Albert Einstein is credited with saying that ‘the most powerful force in the universe is compound interest. The most powerful force in software businesses is revenue retention. High revenue retention rates create extremely valuable businesses, given that in a business with 100% revenue retention, each new sale provides pure incremental growth. A company with a highly stable customer base and a strong sales engine offers reliable, predictable, and growing cash flows over time - the hallmark of a great business. However, not all subscription businesses are created equally. As SaaS Capital and others have found, there is significant variability in the rates of customer churn across SaaS businesses, and as a result, significant differences in business quality.
Tags: Customer Service • Customer Training • SaaS