SQ: customer retention

Bryan Keane

I was thinking about the cohesion and the impact that had, especially on retention for clients. How your guys retention rates are quite a bit different than some of the merchant acquires, can you just talk about that as the power of that piece of the model that you’re able to keep the clients that are going out of business?

Sarah Friar

Right. So, we often get asked about merchant churn. We give statistics based on our GPV and from there we talk about effectively positive dollar based retention and we go from GPV which should be just revenue coming in for seller then to actual revenue that Square will take, all the way down to transaction margin, and they all kind of follow each other. So, on that basis, what you will see with Square is just based on transaction margin alone, the cohorts of Square that have aged out a year, they are still growing at about 106% year-over-year. So, it’s a massive engine of growth. As we can now up-sell and cross-sell new products like a Square Capital, like invoices, like appointments, what you actually see is that retention rate is now at 113%, based on all adjusted revenue. So, coming into a given year, obviously within our base, some merchants go out of business, I’m sure some switch to our competitors. But in terms of those that are last from a year-over-year perspective, using the same denominator, fully account for any attrition we have seen, those dollars grow. And if you think about it and the adjusted revenue of 113% year-over-year. So, that is a massive underpinning to our business model and then, we add net new growth on top of that.

WOW! The customers seem to become really dependent on SQ and have good reason to add additional SQ products and services!!


I run 3 different businesses (soon to add a 4th), all but one of them uses square and some extras:

Retail Business
We use square as our credit card processor (and remote Point-of-Sale when selling out of the shop)
This is probably what most people think of.

Specialty Equipment Rental
We use square invoice to bill clients occasionally (the money hits our account in 24hrs instead of 3-4 days).
More importantly, square can capture the customer credit card information which we can use if equipment is damaged and we need to charge repair costs (instead of chasing customers). Note that we don’t have to keep the client card on file and incur liability (re: Equifax) since this is all handled by the Square system.

Video Production
The commercial video production world is contractor heavy and with square payroll, you can add contractors to the system, pay them via ACH and it will generate the 1099 for tax purpose.
$5/month per contractor paid in a given month (i.e. if I have 20 contractors on file, but only 2 paid this month, it will be $10).

Square is so easy to setup compared to a typical processor (where I had to do a credit check, send forms, all sorts of hoops…)

All of those extra services make my life easy. Never mind the simplicity and ease of the square dashboard when it comes to CC transactions. If you ever tried to decipher the monthly report from a regular processor to figure out if you paid the correct fees, you know the madness that entails… Square is straightforward and can be double checked with a calculator.