Willey: SaaS gross churn under 10% is good, under 5% fantastic
Tim Willey · 10 Rules for Defining Churn with ForgeRock and Solarwinds | SaaStr Software Community · Jan 14, 2021 · at 6:13
Tim Willey (SVP at ForgeRock) outlines SaaS industry benchmarks for acceptable and top-tier gross ARR churn rates.
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“Typically anything under about a 10% gross churn rate is pretty good. Anything under about a five percent gross churn rate is fantastic.”
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More from Tim Willey
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…”
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.”
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.”
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…”