Marketers: The way you measure your impact on post-sale outcomes might need to change, especially if your business has substantially grown its revenue. Are you still measuring mainly logo retention? You might be missing key indicators of growth offered by more sophisticated measures.
Here are three indicators and benchmarks of “best-in-class” performance for each, which we observed in a recent study of our portfolio. I’ve placed them on a Crawl-Walk-Run maturity curve, based on firm annual recurring revenue (ARR):
Crawl (0-30M ARR): Logo retention = 90%+. Logo retention is a simple count of existing customers period-over-period. For Marketers, this is a broad measure. It tells you the veracity of your firm’s brand promise, i.e., how well your value proposition describes the reality of your customer’s experience. In marketing, the strongest leading indicators of logo retention are customers’ sentiment (i.e. reviews, NPS, EBRs, CSAT) and their participation in advocacy programs: They won’t put their name on something they’re not going to renew.
Walk (30M-100M ARR): Gross Revenue Retention (GRR) = 92%+. GRR measures existing recurring revenue, excluding expansions. By unpacking GRR’s component parts, Marketers can learn how many customers are downgrading: A high downgrade rate might indicate that marketers are overselling their product to customers, are not sufficiently supporting product adoption, and/or are failing to communicate value after the sale. If your firm’s GRR is below benchmark and customer marketing remains an afterthought, you might reconsider your priorities.
Run (100M+): Net Revenue Retention (NRR) = 110%+. NRR is similar to GRR, but inclusive of expansions. Marketers can use this additional component to evaluate how well they’re supporting cross- and up-sales. The most sophisticated marketers watch this indicator as they execute a circuitous revenue journey: They treat customer expansion opportunities with the same tactical rigor as new business. First, they identify which alternative products or features a customer might next purchase based on account intelligence from their partners in Customer Success and 1st- and 3rd-party intent signals. Then, using what they learn, a strong post-sale marketer will segment their customers into nurture journeys or enroll them in tailored 1:1 content experiences. Their customers’ engagement with these tactics is a leading indicator of NRR. (P.S. Since NRR includes cancellations and downgrades, advice from prior KPIs applies.)
NRR is a superior means by which marketers can measure their performance because it offers a view into their strategic levers. For instance, if a marketer observes high cancellations and is struggling to “stop the bleeding” with their customer marketing tactics, they might instead invest in cross- and up-sales.
And that’s the takeaway: how marketers measure post-sale outcomes impacts how well they can manage them.