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As expected, field sales has the most expensive CAC. And, fields sales has widened the gap as its cost has increased, while inside and internet sales have remained relatively flat. Inside sales is now 17% lower than field sales (vs 10% lower last year) and Internet sales is 47% lower (vs 43% lower last year.) Channels sales at $0.53 CAC are at par with online distribution.

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Is your SaaS business viable?

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

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

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

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

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%”

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

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

If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer

More Growth Strategy Stats

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

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

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

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

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

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

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

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

The statistic shows the worldwide IT spending on enterprise software from 2009 to 2020.

Negative Churn and Expansion Revenue