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independence3 unconnected · 1 more author in those circles
standing

contested · 6 claims against 1

applies to

b2b and consumer, no audience needed

confidence

high

evidence

7 claims · 6 articles · 4 receipts

window

2011-10-03 → 2023-12-24

3 builders who never spoke to each other · contested

Fix retention before you touch growth

Cancellations are the honest test of whether the thing is wanted, because marketing can push people into signing up but not into staying, and acquisition growth slows sooner than founders expect. A high cost per customer is survivable on its own and fatal alongside weak retention, so put retention first in the order of what gets fixed.

Where this splits

Retention is put ahead of everything else, against an argument that you should not slow acquisition for fear of worse lead quality, since tripling signups still wins even when cancellations double.

6 claims against 1

Failory · Jason Cohen · Patrick Campbell · Tyler Tringas

Fix retention first, growth cannot outrun churn

  1. 01Treat churn as the main thing that will kill a young subscription business and get retention working before anything else, because a low cancellation rate makes every other part of the business easier.
  2. 02When several things are broken at once, fix retention before growth, because customers walking out means the product or the model is not yet working.
the objection · 1 claimJason Cohen

Push acquisition anyway, faster growth wins despite worse churn

Do not refuse to grow acquisition for fear of lowering lead quality: even if churn worsened proportionally, the faster growth still wins.

  1. 03Do not plan to outgrow poor retention: growth from acquisition slows and stops sooner than founders expect, and a market that leaves after using the product has not declared a fit.
  2. 04Watch cancellation rate as the honest test of whether the product is wanted, because marketing can push people into signing up but not into staying.
  3. 05Do not let acquisition become the whole growth plan. Give monetisation and retention equal weight from the start.

What it returned

  • 5

    Successful SaaS companies of any size typically lose 5-8% of revenue monthly and much worse than that is usually fatal; Storemapper held 1-2% a month across five years, with many months where upgrade revenue exceeded losses entirely

  • 3,000

    Patrick Campbell, drawing on 3,000 SaaS companies, reports that firms fixated on acquisition alone grow more slowly and fail sooner.

  • $65.9M

    Homejoy raised $65.9M over six rounds. Only a quarter of its users were still using the cleaning service after the first month, because service quality varied widely, and its customer acquisition costs were very high.

  • His order of precedence runs retention, then the team, then throughput, then growth, then competition, then the state of the code, then execution risk.

Sources

the second source

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the second source

Three plays a week, for the phase you are in

No roundup of links, no news. Three tactics more than one builder arrived at separately, with the numbers each one returned and the disagreements left in.

963 corroborated plays to draw from · 3 a week

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