Our Customer Lifecycle ROI (CLR) calculator provides a framework for enterprise software companies to measure growth efficiency and guide operating investments / decisions across the customer lifecycle.
The ratios that will be calculated include costs associated with customer-facing functions such as Sales & Marketing, Professional Services (including Education), Customer Success and Renewals. Note: Support & Cloud Ops are excluded from this analysis because they are necessary to keep the product up and running (part of COGS). Costs from non-customer-facing organizations such as R&D and G&A are also excluded.
You spend $X to acquire $1 of new revenue from a new customer
You spend $X to retain $1 of revenue
You spend $X to acquire $1 of upsell / cross-sell revenue
Note: Ratios were calculated using the high-level inputs provided and other default assumptions and are directional only.
|Performance||Context||Increase Investment||Maintain Investment||Reduce / Optimize Investment||Selected
|Low CAC Ratio||Large Market Opportunity||✔||Invest in additional Sales resources, coverage, programs|
|High Market Penetration||✔||Continue to target high potential segments|
|High||Large Market Opportunity||✔||Optimize Sales coverage model to drive high productivity|
|High Market Penetration||✔||Reallocate spend to CEC / CRC to drive upsell / cross-sell or retention|
|Low CRC Ratio||Low Gross Retention||✔||Expand Renewal and CS focus|
|High Gross Retention||✔||Continue investment, focus on upsell / cross-sell in addition to core renewals|
|High||Low Gross Retention||✔||Optimize spend: adjust CS strategy, optimize renewal process, etc.|
|High Gross Retention||✔||Scale CS / Renewal processes to lower spend but maintain renewal rates|
|Low CEC Ratio||Large Base Opportunity||✔||Invest in additional expansion plays via focused sales / CS resources|
|Limited Base Opportunity||✔||Continue to focus on high-expansion-potential segments|
|High||Large Base Opportunity||✔||Adjust Sales / CS incentives, promotions, etc. to drive higher yield|
|Limited Base Opportunity||✔||Reallocate spend to CAC to drive new logo acquisition / retention|
To discuss your results with a Waterstone business performance expert, request your complimentary consultation below. We have helped numerous tech companies with detailed Customer Lifecycle ROI analyses and advised them on the operational changes required to achieve ideal Customer Lifecycle ROI ratios for their business goals.CONTACT A