Quote Info

The lower Quick Ratio for these larger, more mature companies is further proof that the Quick Ratio looks quite a bit different when used to evaluate young SaaS startups and more mature, steady-state companies.

InsightSquared

More SaaS + Software Stats

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

SaaS IPOs have more than doubled over the last 12 years

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

How to Reduce Churn

The best place to hide a dead body is page 2 of Google search results.

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

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

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%

It’s 9x cheaper to retain existing customers than acquire new customers: costing $0.13 to acquire any additional dollar of revenue

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

More Growth Strategy Stats

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.

Is your SaaS business viable?

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

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”

Three uses for the SaaS Guidelines

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

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

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%