The Early-Stage Retention Challenge
At early-stage startups, renewals often feel like an afterthought. Founders are heads-down acquiring new customers, and the renewal process tends to kick in right when the contract is expiring. Net revenue retention, one of the most important metrics for any tech company, depends on a combination of selling to the right customers while building the infrastructure to support them from day one of the relationship.
When I started working with the team at MedScout, a revenue acceleration platform for medical device and diagnostic companies, they were at an inflection point. Shaina Smolowe, MedScout's Head of Customer Success, had recently taken over renewals from the CEO and VP of Sales. She was a team of one, managing a growing customer base.
"We didn't have a formal post-sale lifecycle," Shaina remembers. "Each customer was getting a different playbook. And we were missing expansion opportunities and weren't running renewal conversations early enough."
To help build that structure, we brought in Stage 2 LP Parker Chase-Corwin, a 25-year SaaS veteran who specializes in building post-sale and customer success functions.
One of the most important ways we help our portfolio companies level up is by partnering them with an LP who has deep experience in the specific go-to-market motions that they need help with. Having expert guidance from a Stage 2 advisor helps companies like MedScout leapfrog over many of the GTM growing pains that startups routinely experience.
"At the time, MedScout was less than $3M million in ARR," Parker shared. "Shaina is incredibly talented and engaged, and like many CS leaders at early-stage startups, was taking on renewals as a new responsibility. So, our collaboration was initially focused on supporting the transition from a founder-led renewals motion to a team-owned one.”
Even now, more than a year later, Parker and Shaina still have a regular monthly cadence of meetings.
“Having access to someone like Parker to brainstorm and help me understand what best-in-class looks like, and what other companies are doing, has been invaluable,” Shaina said. “I had only built retention playbooks once before, but the customer lifecycle and strategies were different. And because we’ve continued to meet, he’s been able to help me evolve the playbooks as the company and our customer base have grown.”
Step One: Establish the Basics
Shaina and Parker focused first on building a foundation. When founders think about retention, they often assume it's just a matter of keeping customers happy. But that approach leads to blind spots, unnecessary escalations, and an overreliance on luck. Moving the needle quickly on renewals requires a quantifiable method of assessing risk and renewal likelihood to direct focus and interventions. But MedScout was missing metrics in this area. That's why they started with health scoring.
Health scoring helps teams identify which customers are thriving and which ones are at risk—well before renewal time. It can be as simple as a red/yellow/green rating based on product usage and a net promoter score or customer satisfaction score.
While there are AI tools that can analyze hundreds of behavioral signals and predict churn months in advance, most budget-conscious startups can see results by taking a consistent, simple approach, especially at first. Focusing on a few key factors creates a solid baseline.
As teams mature, a more sophisticated approach can use many different metrics like new feature usage, onboard completion, engagement with customer success managers, support tickets, and billing status that can be weighted and synthesized. But at first, it’s fine to keep it simple.
"We started by reviewing every customer manually, assigning red, yellow, or green sentiment,” said Parker. “Then we evolved that into an every 60-day pulse check where CSMs would flag risks and opportunities and apply a specific playbook to address the situation."
MedScout had identified what they thought was a strong leading indicator of retention, but over time, they realized it wasn’t actually predictive of whether customers would renew. That forced them to revisit how they were measuring customer health and take a closer look at their data.
"We didn't have a single North Star metric to use because MedScout had several different use cases across different segments of customers," Parker explained. “We had to come up with targeted playbooks to address the specific needs of each type of customer.”
As they got into the details, they discovered something else that founders at this stage often encounter: not every customer is a good fit.
"There were a number of customers who didn’t fit the ideal customer profile," Parker said. "We had to engage with each customer to capture their desired outcomes, create stickiness with the product by actualizing the product value to retain them through their first renewal period—and give the business time to address their full needs within the product roadmap.”
With a better handle on each customer’s health status, the next step was segmentation.
"Parker helped us realize we were spending the same amount of time on $12K contracts as we were on $100K ones," said Shaina. "So we built three segments based on team size and contract value. That changed everything. We could better allocate resources, forecast capacity, and tailor our touchpoints."
This segmentation went beyond contract value. "We realized there were very distinct use cases of the tool," Parker explained. "We couldn't 'peanut butter' a single approach across all those use cases. We had to build out a specific playbook for each one."
By creating segments based on both team size and contract value, they established a framework that was more specific than a simple SMB/enterprise split, allowing for more targeted customer engagement strategies.
Parker noted that while every business will tailor their model to their specific customer base, here’s an illustrative example of what this kind of segmentation might look like in practice:
|
Segment |
Team Size |
Touchpoints |
Contract Value |
Service Level |
Renewal Timeline |
|
Municipal governments |
30 |
|
Medium |
Basic |
3 years |
|
Consulting firms |
10 |
|
High |
Comprehensive |
1 year |
After they segmented their book of business, next they formalized a consistent renewal motion.
"We built a playbook starting 120 days before renewal," Shaina explained. "There are now four standard touchpoints leading up to the date, and they differ depending on whether a customer auto-renews or requires a signature. It's all running in Vitally, our CS platform."
Every company’s playbook will look a bit different depending on customer types. Here’s an example of what a renewal playbook might look like for a high-touch segment.
Sample Renewal Playbook
Once the basics were in place, Parker and Shaina started to focus on helping customers go beyond just "using" the product. The goal was to help them grow with it.
That’s where the customer maturity model comes in. This serves as a framework that allows a company to see how well it’s meeting its customers’ expectations. There are many different maturity models, but they all share the goal of having an objective way to measure customer experience. It should show both where the company is excelling and where it needs to improve.
"The maturity model didn't come right away," Parker noted. "We had to start with onboarding and journey mapping. The ultimate goal was to be able to quantify how much value a customer was getting, and then tie it back to features within the product. Once this mapping was in place we would be able to intentionally replicate the same approach with other, similar customers to standardize value realization. This led to building out a progressive maturity model with metrics tied to each level for measurement."
Early-stage companies typically have a lot to learn about their customers and how they use the product. The maturity model allows the company to see who the best customers are when it comes to adoption, versus your customers who are only lightly engaging with the product. It’s important for any maturity model to answer a few questions:
MedScout's Customer Maturity Model helps align product usage with commercial outcomes instead of basing it purely on usage. The goal is to ensure that customers are getting value out of the product, not just activity.
"If you know a feature drives the right outcomes and better stickiness, intentionally train customers to use it," Parker said. "That increases adoption and retention. It’s a win for them, and a win for you."
This is where founders can start thinking more strategically. Instead of asking, "Is the customer using the product?" ask, "Are they achieving value from it—and are we guiding them to the next level?"
Sample Customer Maturity Model
Value Focus: Set-up has been completed, but the customer has realized minimal business value.
Customer Behavior:
Typical Risks:
Customer Success Actions:
Value Focus: Users are performing key activities and seeing the first signs of business impact.
Customer Behavior:
Typical Risks:
Customer Success Actions:
Value Focus: Usage supports measurable, strategic business goals.
Customer Behavior:
Typical Risks:
Customer Success Actions:
Value Focus: Customer sees product as critical to success and is advocating externally.
Customer Behavior:
Typical Risks:
Customer Success Actions:
The Results
A year into the process, the team has seen major improvements, with a significant decrease in churn and a corresponding increase in net revenue retention.
Just as importantly, Shaina now has a seat at the table.
"A year ago, I couldn't confidently forecast revenue for a quarter. Now I can," she says. "From a forecast and confidence standpoint, I've seen a huge shift. Without these playbooks, we would've missed renewals, missed expansion opportunities, and been scrambling a lot more than we are now. Now, our CSMs have more time to focus on what matters: driving value across our customer base."
This isn't just a CS story. It's a growth story. Here are real, tactical takeaways for any founder navigating customer retention:
Don't wait for sophisticated tools; start with simple tracking (remember to move to data-driven vs. a gut check) that helps you identify which customers need attention. “Health scoring is an iterative process,” according to Parker. “Start with your hypotheses, test them out against what you know about your accounts, and then evolve them. You’ll pretty quickly figure out which signals don’t correlate to health.”
"We were spending the same amount of time on every account, regardless of size," Shaina said. "Segmentation helped us scale smarter." Create different playbooks for different tiers of customers based on contract value, primary use case, and strategic importance.
"Retention isn't an event," Parker emphasized. "It's the outcome of every interaction along the journey." MedScout found that starting renewal conversations four months before the date was good—but they're now moving that timeline even earlier.
"Without Vitally, we couldn't have done any of this," said Shaina. "Spreadsheets would've killed us." Investing in the right tooling early pays dividends in avoiding mistakes and missed opportunities.
"We're still iterating," Shaina added. "Don't lock into playbooks too early. Let them breathe and adjust based on real signals." Your processes should evolve as your customer base grows and your understanding deepens.
Many founders wonder when they should start formalizing their retention processes. Parker suggests that the time is earlier than you'd think.
"Customers you sign up today will be renewing a year from now, probably when you're trying to get ready for your next raise," he said. "If your retention rates aren't good, you're going to have struggles and will be racing to catch up. Renewals are a lagging indicator; it takes time to address the root causes of churn after they are discovered."
While there's no magic number, once you reach 40-50 customers or about $1 million in ARR, it's time to get serious about having someone own the renewal process and implementing these foundational elements.
As Parker said, "If you can't proactively identify and address customer risk before renewal time, your NRR will suffer." And as Shaina put it, "Without this foundation, we'd be missing renewals, missing expansions, and scrambling a lot more than we are now."
Scaling beyond the playbook means putting the same rigor into keeping customers as you do into acquiring them.