# Top 10 in Tech - What to know for Week ending February 18, 2022

Published: 18 February 2022
Canonical: https://www.top10in.tech/posts/week-ending-february-18-2022

## 1. SaaS METRIC OF THE WEEK: NPS

We all like to be liked - Net Promoter Score is a way to quantify that for your product. [This White Paper](https://www.asknicely.com/blog/customer-experience-metrics-understanding-csat-ces-nps-5-star) from Ask Nicely reviews NPS (among other common customer experience metrics) and explains how to measure and calculate NPS. See this link for some methods to [improve the NPS of a SaaS product](https://nethunt.com/blog/how-to-improve-the-nps-of-saas-product/), and Neil Patel then gets into [a 3 step program](http://neilpatel.com/blog/how-to-use-nps-for-saas) of how to leverage NPS for your business.

Link: https://www.asknicely.com/blog/customer-experience-metrics-understanding-csat-ces-nps-5-star

## 2. RENEWALS

Existing customers are the lifeblood of growth in a SaaS business, so making sure they like you enough (see #1) to renew is an exercise in revenue efficiency. New customer acquisition [costs average about **$1.10+ per $1 of ARR**](https://www.gainsight.com/blog/acquiring-customers-isnt-enough-heres-why-you-need-to-focus-on-retention/). Compare that to the cost of retaining or up-selling existing customers (about 12c-15c per $1ARR) - that's eight times cheaper. So [take a peep at this article that not only lists 5 SaaS Renewal Best Practices](https://www.process.st/saas-renewal-best-practices/) but also explains how best to go about calculating renewal rates.

Link: https://www.gainsight.com/blog/acquiring-customers-isnt-enough-heres-why-you-need-to-focus-on-retention/

## 3. SPEND

[How much money do SaaS companies spend on stuff](https://www.saas-capital.com/blog-posts/spending-benchmarks-for-private-b2b-saas-companies/)? Well, check the first chart in that link on SaaS company spend - bootstrapped companies are (obviously) being outspent by venture-backed companies - but the average difference is 80% of ARR compared to 115% ARR! (operating at a loss to support growth - because [growth is a Moat](https://www.kevanlee.com/articles/product-led-growth-moat-framework)). Keep scrolling through - way more goodies in there (such as spending by ARR levels).

Link: https://www.saas-capital.com/blog-posts/spending-benchmarks-for-private-b2b-saas-companies/

## 4. EMAIL

DEEP DIVE. When it comes to outbound marketing, email works best. Yes, organic search is consistently the most significant source of traffic (Driving up to 68% of all traffic). Email accounts for less than 5% of traffic, on average, but has an incredibly high ROI, upwards of 3,800%! Digital Olympus has [a great guide on effective email outreach](https://digitalolympus.net/email-outreach/) (HINT: This takes time and effort!). Andrea Bosoni gives an IRL story about how he [worked hard to improve email open rates](https://www.indiehackers.com/product/zero-to-marketing/worked-hard-to-improve-my-email-open-rates--MA5NZTZ2wfOEPnaowql), and Gong provides a bunch (43 to be exact) of highly effective[Call-To-Action templates](https://pages.gong.io/highly-effective-email-ctas/) you can use in email campaigns.

Link: https://digitalolympus.net/email-outreach/

## 5. SMS

Contrary to the above - did you know that the average open rate for marketing emails is around 20%, while SMS open rates range between 82-98%? Check [this article for this fact and more on SMS-Marketing basics](https://builtin.com/marketing/sms-marketing).

Link: https://builtin.com/marketing/sms-marketing

## 6. SECONDARY DEALS

As mentioned in [#9 last week](https://www.top10in.tech/top-10-in-tech/top-10-in-tech-what-to-know-for-week-ending-february-11-2022) - public SaaS has taken a beating since Dec '21, and the market has been seeing a [rise in Secondary Deals](https://pitchbook.com/news/articles/startup-secondaries-market-heats-up-forge-seeks-listing), which is a mechanism where investors buy secondhand equity stakes from early backers, founders, and employees. Over the last few weeks, investors and some late-stage VCs have been busy [trying to build positions in their existing portfolio companies](https://pitchbook.com/news/articles/vc-secondary-deals-ipo-market-freeze).

Link: https://www.top10in.tech/top-10-in-tech/top-10-in-tech-what-to-know-for-week-ending-february-11-2022

## 7. CHURN

In [this post,](https://www.lennysnewsletter.com/p/monthly-churn-benchmarks)Lenny Rachitsky asks the question, "What is a good monthly churn for a SaaS business?". Zero is the obvious answer for me - but he took to a benchmarking exercise and sourced some quality data sources to develop [this chart](https://cdn.substack.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa15abbdc-c994-4688-bb26-3d75ee3d0366_2728x2320.png). For B2C SaaS: 3% - 5% churn is GOOD, less than 2% is GREAT. For B2B SMB: 2.5% - 5% is GOOD, less than 1.5% is GREAT. For B2B Enterprise: 1% - 2% is GOOD, less than 0.5% is GREAT.

Link: https://www.lennysnewsletter.com/p/monthly-churn-benchmarks

## 8. DE-SCI

Crack open your tech dictionaries and add this one to the list. Deci (or Decentralized Science) is one of the latest Web3 movements and IMO one of the more interesting. It is trying to address two issues: 1) efforts within the scientific community to change how research is funded and knowledge is shared, and 2) efforts within the crypto-focused movement to shift ownership and value away from industry intermediaries. What's not to like? [Read more here on Deci from a16z](https://future.a16z.com/what-is-decentralized-science-aka-desci/).

Link: https://future.a16z.com/what-is-decentralized-science-aka-desci/

## 9. DEBT

Tomasz Tunguz [asks if 2022 will see the rise of Debt in Venture](https://tomtunguz.com/friedman-interest-rate-fallacy/)? Debt is always less expensive than equity because it's far less dilutive. His conclusion, according to the data: interest rates (which may arise by the Fed in 2022) [do influence how much debt startups acquire](https://res.cloudinary.com/dzawgnnlr/image/upload/v1644882158/l3uh0yatdeojkx44jpef.png), but the ratio of debt/equity for startups is [relatively constant throughout time](https://res.cloudinary.com/dzawgnnlr/image/upload/v1644882262/lo2boyi1ux6ub4gjzznp.png). The increase in access to Venture Debt in recent years has seen the rise of essential services such as [Lighter Capital](https://www.lightercapital.com/) and [The 20-Minute Term Sheet](https://www.20mintermsheet.com/) in the past couple of years. [Here is how it works and what these financiers care about](https://blog.chartmogul.com/revenue-based-financing/)

Link: https://tomtunguz.com/friedman-interest-rate-fallacy/

## 10. CASE STUDY

Square is a fintech with a heavy focus on developing and retaining high-quality engineers, and they have created and openly published their [Growth Frameworks for Engineers and Engineering Managers](https://developer.squareup.com/blog/squares-growth-framework-for-engineers-and-engineering-managers) success at Square and also made their internal Engineering Career Ladder [freely available for us all to view](https://assets.ctfassets.net/1wryd5vd9xez/6bDnTwb4H7bfiFvg55ldRR/b1cb8514f0afd0a4050991d35ccbac03/Square_Software_Engineering_Career_Ladder.pdf) (and it's a downloadable PDF).

Link: https://developer.squareup.com/blog/squares-growth-framework-for-engineers-and-engineering-managers

## POD OF THE WEEK

Dannie Herzberg is now a Partner at Sequoia Capital but, prior to this, spent four years at Slack as their Head of Enterprise Sales and over five years at Hubspot building sales. She is a PLG guru, and [this podcast is about building sales teams with a Product-Led-Growth GTM strategy](https://podcasts.apple.com/us/podcast/twenty-minute-vc-venture-capital-startup-funding-pitch/id958230465?i=1000549762534).

Link: https://podcasts.apple.com/us/podcast/twenty-minute-vc-venture-capital-startup-funding-pitch/id958230465?i=1000549762534