SaaS retention benchmarks: How does your business stack up?

Retention isn’t a silver bullet, but in SaaS, it’s the closest thing to it.

High retention indicates strong product-market fit. It is proof that you are solving a real problem and are adding value to your customers.

High retention also means better growth. Companies with best-in-class retention grow at least 1.5x-3x faster.

Finally, high retention means a more capital-efficient business. In SaaS, acquiring customers is the most costly part of running your business. Even at scale, sales and marketing expenses make up the majority of your expenditure. If you are unable to retain these expensive-to-get customers, your business is going to be less efficient and cost more to scale.

It’s no surprise, given all this, that companies with higher net revenue retention often command higher valuations.

How can companies know if their retention rate is up to par? And with the recent market downturn, is retention lower than it used to be?

There’s no…