A good churn rate for a B2B company serving small and medium businesses (SMB) and mid-market businesses (< 1000 employees) is 2.5% - 5.0% per month. A great churn rate is less than 1.5% per month.
A good churn rate for B2B company serving enterprise customers (1000+ employees) is 1-2% per month. A great churn rate is less than 0.5% per month.
Read What is good monthly churn from Lenny Rachitsky.
Links to this note
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What is product/market fit?
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Prospects Will Thank You for Disqualifying Them
When I started doing founder-led sales, I thought it was my job to find a way to sell to anyone who got in touch and scheduled a meeting. When you have no customers and no sales, it’s natural to want to sell to anyone. This is a mistake.
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A collection of benchmarks for B2B businesses (mostly relevant for early-stage SaaS).
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How to Measure the Health of a Startup
Here are the most useful metrics I’ve found for running a startup. These should be measured and reviewed regularly. The metrics that matter most the ones that raise questions and drive useful discussions. Try to avoid difficult to calculate metrics that are hard to build an intuition about (people don’t expect much from simple ideas).
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Saas Revenue Per Employee Benchmarks for B2B Companies
A useful metric for SaaS businesses is the amount of Annual Recurring Revenue (ARR) per employee. A high revenue per employee implies the efficiency of the business and is a proxy for it’s ability to break-even or become profitable (the majority of expenses for tech companies is people). As the business starts to scale, revenue per employee is expected to increase.
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Customer Success First Then Sales
In the early days of a startup with a product in the market, it seems intuitively correct that you should hire some experienced salespeople to get you more sales. However, from many conversations with founders and early sales hires of B2B SaaS companies, I’ve learned it’s best to start with customer success first.