I recently worked with a client whose GRR was in rough shape. Customers were churning at a rate that was making everyone uncomfortable, and the pressure to stop it was real. The team’s answer was discounts and free services. It worked. GRR improved by 20 points, and the board celebrated.
Nobody asked how they got there.
What happened with one account
One customer — I’ll call them Customer A — had notified the team of their intent not to renew about three months before the renewal date. The CS team’s response was to offer significant free services in the next contract period: over $55,000 in value. Customer A renewed. The CS team logged it as a win and went back to their day-to-day.
Nothing else changed.
About a year later, I joined the company on a short-term engagement. Customer A was one of the first accounts I sat down with during my initial discovery. In that first meeting, they told me they were not planning to renew.
When I asked why, they walked me through a list of concerns: the product wasn’t meeting expectations, the CS team wasn’t providing proactive guidance, quality was a problem. All the things CS leaders have heard before.
Then they said something I’ve thought about many times since: these were the same concerns they had raised the prior year that had not been addressed.
The first thing I did was pull the CS team together. We went through the account history. Had they really been told all of this a year ago? They had. What had the team done differently in the last twelve months? Nothing in particular.
The CS team hadn’t solved the problem. They had bought time with $55,000 they didn’t realize they were spending.
The behavior the discount created
With discovery complete, I worked with the team to develop specific responses to each of Customer A’s concerns. We rebuilt how we engaged with them: more proactively, with clearer outcomes in mind. I set up a bi-weekly session with their sponsor to create a regular feedback loop and demonstrate that we were listening.
The changes took time to show up. That’s how CS work actually operates.
When the renewal window arrived, I had good news and bad news. The good news was that Customer A acknowledged the progress. The bad news was that two years of disappointment had eroded their trust. They weren’t sure the changes would hold.
We had also taught them something that was very difficult to unteach.
If they threatened to leave, they would get free things.
So we gave them the same free services again: another $55,000 in value. And because the trust deficit was deeper this time, we added access to a new product they hadn’t been using: another $30,000 to $60,000 in ARR as a goodwill gesture.
Customer A was a $60,000 ARR account. Over two years, we had given away roughly $110,000 in one-time services and $30,000 to $60,000 in software value to save them.
What this cost — and what no one was measuring
The board and CEO saw a 20-point improvement in GRR. Here is what that improvement actually cost on this one account.
The CFO wasn’t looking at account profitability. The board and CEO weren’t looking at how GRR had improved. Everyone was looking at the 20-point headline.
Now consider what that math looks like across 20% or 30% of your portfolio company’s customer base.
What operating partners are not seeing
My contract concluded before the next renewal window. I believe the team was on a path that gave them a real chance, but the conditioned behavior was not going to disappear. Customer A had learned something durable: threaten to leave, receive concessions. That lesson doesn’t expire when a new engagement model arrives.
The operating partners, CEO, and CFO watching this company’s dashboard saw GRR stabilize and improve. They saw none of what I’ve described above. The metric didn’t show them how the number moved, what it cost to move it, or whether the improvement was built on anything durable.
This is the gap. Not between good CS and bad CS, but between GRR that holds because customers are achieving outcomes, and GRR that holds because the commercial levers haven’t run out yet.
The first discount isn’t the trap. The trap is what it replaced: the work of understanding why the customer was at risk, and building something different before the next renewal arrived.
The question worth asking
If you’re an operating partner with a portfolio company showing improving GRR, one question will tell you more than the metric: When an account renews after a concession, what changed in how CS was working with them?
If the answer is specific — new success criteria, different engagement model, documented outcomes — that’s a real fix. If the answer is vague, or if the question itself draws a blank, the number may be moving for reasons that won’t hold.
Post 3 in this series: What your operating partner isn’t asking — but should be.
Andrea Mulligan is a B2B SaaS executive and advisor with 30 years of experience building Customer Success, Professional Services, and GTM organizations. She works with PE-backed and growth-stage companies on CS transformation, revenue retention strategy, and post-sale model design. Start a conversation →