When Cassie Young, General Partner at Primary Ventures, started calling customers featured in flashy AI fundraising announcements, she heard the same story nine out of 10 times: “Yeah, we tried it, but we’re not gonna use it anymore.” That reality check sparked a crucial conversation about what’s really happening with AI SaaS retention.
That’s the challenge we discussed recently on [Un]Churned, the number one podcast for customer retention, hosted by Josh Schachter, SVP of Strategy and Market Development at Gainsight. With Cassie Young of Primary Ventures and Kyle Poyar of Growth Unhinged, Josh explored the uncomfortable truth behind AI’s explosive growth and what it really takes to build durable companies.
Here are seven hard-earned lessons from two experts who’ve watched AI companies succeed and fail at retention.
1. Experimental Revenue Is Hiding Your Real Problem
Impressive ARR growth doesn’t tell the full story anymore. Kyle’s research across thousands of companies revealed that AI-native B2B SaaS companies have a median gross retention rate of just 40%. That means more than half of your revenue walks out the door within a year.
The root cause? As Kyle explained, there’s so much market demand that companies are “just trying to do as much as you can to serve the demand that exists.” When CAC is low and everyone wants to experiment with AI, fast growth can mask fundamental product-market fit issues. Kyle calls this “experimental run rate revenue (ERR)”—customers trying your product, not keeping it.
2. Customer Obsession Is Your Competitive Moat
Cassie has a simple test for evaluating founders: “I always say when I get pitched on something, I’m reasonably well-networked with go-to-market buyers. If I have to chase those buyers to look at the email again, I’m an automatic pass.”
Real customer obsession isn’t about what founders say in pitch decks. It’s visible in how they adapt based on market feedback, how buyers respond when you mention their product, and whether the ROI story is crystal clear without help from the founder. As Cassie puts it, companies need “the access and the expertise plus that jaw-dropping customer experience.”
3. The ROI Bar Has Risen Dramatically
Gone are the days of back-of-napkin ROI calculations. Cassie’s new standard: “When we’re diligencing solutions and I ask the buyer how they’re building the business case and they say, ‘I’m working on it’ or ‘the founder is helping us figure that out,’ I’m like, unsubscribe, I’m not interested.”
The business case must be “so directly correlated into the P&L of the company” that buyers can articulate it without founder assistance. With compressed gross margins from AI compute costs, products genuinely need to sell themselves based on clear, measurable value.
4. Forward Deployed Engineering Is Your Best Retention Insurance
Kyle identifies this as “probably the best thing companies can do to prevent churn”: getting customers live in production with real use cases before they’ve even paid. This approach moves traditional post-sales functions like onboarding and implementation into the sales motion.
The logic is simple: “Once the customer has a working version on something that is really important to their business, the willingness to pay is kind of infinite at that level. And of course they’re going to convert and buy because at that point, like, why wouldn’t they?”
5. North Star Usage Metrics Beat Every Lagging Indicator
When asked about the most underrated metric in SaaS, Kyle didn’t hesitate: “North star usage metrics. If you understand the core usage metric that defines success for your customers, that is a much better leading indicator of the future health of your business than anything else.”
His “patient zero analysis” approach looks at retained customers and asks: What did they do in their first seven to 30 days? Who signed up, and were they in your ICP? Which integrations did they set up? These insights reveal the path to stickiness before renewal cycles tell you what you already lost.
6. Your ICP Needs to Go Deeper Than Firmographics
Kyle’s principle that will hold true in 10 years: “Figure out your ideal customer profile.” But not the surface-level version. “You want to understand the tech stack they’re using, the motivations, the roles of the buyers—go a level deeper than just the service level.”
The companies winning long-term can show that their share of ICP revenue increases quarter over quarter, with a clear strategy to attract more ideal customers. As Kyle warns, “You then will look six months, 12 months, 18 months later and realize that a lot of folks left. And then you wish you had sold more to the ones who stuck around.”
7. The Upside Is Real—If We Get Retention Right
Despite the challenges, Kyle sees massive opportunity: “With AI, we can actually not just become a productivity driver, but we can deliver entire work products and outcomes. I think we can 10X the budget power if we tackle the right things and we do it well.”
The total addressable market can expand as AI-powered software helps organizations drive greater impact from existing teams, rather than competing for fixed software budgets. But that opportunity only materializes for companies that solve meaningful problems and treat Customer Success as a core operating philosophy, not just a function.
From Hype to Sustainable Growth
The message is clear. The AI gold rush created unprecedented demand, but growth that lasts does not happen by accident. It comes from deeply understanding customers, delivering measurable value, and treating retention as a priority from day one.
To hear the full conversation—including more insights on navigating the Series A funding landscape, what investors really look for in AI founders, and practical retention strategies—listen to the full [Un]Churned episode with Cassie Young and Kyle Poyar. Subscribe wherever you get your podcasts to stay ahead in the era of AI-powered Customer Success.
