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

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.

More SaaS + Software Stats

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

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

The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

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%”

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

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

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

Three uses for the SaaS Guidelines

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

80% of venture capital investments take place in the enterprise

In 2018, the global tech spending is forecast to amount to 3,212 billion U.S. dollars.

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

How To Make Pricing A Constant Process In Your Organization

A 1% increase in pricing strategy yields an average 11% increase in profit

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

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

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

Negative Churn and Expansion Revenue