Show notes
In this episode of Selling Intelligence, KK Anderson, Mark Petruzzi, and Alan Rudolph continue their Diagnostic Session series by focusing on the most underinvested side of the go-to-market bow tie: customer retention and expansion.The conversation explores why enterprise value is built not just through acquiring customers, but through keeping, expanding, and delivering value to them over time. Alan breaks down the difference between gross retention and net revenue retention, why time to value has become one of the most critical metrics in modern SaaS, and how broken retention models create pressure that sales teams can never fully outrun.The team also discusses the dangers of applying AI to flawed systems, why bad data and weak customer alignment create compounding problems at scale, and how CROs can build healthier, more profitable businesses through stronger metrics, ICP discipline, and operational alignment.What You’ll Learn:Gross vs. Net Revenue Retention: Why both metrics matter and how world-class SaaS companies measure customer health.Time to Value as a Growth Driver: Why TTV belongs on the CRO scorecard and how faster customer outcomes drive expansion.The Cost of Poor ICP Alignment: How selling to the wrong customers destroys retention, profitability, and scalability.Diagnose Before You AI: Why AI amplifies broken systems and how to avoid accelerating bad processes.Metrics That Protect Enterprise Value: The KPIs every CRO should monitor to improve retention, forecasting, and operational efficiency.Key Topics:Customer retention and expansion strategyGross retention vs. net revenue retentionTime to value and customer onboardingDiagnosing broken retention models before implementing AIICP alignment and customer fitEnterprise SaaS growth metricsAI-driven forecasting and operational efficiencyData quality and AI readinessCustomer churn and expansion motionsBuilding scalable revenue operationsGuest Spotlight: Alan RudolphAlan Rudolph is a strategic advisor at AGS with deep expertise in enterprise software, revenue operations, customer retention, and scaling go-to-market organizations. He has worked closely with growth-stage companies and executive leadership teams to improve operational discipline, retention performance, and enterprise value creation.Resources & Mentions:AGS Revenue Blueprint DiagnosticBenchMarketKey Metrics Discussed:Gross RetentionNet Revenue Retention (NRR)Time to Value (TTV)CAC PaybackWin Rate by ICPTopics:Diagnose Before You AICustomer Health MetricsAI Readiness in Revenue Organizations🎧 Listen now and follow Selling Intelligence for more insights on AI, revenue growth, enterprise operations, and go-to-market strategy from today’s leading operators and advisors. Subscribe wherever you get your podcasts.KK Anderson (00:29)Welcome back to another exciting episode of our diagnostic sessions. And today we're going to pick up right where we left off with the last one in chatting with Mark and Alan about the go to market bow tie and specifically the last, the right side of the bow tie, what we call Keetmore, which is all around customer retention and expansion. And I know Alan will agree with this when we say thatThis is really the most under invested side of the bow tie and where enterprise value truly has the opportunity to compound. so, Mark, I'll hand it over to you to kick us off and we're excited to have another great session.Mark Petruzzi (01:08)great. So Alan, that last segment of the bow tie that KK is describing, that customer retention expansion, this is your home turf. So what does diagnosis look like here? And why is this side the side most CROs just under invest in?Alan Rudolph (01:25)Do we have enough time? I'll be here for hours. ⁓ No, think it's just there needs to be a focus on gross retention, on net retention, on the whole structure of how does sales and account management and customer success, how do all these pieces come together? And we know that it drives growth and it drives value overall for the company.But the under investment mark to your point, I probably have two, three, four conversations today. I was just talking to an exec this morning from a leading research firm and he was telling about one of his clients and their churn numbers are down, their sales numbers are off and obviously they're not growing. And if your churn numbers are too high, i.e. lack of gross retention, then it puts undue pressure.on the sales team because we think, we can just go sell our way out of the box. And we know that doesn't work, right? We know for a healthy software company, we need to keep the gross retention north of, ideally north of 90%. Best in class is 95 % to 97%. And so this is where the pieces need to come together, right, in terms of selling, account management. Oh, let's not forget aboutproduct because it's all about driving value to the customer. So it's definitely the art of the deal, right? It's more than just science. There's art here, in other words, in terms of finessing to ensure that we have the right overall gross retention driven into the organization.Mark Petruzzi (03:04)Yeah, and Alan, you are right on with that because when you then try to sell your, just sell out of that kind of churn challenge that you're describing, what happens is you really need to overextend the sales team and all the sales capabilities. And guess what that gets you? At the end of the day, that gets you a higher churn and a lower retention.Alan Rudolph (03:27)Right,right, right.Mark Petruzzi (03:28)Soyou think you can do this and everyone, every CRO I know loves to go back and say, yes, I can do that for us. But you can't just offer to do it without making sure your board and your executive team, your CEO knows what's likely gonna happen after doing so.Alan Rudolph (03:48)Right.Right.KK Anderson (03:49)So Alan, walk us through net revenue retention specifically, because this is the metric that most leaders mess up. And a lot of times ownership of that falls on the CSM side of the business, which is perhaps why it is not as visible, right? Everyone's focusing on the logo.Alan Rudolph (04:06)Yeah, spot on, KK. And it's fascinating. People just get messed up a little bit. So gross retention is just that. I start the year with $1 of business. I finish the year with $1.10. I'm sorry. I finish the year. I renew the dollar. That's 100 % gross retention. If I increase that dollar to $1.10, whether it'sAnd again, different companies count things a little differently. But if it's, if it's a CPI increase, if it's another product going into that customer, right? If there's a price increase separate from CPI, right? So all those factors go into gross retention. I started with a dollar. I finished with a dollar. That's 100 % net retention. I start with a dollar and with 110, that's 110%. Right. And again, coming back to what I said earlier aboutyou know, world class kind of metrics, gross retention in the 90 to 95 range, obviously 95, 97 will be world class. Net retention north of 120, it varies a little bit by industry. You get to 115, 120, it's that much more powerful. It puts less pressure, as I said previously then, on the sales force in terms of bringing in new logos because you have a healthyrecurring revenue business that continues to drive success into the install base of customers. That's really how to think about those two numbers in terms of gross and net retention. But they are key metrics and they need to be calculated consistently, month in, month out, quarter in, quarter out, because they are key metrics that need to benot only reported across the company, reported to the board on a regular basis.Mark Petruzzi (05:49)Yeah. And you know what, Alan, I've always, I've never been a fan of net retention, net revenue retention, because I really like to look at these numbers separately. And I guess companies like that opportunity to put them together because they can hide something in it as well. But I mean, there's two things. You really want to look at your churn and understand what that is.Alan Rudolph (06:01)Mm-hmm.Right?Mark Petruzzi (06:16)Then you want to look at your revenue growth and your growth versus the targets that were set at the beginning of the year. And those are separate things. So if there's anyone out there with my kind of brain that just feels more comfortable in that space, think it's fine. It's good to have even more clarity and detail than just combining those two numbers.Alan Rudolph (06:40)Correct. Yep.Mark Petruzzi (06:40)So Alan, you also talk a lot about just time to value as one of the most underappreciated metrics. Please make the case for why TTV belongs on the sales leader scorecard, not just customer success.Alan Rudolph (06:55)we go back in time, for us folks that have been around this enterprise software space for a while. And we can all remember, and not that far back in time, less than 10 years, where enterprise application took months and months and quarters and years to get implemented. And in this day and age with all of the new technologies, with all of the changes that we all know about going on in the world around us in terms of,the autonomous world that we're about to live in or we're living in already. A customer signs a contract and they want value tomorrow. And so that's why it's so important from a selling standpoint that the outcomes are clearly laid out for the prospect, you know, soon to be customer. And they understand what they're getting, when they're getting it. And again, that time to value metric, i.e. how quickly can we get that new solution implemented?and the customer getting value out of the solution is in, I'm gonna call it days, soon we're gonna be in hours, but let's call it days, not months and quarters. And that's why TTV is so critical. That's why it needs to be on the CRO, the CCO, the COO, so Chief Revenue Officer, Chief Customer Officer, Chief Operating Officer, depending on how these titles are divvied up. But again, both sales and delivery, let's use.the generic terminology here, need to have responsibility. And by the way, let's not forget about the product organization because the software needs to be developed in such a way that we can in fact drive that time to value. So it really is at a minimum, a three-legged stool, right? I said sales, I said delivery, I said product, and I'm putting product and engineering together in this case so that we can get to that.Value to the customer. It's all about selling value. I by the way, let's not forget about then what we love to talk about KK. It's your buzzword. ICP, right? You're never going to get the right time to value if you sell to the wrong customer, right? If the customer doesn't fit into that, target box. So that's what I think about, Mark, when I think about how best to understand time to value and get an outcome from it.KK Anderson (08:49)here.So if you're looking at time to value by ICP segments, then your marketing team has an incredible, information around which customers we're selling to that we shouldn't be, right? A fast TTV combined with a strong expansion motion is gonna get that NRR up, which drives valuation up.Slow TTV selling to ICP that's out of our, you know, out of the wheelhouse, right? It's going to destroy it. So that's interesting as well. all feeds into each other.Alan Rudolph (09:35)And that's why I saidearlier, KK, it's more art than science. Sure, it's science because the numbers need to come together, analytics, blah, blah. But there's some art here to finesse this, to make sure that we're driving into the marketplace appropriately.KK Anderson (09:39)Yeah.So I'll throw you a curve ball then, Alan. what if you're looking at the numbers and you see a customer that's just, I mean, this has actually happened to us at AGS before, ironically, right? Where you're just like, my gosh, this customer's killing us. Fire the customer question and you're looking at TTV, you know they're out of your ICP, you know they're draining you. When does a CRO actually...Alan Rudolph (09:59)ThankKK Anderson (10:13)need to walk away from a customer that's hurting in our art.Alan Rudolph (10:15)So should I say it the way somebody else would say it? You're fired, right? I mean, seriously, if there's not a fit from a product standpoint, from a business outcome standpoint, from an overall solutioning standpoint,KK Anderson (10:15)That's I said.Yes.Mark Petruzzi (10:20)Ha ha haAlan Rudolph (10:28)This is where transparency is so critical that you need to go back and have that conversation with the customer, explain what we do and how we do it and the types of business outcomes we can drive through our solutions. And if there's a match, then that's great. Let's modify and go drive that match. But if there's a gap, right, we do this and the customer thinks we did that, then this comes back to all these discussions we're having about it's not only driving.sales and revenue, but we need to run a healthy business. We need to have our costs in line and we need to have a profitable business. And when there's that huge gap between what we're selling, the ICP and what the customer thinks they bought, if the gap's too big, we're going be spending tons of times with the services team. We're going to try to modify the product. We're going to change our roadmap for the product to meet that customer.It's just, the one thing that does step in the way here is size of customer. If all of a sudden this customer is, dramatically large and we bring our CEO in, we have a very broad discussion. But again, more often than not, that outcome has to be get the customer back to the solution we sell, not a variant of that solution that we sell.KK Anderson (11:17)gets it real fast.Alan Rudolph (11:39)that's so dramatic off that it's just costing us oodles and oodles of money.KK Anderson (11:43)Not to mention the reputation that's at stake.Alan Rudolph (11:46)Sure, everybody talks. know they doin this industry, every industry, right? And so, yes, reputational perception is something that we all need to be cognizant of, absolutely.KK Anderson (11:58)So Mark, when we think about our philosophy of diagnose before you AI, and we think about the keep more motion on the right side of the bow tie, what happens if you apply AI to a broken retention model? What does that look like?Mark Petruzzi (12:13)Great question. Before I start with that, I'd love to go back real quickly to the fire their customer question, because that's something I have had very mixed emotions about that over the years. I believe it's so important. And there's a part of me that is so happy to fire the customers that really hurt our productivity and our...or numbers and sometimes just customers shouldn't have become customers in the first place. So there was that aspect, but I'm also someone that really values loyalty and I always want to try to work with them first and it's just not a fun thing when most customers are like, really, you're firing me? And I'm sure at the end of the day, even though you never say fire in this,But they do a lot of times and they're like, wow, that's something. And so I guess I just want to go back to that positive feeling. You can feel so proud when you identify a customer is really just not working out, probably not even working out for the customer either. And you do something about it. That makes me feel really good. All the rest of it doesn't.So, okay, so the questi…
Full show notes at the publisher 
Our TOPPODCAST Picks 
Stay Connected
