In the past, both HubSpot and NetSuite have used the “months upfront” metric as a way to incentivize salespeople to get more upfront when new customers sign up. However, asking for more money up front can turn off some customers and result in fewer new customers, so be careful how you balance these two conflicting goals.
Since churn is a critical success factor for SaaS companies, this is an area that requires deep exploration to understand. Cohort analysis is one of the key techniques we use to gain insight.
As mentioned before, a cohort is just a fancy name cameroon mobile database for a group. In a SaaS business, we use cohort analysis to see what happens to the group of customers that joined in a particular month. So we would have a January cohort, a February cohort, etc. We would then be able to see how the January cohort changes over time see the image below.
month-cohort
This can help answer questions like:
Did we lose most of our customers in the first few months?
Is the loss stable after a period of time?