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 + Software
Statistic in Growth Strategy

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

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 median SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

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

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

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

SaaS IPOs have more than doubled over the last 12 years

How To Make Pricing A Constant Process In Your Organization

86% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority, both in terms of executive support and funding available

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

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

More Growth Strategy Stats

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

The median TTM revenue growth rate + adj. EBITDA margin for publicly traded SaaS companies was ~37%, implying that just under one half met or exceed “The Rule of 40%”

The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9: generating $3.9 in revenue for every $1 lost to revenue churn

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

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

The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013

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

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

A University of Texas study showed that women ask for $7,000 less than their male counterparts in job interviews

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

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