A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

SaaS + Software
Statistic in Growth Strategy

Statistic Info

Consistently retaining customers is an important characteristic of any successful SaaS business, and an entire industry, Customer Success, has sprouted up to help SaaS executives do just that. However, knowing what is a “good” retention rate for your individual SaaS company remains difficult to pin down. This research helps answer that question based on our survey of over 700 private SaaS companies.

SaaS customer retention is broken down by:

  • average contract value
  • company size
  • company age

This brief also explores the relationship between growth and retention, the “false positive” retention rates of young SaaS businesses, and the impact of Customer Success programs on overall retention.

Saas Capital

More SaaS + Software Stats

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

Negative Churn and Expansion Revenue

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

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

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

At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

Cloud-hosted applications have a 99% uptime

More Growth Strategy Stats

In 2018, the market size of information technology outsourcing amounted to 62 billion U.S. dollars.

26% of SAAS companies with at least $15MM in GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher.

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

It’s 9x cheaper to retain existing customers than acquire new customers: costing $0.13 to acquire any additional dollar of revenue

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

As of December 2018, there were total 105,000 employees in Lockheed Martin, as compared to 126,000 employees in 2015.

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

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

Looking for SaaS focused services?
SaaS Website Design
SaaS SEO Agency
SaaS PPC