Statistic Info

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

SaaS IPOs have more than doubled over the last 12 years

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

Growth yields greater returns

Negative Churn and Expansion Revenue

In many SaaS businesses, sales reps play a key role in closing deals

How to Reduce Churn

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

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

To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14

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

More Growth Strategy Stats

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

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.

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

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

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

Software and online services are in a period of dizzying 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.

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

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

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

July 11, 2019 Seminar

Marketing Uncovered: Market Research & Assessments To Win

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