Using Inflection Points to Drive Expansion & NRR

Discover how to drive Net Revenue Retention (NRR) by leveraging customer inflection points.

Chad Estes, Customer Success Leader with over 20 years in the B2B SaaS space

6/24/20243 min read

When analyzing Net Revenue Retention (NRR) for your SaaS business one of the critical elements is to understand how to impact expansion revenue, which of course makes NRR unique from GRR.. As a SaaS leader aiming to improve your NRR (and therefore the overall enterprise value of your business) it’s essential to identify the inflection points which are driving expansion opportunities.

Inflection points can come in many forms, but I will highlight two crucial for optimizing your NRR outcomes.

  1. Customer Feedback Inflection Points

  2. Time-based Inflection Points

Customer Feedback Inflection Points

It’s no secret that listening to your customers is crucial. But just how crucial is it? According to the Harvard Business Review, companies that leverage customer feedback at key inflection points can achieve up to 15% higher retention rates and 20% higher customer satisfaction, leading to more expansion opportunities.

The challenge is that a significant portion of customer feedback comes in unstructured formats such as customer calls, emails, support tickets, etc. Some customer feedback can be captured in structured surveys (NPS, CSAT, etc), but this provides companies with only a portion of the voice of the customer.

While there are existing solutions for CS teams to help facilitate team members capturing and logging customer feedback to relay their partners in product, many of them rely on manual processes for hand-off.

For example, your CSMs are likely trained to ask the right discovery questions in their account review meetings to help uncover expansion opportunities. But, clues to expansion opportunities can also be overlooked in customer support tickets or in emails to your CSMs or implementation consultants who are busy reacting to other time-sensitive requests to the myriad of customers they support.

That’s why BackEngine was created. It analyzes every customer call, email, and Slack message to ensure that everyone - from the front-line teams to the C-suite - actively engages with what's needed to retain and expand customers. This is done automatically to ensure the full voice of customer perspective is captured and nothing slips through the cracks.

Time-based Inflection Points:

With time-based inflection points, customer journey mapping becomes crucial. Mapping helps to identify where and when customer needs and priorities might shift, and therefore, drive additional requirements. Data from TSIA (Technology Services Industry Association) noted that proactive customer success initiatives, especially those timed around critical customer lifecycle stages, can increase renewal rates by up to 15% and expansion opportunities by 30%.

Timing-based stages often include onboarding, initial adoption to first value, growth, and renewal. However, depending on the type of SaaS business you’re running and your contract structure (i.e. annual vs monthly contract terms or billing frequencies), this can vary as it relates to time-based inflection points to upgrade a customer.

For instance, consider SaaS businesses that offer annual subscriptions with up-front billing. Their time-based expansion opportunities could be limited depending on how contracts are structured and how scoping is conducted during sales. However, by implementing creative pricing and contract solutions, you can introduce strategic inflection points to encourage expansion opportunities.

I have seen this done with promising results at an AI text-analytics SaaS company which prices based on volume of text analyzed in the form of credits. They created a 2-month “honeymoon period” at the beginning of the contract which allowed unlimited credit utilization but was also tied to a pre-committed tier of credits post honeymoon period. After the honeymoon period was over, there was a pre-planned decision point to stay with the current pre-committed amount or upgrade.

This kind of contractual inflection point provides the software provider with a new leverage point that can help drive expansion and NRR and provides more consistent forecasting. Customers also benefit from having clear expectations on when a conversation will happen so they can prepare from a budgeting standpoint.

What other kinds of creative inflection points have you seen to drive expansion opportunities and NRR?

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