Negative Churn
We just closed another great quarter at Intacct, and I'm extremely proud to report that we had 100% customer retention for our direct sales channel the quarter. This is no mean feat for a business of our size and growth - more than 2,500 customers in all and well more than 100% year over year growth.
And because our clients tend to purchase new users or new services when they renew their subscription, we achieved more than 100% of recurring revenue from our customer base - in other words we had negative churn in the quarter.
To me this says that all the investments we have been making in client satisfaction are paying off. I see it as particularly good because there has been quite a bit of news around ERP failures lately - the latest being Waste Management's suit against SAP for their ERP disaster, and Dennis Howlett's post about very high levels of customer churn at NetSuite.
Negative churn is a term I first remember hearding in a board meeting at Postini - we had a great customer retention quarter and our board member from Bessemer Venture Partners looked up and said "Do you mean we actually had negative churn?" We all thought that was a pretty good term. I like the work that the team at Bessemer is doing around promoting SaaS metrics like MRR - Monthly Recurring Revenue - as the key metric to run a Software as a Service business by, and it's obvious that driving near zero or negative churn is the key to achieving healthy MRR. What's interesting to me is that as I attend various SaaS events, I don't always hear people thinking a lot about telco like / subscription based terms- I supposed between Postini and Intacct I've learned to manage the business by focusing on MRR, Churn, ARPU (Average revenue per user) and ARPC (Annual revenue per client) - with a whole lot of focus on cost of client acquisition, cost of service and operating margins and it's now become ingrained. This is one of the reasons I really like the SaaS model - if you dial in the metrics and make sure the whole company is staffed and incented to delight your clients the rest of the business almost takes care of itself.
To me this says that all the investments we have been making in client satisfaction are paying off. I see it as particularly good because there has been quite a bit of news around ERP failures lately - the latest being Waste Management's suit against SAP for their ERP disaster, and Dennis Howlett's post about very high levels of customer churn at NetSuite.
Negative churn is a term I first remember hearding in a board meeting at Postini - we had a great customer retention quarter and our board member from Bessemer Venture Partners looked up and said "Do you mean we actually had negative churn?" We all thought that was a pretty good term. I like the work that the team at Bessemer is doing around promoting SaaS metrics like MRR - Monthly Recurring Revenue - as the key metric to run a Software as a Service business by, and it's obvious that driving near zero or negative churn is the key to achieving healthy MRR. What's interesting to me is that as I attend various SaaS events, I don't always hear people thinking a lot about telco like / subscription based terms- I supposed between Postini and Intacct I've learned to manage the business by focusing on MRR, Churn, ARPU (Average revenue per user) and ARPC (Annual revenue per client) - with a whole lot of focus on cost of client acquisition, cost of service and operating margins and it's now become ingrained. This is one of the reasons I really like the SaaS model - if you dial in the metrics and make sure the whole company is staffed and incented to delight your clients the rest of the business almost takes care of itself.
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