Today, Lauren Bahorich, Venture Partner with GST shares with us how she and the GST team advise Growing B2B SaaS Companies to have regard for the Quality of Revenue sought.
Quality Revenue: Predictability
As we discussed last week, quality revenue is sustainable and leads to a higher long-term value; its pursuit is like winning the marathon rather than the sprint. One of the benefits of quality revenue is that it is predictable.
Predictability is key in proving your company will be profitable in the long term. At its core, the predictability of revenue can be measured by customer churn and revenue churn. In other words, what percentage of customers leave in a given year and what percentage of revenue is lost in a given year?
The industry benchmark for SaaS companies is 10% or less churn annually. These are crucial KPIs to track and guide your development and strategy.
How can you reduce churn and thereby improve the predictability and quality of your revenue? In pursuit of this aim, it is crucial to ensure you are pursuing a disciplined, rigorous sales process.
Have you identified the vertical and customer segment your company is best poised to exploit? Have you then developed your product and refined your go-to-market strategy to ensure your product is mission-critical to and embedded in your customer’s workflow?
Over the next few weeks, we will be discussing factors to consider in your pursuit of high-quality revenue.
As always, we love hearing from you as to what you're experiencing as you drive growth for your company; please reach out below.
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