We need more revenue… that means we need more customers… that means we need more leads. Hey, can you make us go viral??? 🤮 Retention will make or break your company revenue model, but for some reason, many organizations (and execs) only seem to care about the top of the funnel. Yet after a few years in business, as much as 50-80% of revenue *should* come from existing accounts, meaning churn and expansion should be #1 focus. Best way to visualize this is with a layered cake chart 🍰 , also known as rainbow mountain chart 🌈. ->You plot the dates on the x-axis, and the y-axis shows revenue contribution on a cohorted basis throughout the duration of the cohort. 3 examples of such chart are in the picture, the great, the good, and the ugly - all based on the Net Dollar (or Revenue) Retention metric. Don't grow Ugly businesses. And checkout my blog for more info on NDR and another example of how to showcase good retention and expansion - SMILE curves! 😄 -> https://lnkd.in/gK_ByhwF #growth #retention
Leah Tharin
2w
The cake you cant smell when its ready
I will never forget attempting to show this calculation and being met with ‘marketing’s role is acquiring new customers. Worry about that.’ I couldn’t help but thinking how that felt like patching holes on a sinking ship. Reputation spreads like wildfire as well!
My favorite charts! First one - Slack? Second one - Life360? Third one??
Insightful, thanks Elena Verna. It feels like CEOs are scared to deal with this problem. Churn seems to mean an unhappy customer, which implies something is wrong ... have you noticed the same thing?
How are you defining NDR here mathematically? Thanks!
Everyone loves a good layer cake 🍰
The other mistake is to focus on net dollar retention but ~not~ on logo retention. If you have 100%+ NDR but unsustainable logo churn (20% - 30%), there's a problem. And it won't be solved by generating more leads, generating more demand, or.... going viral :)
Absolutely true ! While going viral can have its benefits, nurturing existing relationships often holds the key to long-term revenue stability. Keep highlighting the importance of retention in your posts, Elena!
Marketing | GTM | Strategy | Investor | Advisor | B2B Tech | $1M-$100M
2wFar out idea: Do you think acquisition (hunting) obsession is related to domination of men (alpha) in acquisition functions. Vs women that may have a more whole perspective of customer. Or am I stereotyping 🙈