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

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

Growing faster has twice as much impact on share price as improving margins

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

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

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time

The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

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

More Growth Strategy Stats

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

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

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

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

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

The average company gets 16% of new ACV sales from up-sells and expansions, though companies with revenue between $10MM-$40MM are relying more heavily on up-sell and expansions

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000