We found 49 SaaS companies which disclosed their net dollar retention at IPO. The data is below and shows on median, the net dollar retention was 111% while the top performers are well above 120% (top 5 averaged 144%).
Focus on the customers that matter. Both measures of dollar retention are important, but to us, the more important measure is net dollar retention. You shouldnt care so much about losing customers that weren’t a good fit (every SaaS company is guilty of signing up customers they shouldn’t have), whereas you should obsess over customers you lost that are a good fit. So long as your target customer base is upgrading more than they’re downgrading and churning, you’ve got a great SaaS business.
Net dollar retention needs to be above 100%. SaaS is a beautiful business model when net dollar retention is 100% or higher. It means you’re effectively keeping the customer for life. The median net dollar retention of the 49 companies above is 111% so that should be your target, but generally speaking so long as you’re over 100%, you’re in good company. As you can see, 11 of the 49 companies above had net dollar retention below 100% and still managed to go public.
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