How to Reduce Churn

From sixteenventures.com
Quote in SaaS & Tech Growth Strategy

Honestly, there’s nothing magical to reducing churn, it’s just ensuring that your customers continue to realize value from your service.

First, though, you have to get them to start using your service – either through a sale or in a free trial – but without over-promising and by otherwise managing expectations properly. I’ve actually seen a large amount of customer churn directly correlated to missteps during the sales and on-boarding phases, by the way, so keep that in mind.

Then, once the customer is up and running your only job is to ensure they keep realizing (more and more) value from your service.

While you may not add years to your customer lifetime or eliminate churn entirely, what could you do with an extra 6 months of revenue from your customers on average? What would that do to your company valuation?

More SaaS + Software Stats

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”

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business

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

Cloud-hosted applications have a 99% uptime

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

56% treat “Existing Customer Renewals” as high priority

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.

The median annual unit churn for SAAS companies was 10% in 2016

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

More SaaS & Tech Growth Strategy Stats

To establish a revenue or lead-commitment based on your funnel metrics and revenue-growth goals, work backward from the gross revenue amount that marketing is responsible for generating (generally around 40%)

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

In 2017, the world invested around 3.4 billion U.S. dollars in small hydropower technologies, down from 3.9 billion U.S. dollars in 2016.

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

The venture-backed companies that were acquired most often had a 7 percent share of female execs, as opposed to 3 percent at unsuccessful (unacquired) firms

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

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

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

In 2017, Foxconn Technology Group achieved a net income of 135.37 billion New Taiwanese dollars, the equivalent to approximately 4.55 billion U.S. dollars.

In 2018, the U.S. imported aerospace products worth about 53.98 billion U.S. dollars.