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.

Saas Capital

More SaaS + Software Stats

More than 1/2 of SAAS companies increased their spending on customer retention last year

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

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

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

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

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

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

The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8

More Growth Strategy Stats

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

The median monthly revenue churn for large SaaS companies is 0.75%, translating into an annual revenue churn rate of 10%

36% of SaaS businesses managed to reduce their revenue churn over the last 12-months

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

General Dynamics is a market leader in the aerospace and defense industry. In 2018, a total of 105,600 people were working at General Dynamics.

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

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

In 2017, the global adoption rate for biotech soybean amounted to 77 percent.

Negative Churn and Expansion Revenue

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