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Demonstrates the impact of customer success on a hypothetical startup's revenue and cash needs over time.
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Tomasz Tunguz
Partner, Redpoint Ventures• I write about SaaS startups at tomtunguz.com
• Redpoint works with many as-a-Service companies including Stripe, Twilio, Zuora, Zendesk, Looker, Infer, Tidemark, and Expensify
• Former PM at Google; statistics nut
Why CS Is Critical
Happy customers, better product
Grow faster
Decrease capital needs
Hypothetical SaaS Company
$50k in MRR
50 customers at $1k ARR each
$1250 in CAC, Sales Efficiency of 0.8
Growing 15% m/m
How Much to Spend on CS?
Expected Value =
Save Rate x Value of Extension =
30% x 12 months x $83/month =
$298 or about 30% of ACV
Return on Investment?
2 pp decrease in churn
- Increases revenue by 50%
- Decreases S&M spend by 30%
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