New SBI and QuadSci Study Exposes Costly SaaS Retention Crisis—And How AI Can Predict Who Churns Next

DALLAS, October 22, 2025 — Despite record spending on customer success, most SaaS companies are still losing ground on retention. A new study from SBI Growth Advisory and QuadSci uncovers the behavioral patterns behind those losses and shows how AI can now forecast renewal and expansion decisions with 90% accuracy up to a year in advance.

In the report "Engineering SaaS Account Growth: From Guesswork to Predictable Growth," researchers used SBI Wayforge™ to analyze 160 billion telemetry data points across 9,100 accounts. The analysis showed that solution usage alone accounts for 80% of commercial outcomes—far outweighing pricing, competition, or satisfaction scores.

"This study proves that growth doesn't hinge on luck or loyalty—it hinges on behavior. For years, SaaS leaders have relied on surveys and sentiment to understand retention. Usage behavior tells the real story, and it can predict commercial outcomes with remarkable precision."

Key Findings

What is the "Good Enough" growth trap? It's when a SaaS company's customers rate them favorably but that positive sentiment does not predict renewal or expansion. SBI and QuadSci found 84% of SaaS companies fall into this zone. A customer who rates a supplier 6.4 out of 7 is barely more likely to renew than one who rates a 5.5, because satisfaction in this range carries almost no predictive power.

What breaks a company out of the trap? Crossing a precise threshold of 6.5 on a 7-point customer perception scale. Companies that cross it see expansion probability nearly double, from 47% to 79%, and churn probability drop 41%, from 45% to 26%.

How do you know which investments will move a company past that threshold? By analyzing product telemetry, not sentiment. Telemetry separates Growth Signals (features high-NRR cohorts use that low-NRR cohorts don't) from Commercial Noise (features every cohort uses equally). Investment in Growth Signals moves companies toward the Excellence Zone; investment in Commercial Noise doesn't move NRR.

Why Net Revenue Retention Is Declining

Net Revenue Retention (NRR) is the leading obstacle to SaaS growth today. 58% of companies report lower NRR than two years ago, based on SBI's dataset comparing Q1 2023 to Q1 2025. In response, CEOs are prioritizing two levers: realigning resources to drive expansion from the existing customer base, and sharpening account prioritization.

SBI's companion study, Engineering SaaS Account Growth Part 1, showed that telemetry data reveals account cohorts that predict retention and expansion with 90% accuracy, producing a 5% increase in NRR for the companies studied. Part 2 extends that finding: the same cohorts and telemetry patterns also reveal which product and service investments efficiently improve NRR.

The core problem is a disconnect between what customers say and what they do. Customers often report satisfaction and intent to renew in surveys, then churn anyway. Sentiment data (NPS, surveys, verbatims) captures intentions and aspirations. Telemetry data captures revealed preferences, what customers actually rely on in daily use. When the two diverge, telemetry predicts commercial outcomes and sentiment does not.

The Three Zones of Customer Perception

SBI analyzed customer perception of solution quality, pricing, and brand strength on a 7-point scale across 364 renewal and expansion decisions. Three distinct zones emerged.

Failure Zone (scores at or below 5.1, fewer than 5% of companies): 82% churn probability, roughly 0% expansion likelihood. Immediate intervention is required for survival.

Good Enough Zone (scores 5.1 to 6.5, 84% of companies): 45% churn probability, 47% expansion likelihood. Within this range, improving satisfaction scores generally does not improve retention or expansion. This is the growth trap.

Excellence Zone (scores above 6.5, roughly 12% of companies): 26% churn probability, 79% expansion likelihood. Crossing the 6.5 threshold nearly doubles expansion probability and cuts churn by 41%.

Over 96% of customers hold a favorable view of their supplier, scoring above 5.1. That's precisely what makes the trap dangerous: nearly every company looks acceptable, and almost none stand out as excellent.

How Telemetry Identifies the Right Investments

SBI and QuadSci examined 160 billion telemetry data points across 9,100 commercial outcomes, then overlaid that telemetry onto customer cohorts. This separates two categories of product usage:

Growth Signals: features that high-NRR cohorts use heavily and low-NRR cohorts barely touch. Investment here reliably improves NRR and moves companies toward the Excellence Zone.

Commercial Noise: features used at similar rates across every cohort, regardless of renewal or expansion outcome. Investment here is unlikely to move NRR because usage doesn't distinguish a successful account from a churning one.

In the study's illustrative example, all customer cohorts used the Admin Panel at similar rates, that's Commercial Noise. Only high-NRR cohorts in the Zone of Expansion heavily used Events in Live Deployments, that's a Growth Signal. The actionable conclusion: product and customer success teams should concentrate resources on driving adoption of Live Deployments rather than the Admin Panel.

Bridge Features and Dynamic Features

Modern SaaS products contain hundreds of features, but typically only 15% to 25% actually determine commercial value. Telemetry lets GTM leaders ignore Commercial Noise and focus on two feature types:

Bridge Features (the path to safety): capabilities a customer must adopt to progress from a Struggler cohort to a Convert cohort. Without them, customers stall in shallow usage patterns and never reach expansion. Identifying bridge features clarifies what successful onboarding looks like, which workflows need simplification, and where activation paths break down.

Dynamic Features (the path to growth): higher-complexity, "knife-edge" capabilities that sharply increase perceived value and drive expansion when adopted correctly, but can increase complexity and overwhelm a customer if introduced too early or without guidance.

Three Ways to Operationalize Telemetry-Driven Growth

Prioritize essential features. Use telemetry to identify Bridge Features and Dynamic Features instead of debating which capabilities matter based on opinion or the loudest customer request.

Accelerate the customer journey. Benchmark every account's usage against peers to build a recommendation engine that surfaces the next best action based on each customer's specific feature gaps.

Strengthen value perception through peer benchmarking. Show customers proof that they're using the solution well relative to peers in their industry, ARR band, and segment. This accelerates onboarding early in the relationship and builds confidence to expand over time.

What This Means for Account Management

Companies that base product, customer success, and enablement strategy on telemetry patterns instead of sentiment gain three advantages: they know exactly which features to invest in to improve NRR, they accelerate adoption of those investments through cohort-aligned experiences, and they guide customers toward value-driving behaviors through personalized recommendations. The result is a reliable, repeatable way to engineer NRR improvement, anchored in customer behavior rather than customer opinion.

Frequently Asked Questions

What percentage of SaaS companies are stuck in the "Good Enough" zone?
84%, based on SBI's analysis of 364 renewal and expansion decisions across a 7-point customer perception scale.

What is the difference between the Failure Zone, Good Enough Zone, and Excellence Zone?
Failure Zone (score ≤5.1): 82% churn probability, ~0% expansion likelihood, fewer than 5% of companies. Good Enough Zone (5.1–6.5): 45% churn probability, 47% expansion likelihood, 84% of companies. Excellence Zone (>6.5): 26% churn probability, 79% expansion likelihood, roughly 12% of companies.

How much does crossing the Excellence threshold improve expansion and churn?
Expansion probability nearly doubles, from 47% to 79%. Churn probability drops 41%, from 45% to 26%.

How many data points did the study analyze?
364 renewal and expansion decisions from SBI's 2024 B2B Buyer Survey, plus 160 billion telemetry data points across 9,100 commercial outcomes, analyzed in partnership with QuadSci.

What's the difference between sentiment data and telemetry data?
Sentiment data (NPS, surveys, verbatims) captures what customers say they value or intend to do. Telemetry data captures what customers actually do inside the product. When the two disagree, telemetry is the more reliable predictor of renewal and expansion.

"The SaaS industry has been sitting on a goldmine of telemetry data without the AI to make sense of it. This research shows that the signals for growth and churn are already there. The companies that act on them now will set the pace for 2026."

"These AI insights are now built directly into Reltio's Intelligent 360 platform, giving both our go-to-market teams and Reltio's Agentic AI a clear view of how customers engage with the platform—enabling us to support them more effectively."

Methodology

The study examined 160 billion telemetry data points tied to 9,100 customer accounts, tracking usage behavior across the full lifecycle. Researchers also analyzed more than 40,000 financial documents from 300 public subscription companies to benchmark NRR trends.