Customer Retention is a hallmark of the SaaS recurring revenue business model. But what is the primary metric to measure the cost of retaining each customer, how is the efficiency to renew ARR calculated, and what goes into that metric?
Dave "CAC" Kellogg and Ray "Growth" Rike go deep into the components of Customer Retention Costs and the value in measuring including:
- The benefits of measuring Customer Retention Costs
- Customer Retention vs Customer Renewal Costs
- The Components of Customer Retention Costs
- Total ARR or Renewed ARR - which is the best to measure Retention Costs against
The SaaS industry has multiple metrics that measure the cost to acquire a customer (Customer Acquisition Cost), the efficiency of acquiring new customers (CAC Ratio), the payback period on Customer Acquisition Costs (CAC Payback Period) and how much recurring revenue is retained every period (Gross Revenue Retention- GRR)...but no standard metric that measures the efficiency of retaining and renewing customers.
During this episode, CAC and Growth dive deep into the topic of the Customer Retention Cost Ratio and the Customer Renewal Cost Ratio!
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