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55% of SaaS companies rate Customer Retention as the key metric to measure
In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal
It’s 9x cheaper to retain existing customers than acquire new customers: costing $0.13 to acquire any additional dollar of revenue
High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.
For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time
SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer
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
Google only has a 30 percent female workforce
51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution
The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month
Negative Churn and Expansion Revenue
The median TTM revenue growth rate + adj. EBITDA margin for publicly traded SaaS companies was ~37%, implying that just under one half met or exceed “The Rule of 40%”
If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years
In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%
As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn
In 2018, the market size of information technology outsourcing amounted to 62 billion U.S. dollars.
Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs
Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there
Customer Segmentation analysis will help point out which are your most profitable segments
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