Gainsight Pulse Presentation by Tom Tunguz
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Tomasz Tunguz, a partner at Redpoint Ventures, discusses the importance of customer success (CS) in SaaS startups, emphasizing its impact on growth and capital efficiency. He provides a hypothetical SaaS company's metrics to illustrate how CS can reduce churn and increase revenue, indicating a potential 50% revenue boost from a 2 percentage point decrease in churn. The analysis suggests that spending on CS can lead to a meaningful return on investment by enhancing customer retention.
Gainsight Pulse Presentation by Tom Tunguz
- 1. 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
- 2. Why CS Is Critical Happy customers, better product Grow faster Decrease capital needs
- 3. Hypothetical SaaS Company $50k in MRR 50 customers at $1k ARR each $1250 in CAC, Sales Efficiency of 0.8 Growing 15% m/m
- 9. 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
- 10. Return on Investment? 2 pp decrease in churn - Increases revenue by 50% - Decreases S&M spend by 30%