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

SaaS + Software
Statistic in SaaS & Tech Growth Strategy

Statistic Info

At 2% monthly churn, you are losing about 22% of your revenue every year. That is nearly a quarter of your revenue! It’s a clear indication that there is something wrong with the business. As the business gets bigger, this will become a major drag on growth.

We recommend that you work on fixing the problems that are causing this before you go on to worry about other parts of your business. Some of the possible causes of churn are:

The best way to find out why customers are churning is to get on the phone with them and ask them. If churn is a significant part of your business, we recommend that the founders themselves make these calls. They need to hear first hand what the problem is, as this is so important for the success of the business. And they are likely to be the best people to design a fix for the problem.

For Entrepreneurs.com

More SaaS + Software Stats

Best-in-class SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

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The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

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The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling

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

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

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

More SaaS & Tech Growth Strategy Stats

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

56% treat “Existing Customer Renewals” as high priority

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

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

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

High-growth companies generate 60% fewer sales opportunities than low-growth companies

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

Cloud-hosted applications have a 99% uptime

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

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