Tomasz Tunguz wrote this very brief post on the counter intuitive situation to find that negative churn or account expansion best co-relates to the valuation of a SAAS company during Series A. Not revenue or rate of growth of revenue.
There are many reason that he attributes to this:
All in all it demonstrates product market fit. lower CAC through word of mouth and referrals. When even a small group of customers continue to spend more with a product it is believable that many more customers can be acquired with the same product and service (customer success) combination.
Great product is step one. Customer Success (with your product) is step two.
This is a brief read. Will totally convince you to invest in great customer experience with your product if you are not doing so already.
If you want to get started on Customer Success read ‘Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue by Nick Mehta CEO of Gainsight.
