SaaS Talk™ with the Metrics Brothers - Strategies, Insights, & Metrics for B2B SaaS Executive Leaders Customer Retention Cost Ratio
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Oct 28, 2024 Discover the critical role customer retention costs play in the SaaS model. The hosts break down essential metrics like the Customer Retention Cost Ratio and Customer Renewal Cost Ratio. They discuss the nuances of measuring customer success and the various factors impacting retention strategies. The conversation delves into the distinction between costs for retention and upselling, highlighting how customer support and marketing efforts can elevate satisfaction. Tune in for insights that could shift your approach to maximizing recurring revenue!
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Customer Retention Cost Definition
- Customer Retention Cost is the total expense of servicing existing customers to retain them and their ARR.
- This is similar to Customer Acquisition Cost (CAC) but focuses on retention.
Importance of Measuring Customer Retention Cost
- Investors and private equity firms are increasingly interested in Customer Retention Cost.
- This metric helps determine potential cash flow from the existing customer base without new customer acquisition.
Components of Customer Retention Cost
- Include customer success and renewal team costs in your Customer Retention Cost calculations.
- Allocate only the portion of customer success efforts focused on retention, not expansion.