ACTIONS TO TAKE TO IMPROVE NRR There is a natural order of opera琀椀ons to improving NRR that can be seen in the survey data. 1. Address churn 2. Manage discoun琀椀ng 3. Design pricing metrics for growth in package 4. Design packaging to encourage upsell 5. Add cross sell opportuni琀椀es Address churn Churn sucks growth out of the subscrip琀椀on model. With high churn, it is almost impossible to deliver NRR of more than 100, let alone reach Snow昀氀ake-like heights. Managing churn is the 昀椀rst priority in improving NRR performance. This does not mean that churn will be, or even could be zero. Every business has a natural level of churn and trying to drive churn below that number will have a diminishing return on investment. The natural rate of churn will depend on things like the rate of mergers, businesses closing down or changing business models, and the business cycle. That said, if your reten琀椀on is less than 90% a year, you have a problem that you need to address. If reten琀椀on is below the natural rate, you need to 昀椀x that with customer success, with product tweaks, and possibly with tac琀椀cs like reten琀椀on o昀昀ers. If you are at the natural level of reten琀椀on, and this is too low to build a sustainable business model, then you need to consider shi昀琀ing into a market with a higher natural reten琀椀on rate. Manage discoun琀椀ng Discoun琀椀ng is part of B2B and you may need to have discounts (some companies do not, see for example Chili Piper ‘We don’t o昀昀er discounts at Chili Piper. Ever’. But undisciplined or ad-hoc discoun琀椀ng can have a very bad impact on NRR. This connects back to churn, as companies with high churn o昀琀en have a lot of ad hoc discoun琀椀ng, as they try to save accounts. One has to have good control of discoun琀椀ng before taking other steps to improve NRR. →See SaaS discoun琀椀ng prac琀椀ces and pricing PeakSpan & Ibbaka Net Revenue Reten琀椀on Research Report September 2023 9