54% treat upselling and add-on sales as high priority

SaaS + Software
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Increased retention and upsell leads to faster growth Companies that are doing a good job of controlling churn and driving new revenue from existing customers are on the whole growing substantially faster than their peers. Companies still place priority on new customer acquisition Despite a shift in the metrics companies are tracking, priority and funding for customer renewals and upsell has not increased. This suggests that despite best intentions to focus on monetizing existing customers, day-to-day business realities make it di?cult for companies to shift priority and funding. SaaS metrics shifting focus toward existing customers This year more companies than ever are looking at metrics on existing customers such as customer lifetime value, revenue per user, product adoption, and customer health.

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Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling

The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

56% treat “Existing Customer Renewals” as high priority

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years

More Market Research Stats

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

In 2017, Foxconn Technology Group achieved a net income of 135.37 billion New Taiwanese dollars, the equivalent to approximately 4.55 billion U.S. dollars.

Investment in marketing automation tools is expected to reach $25 billion by the year 2023

In 2018, the U.S. imported aerospace products worth about 53.98 billion U.S. dollars.

Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing

Sony’s PlayStation brand had accumulated approximately 38.57 million fans on the social network

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

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