How ScreenCloud used insights from RevenueStory to mitigate hidden churn

The Problem

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The team at ScreenCloud uses new MRR and expansion MRR to track revenue growth. But these are never viewed in isolation. They view these metrics in conjunction with gross churn and MRR churn. This combination gives them visibility into SaaS Quick Ratio — a critical metric and investors’ darling that measures the efficiency rate between how much money you’re bringing in vis-a-vis how much you’re losing every month.

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[Tip: A highly efficient SaaS would look at a Quick Ratio of ≥ 4. Anything lesser than that indicates inefficiencies where churn almost always outweighs revenue growth.]

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The problem was that, despite significant growth in their new and expansion MRR, their Quick Ratio wasn’t seeing a clear improvement as anticipated. This clearly meant that their efficiency had hit a roadblock. They wanted to understand if they were spending a lot of their money on bringing low-quality leads which led to a spike in the new MRR but are likely to churn the next month.

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The Solution

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ScreenCloud explored Chargebee’s integration with ProfitWell and ChartMogul to get insights into key SaaS metrics. While the integration helped them get to 90 percent of the way in generating the right reports, it left ScreenCloud wanting more.

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With RevenueStory, ScreenCloud was able to dig deeper into the numbers, only to find that the churn amount was disproportionately affecting their quick ratio. Digging further into the accounts that were attributed to that churn number, they realized that it was because of their invoicing logic for these annual subscriptions and the communication planned around that.

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Simply put, the SaaS quick ratio gave insights into the kind of churn that ScreenCloud could anticipate ahead of time, especially from annual subscriptions, where the invoices needed to be reinstated.

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The Impact

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Sim Ahmed, (former) Head of Marketing at ScreenCloud, said: “This has been a really big change for us actually. It’s not only a financial change but it’s been a mindset change.”

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He adds, “I think ChartMogul and ProfitWell — they could probably pick out quite a few of the things that we’d look for in Chargebee. In fairness, it’s accuracy. So, I don’t know what it is about having a third-party connection, but we’ve never found that the numbers matched up well enough for us to feel confident in a lot of our assessments when we used tools that weren’t Chargebee. Now, post-RevenueStory, what’s happened is that we just go in there and use that to do 90 percent of querying and interrogating of data because we can understand the relationship between all that and our SaaS quick ratio, which is very important for us to maintain. That’s all done in one place now.”

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RevenueStory’s query engine and the data store is designed for optimization specifically for subscription analytics, by allowing essential queries to throw accurate data in real-time.

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The reason ScreenCloud came to accept that Chargebee (as our solution of choice) is that’s where all the invoices and subscriptions are going through. So it should be our single source of truth, and it’s the one that matched the most to our management accounts in Xero.

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• Source: https://www.chargebee.com/customers/screencloud/