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

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

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

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

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

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

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

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added

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

More Growth Strategy Stats

The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

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

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

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

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

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

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

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

After $10M in ARR, the median growth rate slows to just under 50%