Statistic Info

Monthly vs. Annual Churn Rates

Now, just so we’re on the same page, 5% – 7% Annual churn – the good churn rate – translates to 0.42 – 0.58% monthly churn.

This means companies with acceptable churn only lose about 1 out of every 200 customers (or dollars) per month.

Now that’s a solid platform you can really build a high-growth company on.

On the flip side, a high churn rate is the reason you ended 2012 with a whole bunch of new customers… but had about the same amount of revenue.

Churn is the reason that – though you acquired a lot of new logos in 2012 – you had no significant year over year growth from 2011.

sixteenventures.com

More SaaS + Software Stats

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

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

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

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

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

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

Our experiences with SaaS startups indicate that they usually start with a couple of lead generation programs such as Pay Per Click Google Ad-words, radio ads, etc

How To Make Pricing A Constant Process In Your Organization

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

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

More Growth Strategy Stats

When venture capitalists participate in seed rounds, the average round size is 3x larger

It’s essential to have a point of view that puts a stake in the ground and breaks through the clutter.

As of December 2018, there were total 105,000 employees in Lockheed Martin, as compared to 126,000 employees in 2015.

SaaS IPOs have more than doubled over the last 12 years

How to Reduce Churn

The average SaaS company spends just 6 hours determining their pricing strategy

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

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

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