As a growth-oriented entrepreneur I’m always focused on new annual recurring revenue. Only, at Pardot, we had a heavily-funded competitor that was focused on logo growth. Meaning, they’d do everything in their power to sign up a new customer — a new logo — even if that meant discounting their product by 50% or more in the first year so that they could then charge much higher prices in later years. In hindsight, we were playing two different games: revenue growth vs logo growth.
Here are a few thoughts on revenue growth and logo growth:
- Best for most startups
- Better if bootstrapped or capital light
- Easier to understand the value
- Fluctuates based on the customer size
- Best for platform companies where scale matters
- More expensive short-term but potentially more valuable over the lifetime of the customer
- No difference whether signing a large or small customer
If there’s an opportunity to build a platform company, and capital is readily accessible, logo growth makes sense. For most startups, revenue growth is the more common focus.
What else? What are some more thoughts on revenue growth vs logo growth?