Repeating customers are critical. Why is it ok to generate less than $1 of revenue per $1 of investment? Because the customer comes back often. For instance, publicly traded SaaS businesses tend to have net revenue retention of 112% on median, meaning their customers return and renew every year, spending more than they did the first year ($0.64 per $1 of revenue in the second year versus $0.57 in the first). Holding that metric steady, 5 years from now, a SaaS business will have earned $3.62 in revenue per $1 of investment. Businesses with stickier customers can afford to be less cash efficient in getting those customers.
Watch cash efficiency closely and make sure the metric is always improving. If it is and you’re growing, you may be well on your way to joining the ranks of the companies on the list above.
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