For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

From Saas Capital
Statistic in SaaS & Tech Growth Strategy
Consistently retaining customers is an important characteristic of any successful SaaS business, and an entire industry, Customer Success, has sprouted up to help SaaS executives do just that. However, knowing what is a “good” retention rate for your individual SaaS company remains difficult to pin down. This research helps answer that question based on our survey of over 700 private SaaS companies.

SaaS customer retention is broken down by:

  • average contract value
  • company size
  • company age

This brief also explores the relationship between growth and retention, the “false positive” retention rates of young SaaS businesses, and the impact of Customer Success programs on overall retention.

More SaaS + Software Stats

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

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

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

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

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

Improve Your Pricing Schedule And Turn More Profit

SaaS organizations are now operating in over 100 countries

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

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

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

More SaaS & Tech Growth Strategy Stats

Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

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

Improve Your Pricing Schedule And Turn More Profit

How to Reduce Churn

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

orecasts suggest that global blockchain technology revenues will experience massive growth in the coming years, with the market expected to climb to over 23.3 billion U.S. dollars in size by 2023.

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

Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there

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

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%