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

More SaaS + Software Stats

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs

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

How to Reduce Churn

To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

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

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

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

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

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

More Growth Strategy Stats

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

54% treat upselling and add-on sales as high priority

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

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

Negative Churn and Expansion Revenue

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

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

Three uses for the SaaS Guidelines

36% of SaaS businesses managed to reduce their revenue churn over the last 12-months

The 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%