On: The unprofitable SaaS business model trap

[rgrieselhuber]

Great post but the 75% retention thing was odd. All of the SaaS companies we know would flip their shit if annual retention dipped below 98%. Even 98% would be very painful.

[usaar333 → rgrieselhuber]

98%? Can I ask who your SaaS companies are selling to? If you are reaching a diverse business audience, I would think > 2% of your customers each year would implicitly cancel by going bust.

[rgrieselhuber → usaar333]

That would be surprising. If more than 2% of my customers every year were going out of business, I'd come to the conclusion that I was selling to the wrong audience.

[andrewcamel → rgrieselhuber]

Annual retention is honestly considered fairly strong <20%.

[rgrieselhuber → andrewcamel]

For SaaS? That means you're turning over your entire customer base in less than six months.

[andrewcamel → rgrieselhuber]

You said annual?

[rgrieselhuber → andrewcamel]

Yes. Are you saying that annual retention (not churn) of <20% is considered strong?

[andrewcamel → rgrieselhuber]

Sorry I meant churn, but >80% annual retention is very good. 98% annual retention is unheard of in pretty much any decently sized business I've seen.