Insight certainty 3/5 debate potential 1/5

Willey: Logo churn often exceeds ARR churn due to small customer tail

Tim Willey · 10 Rules for Defining Churn with ForgeRock and Solarwinds | SaaStr Software Community · Jan 14, 2021 · at 5:27

Tim Willey (SVP Commercial Strategy & Operations at ForgeRock) explains why customer logo churn rates often differ from ARR churn rates in SaaS businesses.

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“Larger customers tend to be a little bit more sticky than smaller customers. So what we've tend to found is that our customer churn rate is sometimes a little bit higher than our ARR churn rate because it has this longer tail of smaller customers.”

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More from Tim Willey

Insight
Willey: SaaS gross churn under 10% is good, under 5% fantastic
“Typically anything under about a 10% gross churn rate is pretty good. Anything under about a five percent gross churn rate is fantastic.”
Tim Willey Jan 14, 2021 ▶ 6:13 10 Rules for Defining Churn with ForgeRock and Solarwinds | SaaStr Software Community
Disclosure
Willey: ForgeRock allows up to six months renewal slippage before forced churn
“Because we focus mostly on enterprise customers. We have this idea of allowing a renewal to slip up to a period of six months. Oftentimes the customers maybe are negotiating and there may be a significant upsell associated with the renewal that we haven't mana…”
Tim Willey Jan 14, 2021 ▶ 10:12 10 Rules for Defining Churn with ForgeRock and Solarwinds | SaaStr Software Community
Insight
Willey: Short-term contract extensions at full run-rate do not count as churn
“Even if the customer is just renewing for one extra month, as long as they're renewing at the full ARR value, there shouldn't be any churn.”
Tim Willey Jan 14, 2021 ▶ 20:26 10 Rules for Defining Churn with ForgeRock and Solarwinds | SaaStr Software Community
Insight
Willey: Requests for short contract extensions usually signal intent to churn
“Typically if customers are looking for something like that, it tends to mean that they're interested in moving off or moving to something else.”
Tim Willey Jan 14, 2021 ▶ 20:45 10 Rules for Defining Churn with ForgeRock and Solarwinds | SaaStr Software Community
Disclosure
Willey: ForgeRock treats contract reductions lasting over six months as formal churn
“How, how we typically look at it is if there's a temporary reduction for a short period of time, let's say within, within the six month period, as long as at the end of that period, the customer is, is effectively renewing the full amount and kind of go get, g…”
Tim Willey Jan 14, 2021 ▶ 22:14 10 Rules for Defining Churn with ForgeRock and Solarwinds | SaaStr Software Community
Disclosure
Willey: ForgeRock counts ARR losses from channel partner margin shifts as churn
“Typically we would look at the ARR value coming in from that customer through that, that channel. So if that ARR goes down because the margin changes, then we would take some kind of churn on that.”
Tim Willey Jan 14, 2021 ▶ 27:48 10 Rules for Defining Churn with ForgeRock and Solarwinds | SaaStr Software Community
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