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:
Key Topics:
Guest Spotlight: Alan Rudolph
Alan 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:
Topics:
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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 that
This 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 about
product 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)
So
you 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's
And 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 about
you 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 healthy
recurring 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 be
not 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 said
earlier, 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)
Thank
KK 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 ha
Alan 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 do
in 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 question of, what happens when you apply AI to a broken retention motion look like? And it's really, it's how AI is impacting everything today. The productivity increases, the impact that AI has is not 15 % or 20 % in most cases.
As far as impacting processes directly, it's usually 3x, 5x, 10x. So things get 7 to 10 times faster when you bring in AI. So when you do that through a broken retention motion, just, again, you just make that happen faster with more overall impact to the company.
Alan Rudolph (13:58)
Mmm.
Mark Petruzzi (14:11)
And that really, really just impacts the overall. If you can do that, you're going to have much better deal scoring. You're going to have a much more accurate forecast. most of you have heard me talk about that a lot. And just what a good forecast does for the entire business. And again, I'll say it again, good forecast means
Alan Rudolph (14:31)
Mm-hmm.
Mark Petruzzi (14:35)
accurate, not always, sandbagging and then ended up coming in 25 % higher than you predicted because there are ramifications of doing that as well. And then you just, can leverage AI even further and understand like how the scoring of your deals work and you know, what, when these things have happened, what has then happened to the, the company as well. And then,
You know, the last point on this is if you're training an AI on bad judgment, it just makes bad judgment happen faster. you could take any negative phrase with that and it's going to do that. And as smart as these frontier labs, you know, models are nowadays, they...
they can learn and they do learn all the time. But if you give them the incorrect information at the beginning, they're not capable of just figuring out the right thing to do after you told them in all this training that it has to do something a different way.
KK Anderson (15:38)
No, I was having a conversation with one of our expert accelerators earlier today about, about diagnosing your data, right? We talk about diagnosing, find more, win more, keep more, but diagnosing your data and, and Carrie is who I was speaking with Mark. And he gave it the analogy of, of your, of your body, right? You've got a human body and your organs, your, heart is your.
sales and the brain is your CEO and all of the different organs are the different parts of the body and the blood is the data that runs through it all. And if that data is not flowing, not oxidized, oxidized, oxidized, oxidized,
Alan Rudolph (16:16)
Awesome,
Mark Petruzzi (16:17)
That's a
tough one. ⁓
Alan Rudolph (16:19)
you're amazing.
KK Anderson (16:19)
then
none of these systems are going to be talking to each other effectively. And so before you can go and put in some amazing AI predictive modeling, that's going to say, hey, this customer is about to churn. Or I can see your order count is lower and you might be losing a product if you're a SKU-based business or whatever it may be to indicate retention problems or even
signals out there to go land a new customer. And if you're not looking at all of that data cohesively across marketing, across finance, across product, across sales, then you're not going to be able to leverage it in the right way. then, you know, AI is going to be the most powerful when it can look at those patterns and look at those histories.
Mark Petruzzi (17:00)
Yeah, no good stuff. And I'm gonna give some work for anyone who may have been an English major and try to say that word and you guys can let us know if we pulled it off. I think it would be oxygenated, but it's not easy.
KK Anderson (17:13)
Yeah. Yes, that's it.
Alan Rudolph (17:18)
And more importantly, Mark, can you spell it, right?
Mark Petruzzi (17:20)
Exactly.
I think I can, but I'm not going to try that one on the podcast. So, KK, kind of back to you, with this. So what's the right way to apply all this that we're talking about here and particularly on the, you know, these corrections of broken retention models that, we can leverage AI to, but you just got to do it in the right way.
Alan Rudolph (17:24)
That's not past
KK Anderson (17:44)
So, I do think that as unsexy as it is, it does start with the right data, right? Because that's the crown jewel of everything that all of these businesses are functioning off of. I think it's taking the data and it's taking your tribal knowledge and your secret sauce and what you do better than anyone and figuring out,
based on the metrics and based on what makes sense is how do you turn that into an agentic process that will take you to the next level? How do you take what you do that no one else can do and do it 10 times faster using AI and then enable your team to be able to dazzle your customers and provide an incredible customer experience as the human in the loop?
based on all of the insights that are served up with the AI that's provided to you.
Alan Rudolph (18:36)
Yeah, spot on. And as we wrap up, this section, look, when I think about retention and expansion, this is where enterprise value of a software, you know, agentic enabled company, truly, truly compounds. Right. we've talked, we've thrown out lot of topics out in this section. threw alphabet soup, so to speak, but the bottom line is we need the measurement systems.
KK Anderson (18:36)
Yes.
Mark Petruzzi (18:36)
Yeah,
good stuff.
Alan Rudolph (18:57)
those measurement systems will drive value. need to understand our customer. We need to understand their health. We need to understand, you know, are we truly transforming their business and just drive through all those respective metrics. It won't fix the TTV gap, right? That's a different issue that we need to solve for. But, as we pull these metrics together, when we think about the forecasting,
We think about the tools available to us in today's day and age. This truly does drive enterprise value once the appropriate metrics we have, we gather them, we know what they are, we know how we're measuring across the company, and hopefully we're driving them up and to the right.
KK Anderson (19:38)
So one of the tools that we've produced for our audience is a quick reference guide. It's a diagnostic blueprint. And it has a list of all of the metrics that we recommend a CRO look at as it relates to find more, as it relates to win more, and as it relates to keep more. And it's a list and there's some explanations on there as well around how
how you should read the diagnostic and the report. so Mark, we'll leave in the show notes where people can go and download that diagnostic scorecard. But so Mark, for every CRO that's listening right now and they're thinking to themselves, okay, what's the first thing I need to do tomorrow morning? What do you suggest? Do you start with downloading this list and kind of going through and calling your rev ops department, try to get some of these numbers? Like what do you do tomorrow?
Mark Petruzzi (20:26)
Yeah, great question. And the first point is do it and do it tomorrow. Meaning, this isn't something you can wait around with. The next recommendation is get those metrics. Find out where you're starting and what everything looks like there and try to work with individuals like
Companies like BenchMarket, Ray Reich is the CEO of that and find out what the metrics in your particular segment of an industry look like and compare those and get that really strong understanding of where you are today. And then kind of going into the point of doing something. There are so many things that we all could be doing with AI every single day.
The only way I can process this and recommend for my clients is, take a short window, I mean, it be a half a day, and figure out, all right, what's the list of the things I want to do, and then prioritize it, and really go for that lowest hanging fruit. ⁓ And then that's it. And like anything else, just like a good meal. A good meal is you eat, one bite at a time.
Alan Rudolph (21:26)
Mmm.
Mark Petruzzi (21:38)
try to devour the whole turkey dinner on Thanksgiving in one bite. So the idea is understand where you're starting, understand what's the best place and what are the items that add more value more quickly, and then manage to that. Then compare every step of the journey with, ⁓ where were we?
Alan Rudolph (21:54)
Hmm.
Mark Petruzzi (22:02)
three months ago, six months ago, where are we today, where do we want to go? It makes everything else that much easier to accomplish.
So KK, to you, we know the real value isn't the score. It's the conversation that these processes force. And then it's great to just, let's parse it down to three or four things that every CRO should do this quarter. And we can tie back that to some of the things I just said with
Alan Rudolph (22:21)
video.
Mark Petruzzi (22:35)
how to start it, but more importantly, what are usually the lowest hanging fruits for most companies that we work with.
KK Anderson (22:42)
All right, Mark, that's a great question. And I'll give you four things that I would do tomorrow. So in order, number one, first get a competency baseline on your sales team. Like whether it's through one of our AGS diagnostics or through any other tool, it does not matter. Get a sales competency baseline. You've got to know what are the skills of the sellers and the leaders on your team? Do they have the competency to be able to sell?
your product at your price point against your competition and your market. Like you've got to know that, right? You've got to know that. Number two, get a metrics baseline and simple at the simplest terms. need to know win rate by ICP, right? We want to know general win rated too, of course, but win rate by ICP, ideally deal size trend. it trending? Your deal size is trending up. Are they trending down? What's the sales cycle time? Is that pushing?
What are the trends there? Your CAC payback time. We want to look at NRR, absolutely. And we want to look at TTV. Those metrics at a minimum will give you a very strong indicator of where you are, where the health of your business is, where you're starting. And then third, the third thing I would do is I would map your sales process against how your buyers are actually buying.
and how buyers are buying is changing dramatically. It has changed more in the last 12 months than it has in the past 12 years. And so we need to make sure that the sales process is aligned to how your buyers are making these decisions. And then when you can apply AI to a seller-centric process like that, or a buyer-centric process, excuse me,
Alan Rudolph (24:07)
Mmm.
KK Anderson (24:17)
then you're going to have better alignment and better results with whatever you're, wherever you're layering in AI. So those are the things that I would do in order. Alan, what about you from a PEC, like when a CRO does these, these four things specifically, and what Mark has talked about as well, like what does it unlock for the business?
Alan Rudolph (24:36)
CRO gets to take a nap. mean, that means
he or she is running the business, I'm gonna say appropriately, right? It's effective, it's efficient. We understand the metrics, we know what the metrics are, right? And that's what every CRO wants. He or she doesn't wanna be stuck out there trying to drive value to a prospect with each and every one of his reps, right? They wanna be able to run the business.
And that's what that does, KK. And when they do that, it drives valuation. It drives a better narrative to future acquirers. It drives a better narrative to those customers, right? You don't have miss set expectations. You don't have customers you need to fire, right? It's a healthy way of running the business. But let's not forget that while you're doing all this, right? We're constantly changing.
what we sell, right? The product's constantly getting better. I like to say, for those that don't know me that well, I live in the great state of Colorado and I'm a skier. And so we use the phrase, don't get too far over the ski tips, right? There's a healthy balancing act, right? You want to be slightly forward, but not too far forward. So that's just an important concept to think about from a business standpoint as we're working with customers.
to make sure they understand what's coming a week, a month, a year, whatever for now as we continue to drive value in the product. And that fits into this whole discussion about optimizing the business of the CRO and giving the CRO that healthy discipline to be able to explain what is coming tomorrow.
Mark Petruzzi (26:12)
Yeah, and Alan, your comment about the CRO gets to take a nap or the CRO gets to show up and be on time, not 35 minutes late to their child's field hockey game or the dance recital or anything else. So that's really, really what it does. And when you have good, smart people,
thinking strategically in ways that they haven't in the past, or they haven't had the time for in the past, it does a lot for the business. So like in a general closure for this segment, really there's four key things that I think kind of drives this for our clients. And that's the behavioral baseline, really figuring out where you're starting, figuring out the metrics baseline,
the numbers, things you can measure and evaluate every step of the way, alignment over the organization, the entire sales organization, and over to the rest of the C-level individuals on the board. And then, the placement of AI, like, where do you put this in first? And when you can do these things, these four things in that order,
you've already by itself have done more than 80, 90 % of the leaders we talk to every day. this is not, like again, you don't have to be perfect, you don't have to do 20 things, but if you can do these things very capably and reliably, you're gonna get benefit out of all these steps.
KK Anderson (27:49)
It's a playbook really for how to do it. And so if you, remember nothing else from this session today, AI is going to amplify whatever motion you have, wherever you put it. So if you have a broken motion, it's going to amplify that broken motion at scale. And if you don't know what your motion looks like at the competency and the metrics level, you're not making
Alan Rudolph (28:00)
Right.
KK Anderson (28:13)
decisions on where to put AI, you're rolling the dice and it's going to come back. It's going to come back and bite you.
Mark Petruzzi (28:19)
and that starts with diagnose before you AI. If you don't do that, AI can be the most expensive thing that you ⁓ invest in and it could be the most impactful for the rest of your 2026 because again, you really have to know where you're starting from to really get the...
types of benefits we all know we can get with AI, but sometimes we don't.
Alan Rudolph (28:46)
And then Mark, I just say from an ownership standpoint, coming back to the comment I made earlier about the CRO, know, the CRO needs to be able to go take the naps, go to his or her kids, play school, sports, whatever. And so don't rest on what exists today. Fix it, make it better. Reach out to, you know, whether it's folks like us at AGS or there's great, great operators out there that can provide this advice and counsel.
is make it better. If we, we always can look back on our careers and say, God, I wish I would have done this. I wish I would have done it faster. Right. And I think we all have a huge opportunity right now. Take, take, take stock at what we talked about today and, and change your business and change it fast. Right. We're not talking about months or quarters worth of work. We've seen value from our customers in 30 days. Right. We've seen results. And so, drive that accordingly. So a lot of fun today.
We really appreciate it. KK, I think you're going to bring us home.
KK Anderson (29:43)
Yep, I will. again, I'll put in the show notes, but you can download our revenue blueprint diagnostic on our website. And it will give you those, all the metrics we talked about today and give you a starting point for how to get started tomorrow. And again, you're welcome to reach out to any of us for assistance, but we don't care where you get the help. We want you to grow. We want you to be successful.
And we want you to not only create but protect your enterprise value. And it's an exciting time to be in business. It is an exciting time to be in business. Everything is changing. And we're here to support you as we go through.
Mark Petruzzi (30:18)
KK, thanks so much for...
for closing this off for us as articulately as you have. We so appreciate Alan, you joining us and being a part of this. we are definitely going to just grab as much of Alan's time as we can and have him on here as much as we can as well because of all the great insights he brings. And as always, I just wanted to thank our incredible
audience, people who are in here investing time with us every week. We appreciate it and thanks again. All the best.
KK Anderson (30:50)
Thanks, Mark. Thanks, Alan. Thank you.
Alan Rudolph (30:53)
Thank you.