Why Concentration Hurts Multiples
When one customer represents a large share of revenue, buyers price in churn risk and integration risk:
- One logo >30% of ARR often caps multiples below 2x–3x ARR.
- Enterprise customers with custom contracts create transition risk.
- Loss of a single integration partner can cascade into churn.
With One Customer
- Emphasize contract length, renewals, and switch costs.
- Share contingency plans for replacement revenue.
- Offer seller financing to offset concentration risk.
With Many Customers
- Highlight logo distribution and low top-10% revenue share.
- Show cohort stability across industries or segments.
- Present churn reasons and retention programs.
How to Diversify Fast
- Launch self-serve pricing to capture long-tail users.
- Join marketplaces and partner directories.
- Spin up a lightweight inside sales motion for smaller deals.
- Incentivize annual plans for new segments to lock retention.
Revenue Mix Benchmarks
Share this simple table with buyers to show how you are actively diluting concentration risk.
| Metric | Good | Watch | At Risk | What to Show Buyers |
|---|---|---|---|---|
| Top customer % of ARR | <15% | 15–30% | >30% | Contracts, renewal history, and back-up pipeline coverage |
| Top 10 customers % of ARR | <40% | 40–60% | >60% | Segmented ARR by industry and contract length |
| New logo mix (last 90 days) | Diverse | Skewed | Single-logo heavy | Channel and pricing experiments to broaden top of funnel |
Pair these thresholds with proof of expansion revenue from smaller accounts and a roadmap of integrations that unlock new verticals.
Documentation Buyers Expect
- Revenue by customer with top 20 logos highlighted.
- Renewal dates, payment terms, and termination clauses.
- Dependency list: integrations, APIs, and vendors by customer.
- Pipeline mix that shows decreasing reliance on one logo.