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.

InsightSquared

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Internet Sales strategies have a significantly lower CAC of just $0.42

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

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

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

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

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

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense

High-growth companies generate 60% fewer sales opportunities than low-growth companies

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

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

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

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

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

Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

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

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

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

In 2020, China is expected to generate 55 billion U.S. dollars in the global medical technology market.

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