In Software GTM there are two factors that are making life difficult for companies right now:

1. The increasing cost of acquisition

2. Historically lower Net Revenue Retention

Many factors are contributing to this, mainly lower valuations/less capital available and categories full of competition and substitutes targeting fewer buyers or less budget.

But how you overcome these challenges entirely depends on your stage of growth.

A lot of people are emphasising heavily the need to "look after your existing customers as the number one priority for your organisation".

Considering Delegate (Formerly 42ai) sells software to help companies improve NRR we might also make the same recommendation. But there are some financial realities which likely make this less of a priority for you if you are Seed to Series B.

💰 If you are required to triple or double revenues, NRR of 125% is not going to be the main driving force. And fewer companies are in 'hyper-growth', so it's less likely star clients will drive this number up to the heights you need.

💰 Churn likely isn't such of an issue yet, as the majority of your high-revenue-producing cohorts are less than 1-2 years old an have not outgrown the product or considered a switch.

💰 Competition is much more acutely felt in new business acquisition as the new value proposition (potentially of all players) has not been consumed by all initial ICPs.

So the name of the game remains "acquisition" in early-stage. Churn and NRR become much more material once your annual growth rates drop closer to your expected NRR gains for the year and you reach Series B/C and beyond.

But if you are going through this transition, there are a few questions you could ask yourself (beyond the usual ones) that might help you assess your chances going forward:

🚫 Have you spent the last few years acquiring a high % of crappy, non-ICP customers just to accelerate growth?

🚫 Similarly, do all your top customers have a laundry list of stuff they need you to build to keep them happy?

🟢 Have you meaningfully managed to reduce your cost of acquisition through longer term plays like brand, content, community?

🟢 Are new sales people ramping and winning? And contributing profitably to the business?

🟢 Are older cohorts sustaining GRR/NRR to a degree that suggests later cohorts will do enough of the same?

Growth, investment, competition aside. If you don't like the answers to some or all of these questions then there are usually some factors underneath the hood that could have a material impact on how you transition to NRR led growth.