already have is five times more cost effective on average than bringing in a new customer.
More good 101-level info
Expansion Revenue: Explained In 5 Mins
Today is all about the often untapped gold mine for many businesses; their existing customer base! In particular, the specific revenue that comes from selling to them. We will discuss what it is, how it works, and why it's important. With that all said, let's get into it! e.g.
Expansion MRR - Baremetrics
Expansion MRR (Expansion Monthly Recurring Revenue) is a metric used to measure the amount of additional revenue coming from existing customers.
One point I’d make in disagreement with all of the above: you don’t want to measure growth of New Expansion Revenue from one month to the next; you want to measure it over the cohort lifetime. Same rationale here as “don’t use net churn, use lifetime churn”.
I wonder how games (especially free2play) model expansion revenue. I bet it’s a lot smarter than Enterprise/SaaS
Why your LTV might be higher (or lower) than you think
If you're an early-stage SaaS startup, still in the process of getting to Product/Market Fit, or doing your first experiments to attract and convert leads, you shouldn't worry too much about customer lifetime value (LTV or CLTV) and related metrics.
... with this excellent video accompaniment:
Why Everything I Thought I Knew About Churn Is Wrong by @ttunguz
Churn is one of the most important metrics for businesses. Churn dictates customer lifetime, lifetime value (CLV), customer acquisition spend and customer success spending. In short, churn is pivotal number to evaluate a startup's business, both for founders/management teams and investors. Unfortunately, accurately measuring churn rates/lifetime value is more complex than I initially thought.
... which links to other good LTV-related resources:
The mistake of 1/c in LTV calculations
This is the third article in a series on novel ideas for SaaS metrics, which started with The unprofitable SaaS business model trap and COC: a new metric for cancellations. You can't read an article about SaaS metrics without running into LTV - The Life time V alue of a customer.
The unprofitable SaaS business model trap
Marketo filed for IPO with impressive 80% year-over-year growth in 2012, with almost $60m in revenue. Except, they lost $35m. WTF? It's not impressive when you spend $1.60 for every $1.00 of revenue, force-feeding sales pipelines with an unprofitable product. Don't tell me this is normal for growing enterprise SaaS companies.
User Profitability / Lifetime Revenue
How To Acquire More Profitable Users with a Long-term Optimization Strategy
Instant gratification is great. But a tunnel-vision on short-term metrics could distract you from a more lucrative audience when it comes to user acquisition. Google, Facebook, and the likes have been giving you the data to target short-term conversions that take place soon after the initial engagement (e.g., signup, purchase, content view, day-7 login.)
Haven’t fully read yet, but skimmed and looked promising
Also, it was published by a SaaS company with a pretty interesting value prop of its own:
Voyantis - Growth Superpowers
Acquire high-value users at scale with Voyantis' modern no-code platform. We empower Growth & UA teams of top brands to lift ROI and scale up in a predictable way.
How to Calculate Customer Lifetime Value (LTV Formula) - Baremetrics
Of all the metrics you need to track as a SaaS company, lifetime value (LTV) may be the most mysterious. It feels difficult to calculate, and then once you have the calculation, you don't really know what to do with it whether it's good or bad.
The Full Guide to ARPU for SaaS Companies
At first glance, ARPU looks like a weird metric to track - why should I care about the average customer and the price they pay? Shouldn't we be more interested in specific (groups of) customers? In fact, ARPU (or ARPA, or ARPC) is one of the most important metrics you should be looking at every stage of your company's journey.
A couple good LTV-related points here
How to pour your money down the drain with CAC & LTV
A CAC:LTV ratio of at least 1:3 is the general rule of thumb for achieving sustainable growth in a SaaS business. But is it really as simple as that? You could actually be fooling yourself, wasting a big pile of cash in the process.
The Ultimate Cohort Analysis Cheat Sheet | ChartMogul
This cheat sheet will help you get started with Cohort Analysis. Cohorts are a great tool to understand the behavior of your customers, and quickly identify areas on which to focus your Customer Success efforts.
15 Effective Tactics To Optimize Customer Lifetime Value (CLV)
Before you can start implementing the best strategies to retain customers, you need to know the top reasons why customers leave in the first place. 71% leave because of poor customer experience 14% are not satisfied with the quality of products/services 56% of customers don't believe that brands have their best interest in mind 35% of customers leave because brands don't "get them" Notice a pattern here?
“It’s far less expensive for a business to retain customers than it is to acquire new ones. Yet most companies continue to invest significantly more money into customer acquisition than retention efforts. As a result, they do acquire new customers, but they lose most of them along the way.”
We can probably learn a lot from the niche of ecommerce LTV-boosting, like:
How to Increase Customer LTV With a Loyalty Program
When brands evaluate their business success, they look at metrics like net promoter score, customer satisfaction, and customer effort score. But perhaps one of the most important metrics these days is the customer lifetime value (LTV), which highlights the strength of customer loyalty.