Not all SaaS companies are the same.

There’s two major types of SaaS companies that serve vastly different customers: B2B and B2C.

Business-to-Business (B2B) SaaS companies sell software to other businesses, like spreadsheet apps, sales & marketing tools, inventory management software and more 🔗

Some of the biggest B2B SaaS companies include Adobe, Salesforce, and Snowflake

Business-to-Consumer (B2C) SaaS sells software directly to individual customers, like streaming services or personal fitness apps. 🏠🎵

Some of the largest B2C SaaS companies include Spotify, Netflix and Duolingo 🎥

B2B SaaS companies typically have large contracts with a small number of business clients, while B2C relies on small subscriptions from millions of individual users! 💼💳

Churn rate is generally significantly lower for B2B companies compared to B2C companies 🔄🔒

This is because it’s more common for an individual consumer to cancel a subscription to a B2C app, than for a business to end a long-term contract with an important B2B service provider.

B2C SaaS and B2B SaaS have different “benchmarks” for what’s considered “good” NRR.

For B2B, 110% NRR is considered good, while for B2C 50-60% is good 🤔

When investing in SaaS companies, make sure to understand what type of customers they serve and the relevant benchmarks, in order to evaluate stability and growth potential 🚀