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

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

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

The median SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”

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

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

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

The global cloud computing market size is expected to grow from USD 371.4 billion in 2020 to USD 832.1 billion by 2025

More Growth Strategy Stats

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

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

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

After $10M in ARR, the median growth rate slows to just under 50%

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

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

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

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

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

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?