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

Statistic Info

We wanted to find out, so as part of our 2016 Sales Benchmarking Report, we took a close look at the Quick Ratios of the high-growth SaaS companies in our study. We sliced the data in every conceivable way to see what we could uncover about the optimal Quick Ratio for growing SaaS companies, and how the SaaS Quick Ratio evolves as companies grow.

More SaaS + Software Stats

55% of SaaS companies rate Customer Retention as the key metric to measure

Companies with longer contracts (2+ years) reported the lowest annual unit churn

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As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn

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

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

Revenue per employee has been steadily increasing in SAAS companies. It serves as a great longitudinal measuring stick to understand the increasing or decreasing efficiency of the business

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Is your SaaS business viable?

More Growth Strategy Stats

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

The median annual unit churn for SAAS companies was 10% in 2016

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

In contrast, only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

47% of millennials want to work at diverse companies, according to a recent study.

SaaS IPOs have more than doubled over the last 12 years

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

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

Growth happens in phases

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