What are good customer retention statistics to collect and follow? At Gainsight, we think these customer retention statistics are worth considering, among the dozens often cited by pundits and consultants.
Customer Success Batting Average. Are customers renewing because they see the value of your product or service? [# of customers renewed in period] / [# of customers eligible for renewal in period]
Customer Success Headwind. What will the drag be on growth from customers? Sustainable growth will be a challenge if this number is much more than 20%-30% per year. [ARR/MRR* of churned customers and ARR/MRR decreases] / [Beginning of period ARR/MRR]
Customer Success Tailwind. How much acceleration can we expect to growth from customers? Best-in-class companies generate upwards of 10% up-sell per year on a dollars basis. [ARR/MRR of up-sell and price increases] /[Beginning of period ARR/MRR]
Net Revenue Retention. What’s the net dollar impact from Customer Success to growth? Top-of-class companies are greater than 100% and ideally above 110%. [Beginning of period ARR/MRR + ARR/MRR of up-sell and price increases - ARR/MRR of churn and price decreases] / [Beginning of period ARR/MRR]
Customer Success Magic Number. What impact is your Customer Success efforts having on upsell and revenue retention? For most companies, this number should be above 5.0 [ARR/MRR of customers renewed in period + ARR/MRR of up-sells in period] / [Total cost of Customer Success team + Customer Support team]