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.

More SaaS + Software Stats

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

Very few software companies grow beyond $1 billion in revenues

The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year

How to Reduce Churn

If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

The median SaaS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month

SaaS IPOs have more than doubled over the last 12 years

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

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

More Growth Strategy Stats

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

Analysed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

Software and online services are in a period of dizzying growth

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.

Customer Segmentation analysis will help point out which are your most profitable segments

Growth trumps all

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

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

Sustaining growth is really hard

Invention is 10% inspiration and 90% perspiration.

July 11, 2019 Seminar

Marketing Uncovered: Market Research & Assessments To Win

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