Impact Pricing Why Is Net Revenue Retention (NRR) Your Most Important Growth Metric? Latest Report with Steven Forth
Steven Forth is Ibbaka's Co-Founder, CEO, and Partner. Ibbaka is a strategic pricing advisory firm. He was CEO of LeveragePoint Innovations Inc., a SaaS business designed to help companies create and capture value.
In this episode, Steven delves into a report that includes research analysis on the Net Revenue Retention growth of various industries. The report explores the impact of factors such as organizational design, package architecture, pricing metrics, among others. Additionally, it highlights the role of churn, customer success, and a dedicated team in driving this growth.
Why you have to check out today's podcast:
- Gain important insights when it comes to Net Revenue Retention [NRR] performance growth for different industries based from a research report
- Understand how a company's organizational design contributes to a low or high Net Revenue Retention [NRR]
- Learn how churn, customer success, and dedicated team greatly affects your Net Revenue Retention
"You need to have two pricing metrics so that you can grow in package. So, some form of usage-based pricing is going to be absolutely critical to a successful NRR growth."
- Steven Forth
Topics Covered:
01:55 - What drives Ibbaka and PeakSpan to work together and come out with a report that gives insights to the pricing industry
06:01 - Why not include price increase when considering net revenue retention [NRR]
09:25 - Differentiating upsell from cross-sell
10:58 - Two reasons why NRR by API is high
15:07 - An explanation on what those chart and numbers mean on page 29 of the report
18:10 - Explanation to Mark's observation on the package architecture with one data showing huge NRR
20:48 - The meaning behind having independent modules but low NRR [in reference to the two sections in the report]
23:04 - Steven's response to Mark's suggestion of redoing the chart [good, better, best version]
26:17 - Touching on the different pricing metrics for AI [ what he says about pricing based on input/output tokens]
28:50 - Pricing a solution and a platform [case in point: Zoom]
33:23 - Explanation to Mark's question in reference to page 39 of the report about Pricing Metrics for API Integrators: Are APIs supposed to be a pricing metric?
35:10 - Two important points that these data report generates [also touching on churn, customer success, and dedicated team and how it affects NRR]
40:36 - Steven's best pricing advice
Key Takeaways:
"If you've designed your packaging and pricing so that you don't have growth in package, don't have upsell, and don't have cross sell, then you know in advance that the net revenue retention is going to be less than a hundred percent because there is always going to be some churn." - Steven Forth
"API as a pricing metric is associated with high NRR performance. Why is that? And I think the answer is because of the verticals where it's used." - Steven Forth
"There's lots of companies that are not very good at cross-sell. So the fact that, if you're using independent modules and you have low NRR, that suggests that you're not doing a very good job with cross-sell." - Steven Forth
"When you really get into this data, even in the verticals that are generally having low net revenue retention, there are a few companies that have high net revenue retention. So you can't just blame it on your vertical because there are probably some of your competitors in your vertical that do have maybe not 130, but 110 to 120% net revenue retention." - Steven Forth
"The companies that have the best NRR performance are the companies that have dedicated NRR teams." - Steven Forth
Resources/People Mentioned:
- PeakSpan: https://www.peakspancapital.com
- Webex: https://www.webex.com
- Zoom: https://zoom.us
Connect with Steven Forth:
- LinkedIn: https://www.linkedin.com/in/stevenforth/
- Email: steven@ibbaka.com
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: mark@impactpricing.com