Dollar Retention Matters More Than User Retention

01 /The Concept

Getting users to sign up for a cloud product is only the first step – and not even the hard one. Developers of SaaS products know this well. A meaningful share of new subscribers barely engage with the product before canceling. They weren't hooked.

Getting users to stick around means getting them to actually use the product – all the features that are genuinely useful to them. But to use those features, they first have to know they exist.

Maybe they read about them on the website before signing up – but they've since forgotten. And products keep shipping new features, which existing users also need to hear about.

So communicating what a product can do – both its existing features and new ones – is a real, ongoing challenge that every cloud product developer has to solve.

Resonance is a platform built to do exactly that. And it turns out to be harder than it sounds.

You can't make users read documentation – only a small minority ever will. And you can't spray them with random in-app popups promoting features – that's annoying enough to trigger cancellations on its own.

Smarter communication means:

- Showing prompts in the context of what the user is currently doing – so they feel like help, not interruptions.

- Capping frequency per user – so no one feels bombarded.

Prompts can also take different forms: tooltips, banners, modals, highlight states. Different formats work for different moments.

That leaves the developer with a three-variable optimization problem: which prompt to show, how often before it becomes annoying, and what format works best in each context.

Resonance's AI engine handles that optimization automatically. It selects the best timing, frequency, and format for each prompt to maximize engagement. According to the startup, the AI converges on an optimal configuration 7x faster than manual A/B experimentation.

The platform almost certainly also personalizes at the individual user level – something no developer team would attempt manually, but well within the reach of a well-trained model.

Integrating Resonance into a product requires a one-time code implementation on each page. After that, no additional engineering work is needed to launch new prompt campaigns. Product managers and marketers can set up and run awareness campaigns themselves.

Using existing prompt templates, launching a new campaign takes a few minutes of initial criteria-setting – after which the platform handles all the optimization. Custom formats add 10–20 minutes to setup, which is still very manageable.

Resonance was founded last year. It's currently in Y Combinator and received the standard $500K. The first version of the platform launched less than a week ago.

02 /Why It Matters

Smarter in-app prompting is just the mechanism. The real thing Resonance is solving for is Net Revenue Retention – NRR, also called Net Dollar Retention (NDR).

Retention can be measured in two fundamentally different ways:

- Logo retention: what percentage of users are still subscribed after some period of time.

- Net Dollar Retention (NDR): how much money you're now earning from the cohort of users who signed up some period ago, expressed as a percentage of what that cohort paid at the start.

A simple illustration:

- 100 users sign up in a given month, each paying $10/month for the base tier.

- After six months, 30 have churned. 70 remain.

- Logo retention: 70%.

- Of those 70, 49 continue at $10/month. 21 have upgraded to a $30/month plan.

- NDR = 100% × (49×10 + 21×30) / (100×10) = 112%.

On a user-count basis, the cohort shrank. On a revenue basis, it grew. Which one matters more?

NDR is the more important metric by far – because some churn is inevitable in any subscription business. The whole game of subscription monetization is ensuring that enough of the users who stay pay you more over time.

Strong cloud products target NDR in the 110–120% range; the top performers get to 150%+.

The path to higher NDR runs through users discovering and actually adopting more of the product. More usage drives either higher-tier subscriptions, more seat licenses, or additional feature purchases. All of that flows through awareness – which is what Resonance enables.

In-app feature communication goes from a marketing inconvenience to a core revenue driver. Any SaaS company on a subscription model that isn't investing in this is leaving money on the table.

Resonance isn't alone in this space. Appcues, [covered here](/review/chto-ja-tut-mogu-poleznogo-dlja-sebja-sdelat) in early 2022, has been solving a similar problem for years and has raised $52.8M.

03 /Opportunities

The subscription model is the default for cloud software businesses.

Conventional wisdom focuses on acquiring new users. But as a product matures, new user acquisition becomes progressively harder and more expensive – and the total addressable market isn't infinite.

More importantly, if a significant share of newly acquired users churn quickly, the business resembles a leaky bucket: no matter how fast you pour users in, revenue stays shallow.

The first priority for any subscription product is retention. But 100% retention is impossible. So the real objective is to retain not just the users, but the revenue – to maximize NDR.

That requires two things working together: a pricing architecture where more engaged users pay more (without that structure, there's nothing to optimize), and a system that actually converts light users into power users so the pricing tiers aren't just theoretical.

In practice: if you have a subscription product, start by building or improving the pricing structure that enables NDR growth. Then build or buy the system that activates it – by pulling users deeper into the product.

For the latter, you can use platforms like Resonance or Appcues – or you can decide this is a big enough problem to build your own platform and sell it to others.

Given that every SaaS developer needs this, the market is large. And given that AI is what makes it genuinely work at scale, platforms built on the model of today's Resonance are well-timed.