The Ledger
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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.”
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…”
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.”
Willey: Paying full commissions for flat account renewals breaks SaaS unit economics
“If they're not growing customer accounts, the economics, the customer acquisition costs, the lifetime value doesn't really stack up to pay the full commission on, on, on effectively just treading water.”
Willey: Available to renew churn is the best metric for renewals teams
“If you're running a renewals team, a customer success team, I think that's probably the best metric in terms of understanding performance and health of business.”
Willey: Logo churn often exceeds ARR churn due to small customer tail
“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.”
Willey: Salesforce struggles to capture dynamic views of contract timing opportunities
“Unfortunately, Salesforce, isn't that good at kind of capturing dynamic views of these different types of opportunities”
Willey: Lack of standardized SaaS churn accounting will face increasing industry scrutiny
“And unfortunately there isn't right now, you know, Gemini accept the counted principles for how to define churn. So I think it's going to be one of those things that as more and more businesses become cloud orientated, SAS orientated, ultimately customer succe…”