State of the Cloud 2019

A very good article :


"Retention is your best friend.

Retention, the amount of revenue accrued over a period of time, including upsells, is one of the most influential levers for cloud and SaaS businesses to pull when growing ARR. Some of the best performing SaaS businesses we’ve seen in the past decade have higher than 100 percent net retention rate because they’ve built a metered business that sells more to a customer as its business scales.

However, retention rates have different meanings depending on customer segments.

Here are the retention benchmarks a cloud company should aim for, by customer segment:

SMB customers that have an average account contract value less than $12K see a gross retention rate between 70-80 percent and net retention rates between 80-100 percent.

Mid-market companies that have an average account contract value between $12-50K should aim for a gross retention rate between 80-90 percent and net retention between 90-120 percent.

Enterprise businesses that have an average account contract value $50K+ should aim for more than a 90 percent gross retention rate and more than 100 percent net retention.

If a company’s retention rate doesn’t fit within these bands, it’s time to investigate the culprit behind the “leaky bucket.” Churn is always a symptom of larger problems. By identifying and addressing the root cause of churn, a company can directly impact top line ARR growth by just retaining its current book of business."