The Latest GRR Benchmarks

Speaker A: Is gross revenue retention under attack? Well let's find out in today's edition of SAS Metric School. Welcome. My name is Ben Murray. So my latest blog post, I'll put it in the show note links because I'll give you a bit of data here. But Ray Reich at BenchMarket AI just released his latest SaaS Metrics Benchmark report. And this is the report that I use within my client base to benchmark my SaaS clients. I use it in my app at SoftwareMetrics AI. So when you're calculating metrics we have to provide context. So we need benchmarks to see how we're performing against our peers. So today let's talk gross revenue retention. We know retention is under attack, Retention is under pressure. Changing pricing models, the death of seat based pricing, we'll see. So let's dive into some of these numbers. So headline numbers here. And again I'm going to cover just gross revenue retention because he produces a lot of metrics benchmarks here. So in the latest report, the median gross revenue retention out of the entire population that he sampled in the survey is 84%. Where was that in the previous survey? 88%. So a four point drop at median, which I think is a big drop. So retention we know is under pressure. Pricing models are changing all the AI influence here and now. What about the top quartile? So we know that rule of thumb for Mid Market Enterprise SaaS, if you're targeting that larger client base in your B2B, the elite number has been 95% GRR. And in raised data and this is why I love some of these rules of thumb, if we can support that with data like where did this rule of thumb come from? The rule of thumb's been 95% and in Ray's survey, in the last, I'd say three surveys prior to this year, the top quartile gross revenue tension has been 95%. So that supports that rule of thumb that we see that if you're operating above 95% GRR, and this is annual retention, you are elite, you are in that ah, best group of software companies. This year the top quartile retention dropped from 95 to 91. So we did an 88 to 84 at median and then a 95 to 91 for top quartile. So definitely retention is under attack here. And I think this my forecast for next year. I think this will continue. I think we just have a shaking out of all these pricing plans and all the AI influence. So how about some more numbers here? So what about pricing model. Uh, I'm sorry gross revenue attention by pricing model. And this is the entire sample in the data set. Subscription. So the lowest gross revenue retention was for a subscription based pricing model. Median at 81, top quartile at 90. The best performer was uh, let's see, we've got usage based with a median of 83 and top quartile at 92 and subscription plus usage which we've seen a lot of these companies move to, especially AI companies kind uh, of that platform plus usage fee meeting an 85% top quartile at 90%. So really interesting. Another data point for consideration. We've seen the investment vertical SaaS. Vertical SaaS has always been an interesting funding play and the funding data supports that. But in this survey B2B SaaS applications, which I assume that category is just horizontal SAS, median gross revenue tension at 84%. But if you're vertical SAS. So for those companies who submitted their data and our vertical SAS plays, they actually had a median of 90%, top quartile of 97%. So vertical SaaS outperforming horizontal SaaS in the last one that I'll show here, our show. Well you can go to the link in the show notes if you want to read my blog post on this. Uh, gross revenue retention. Now how do I benchmark my clients? I it's a mix. We can't use aggregate benchmarks, those are dangerous to our health. So some benchmark sets or metrics we're going to use are ARR size like growth rates or our OPEX profile, that's relevant to the size of our company. But say gross revenue retention, that's not really relevant to the size of our company. I benchmark gross revenue retention by ACV segments. So if you have a low price point product, the expectations of retention are much different if you're offering a uh, 250k a year price point product. So more that enterprise side and this chart plays out how you'd expect it. So at the less than 5k annual segment median gross revenue retention is 80%. And for those companies offering say 50 to 100k so we could say the enterprise segment, their gross revenue retention at median is 91% but their top quartile is at 96%. So at that gold standard level. So this is the latest data from Ray Reich at Benchmarket. Uh AI, you can go to a site and get those benchmarks yourself and I'll have the link in the show notes. But really gross revenue detention is one of my Power 3 metrics. It's hard to scale without great gross revenue retention. So this is the latest data that we're seeing on gross revenue detention. Hope you enjoyed it today. Thanks.