High client retention dramatically increases valuation by impacting:
- Revenue Level
- Growth Rate
- Profit Capacity
Consider the following:
Two companies have the same 20m in revenue and each is growing at 50% per year. Company 1 has a 5% churn and Company 2 has a 15% churn. At the end of five years Company 1 has $90M in revenue and Company 2 has $60M. Using a typical 5 times revenue for a SaaS company valuation, Company 1 is worth $150M more than Company 2.
Customer retention is the key to long term success. It’s well known that it is significantly cheaper to keep an existing customer than it is to gain a new one. Keeping customers is what makes subscription models so popular and effective in cloud based application sales that the SaaS industry favors.
For a demonstration and Best Practice Retention Accessment (BPRA) contact us at; email@example.com or 1-360-894-8151
from the Selling to Zebras website: (http://www.sellingtozebras.com/our-solution/retention)