Retention Rate is expressed either as a dollar-based metric or customer count-based metric. Enterprise and Small/Mid-Market SaaS companies use dollar-based retention because of the significant variance in the customer ACV. So, the loss of one customer may or may not have a material impact on ARR. Contraction in one customer contract would impact ARR, but a count-based metric would not account for this change. Finally, these customers tend to be more stable and less likely to churn. Alternatively, B2C SaaS companies use a count-based metric because the average ACV among the customer base is more similar, and the customers are more likely to churn.
Retention Rate is expressed either as a dollar-based metric or customer count-based metric. Enterprise and Small/Mid-Market SaaS companies use dollar-based retention because of the significant variance in the customer ACV. So, the loss of one customer may or may not have a material impact on ARR. Contraction in one customer contract would impact ARR, but a count-based metric would not account for this change. Finally, these customers tend to be more stable and less likely to churn. Alternatively, B2C SaaS companies use a count-based metric because the average ACV among the customer base is more similar, and the customers are more likely to churn.
