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

SaaS + Software
Statistic in SaaS & Tech Growth Strategy

Statistic Info

SaaS companies vary a lot in their willingness to invest in customer acquisition. For example, the OPEXEngine SaaS benchmark report gives an average payback period for CAC alone of about 18 months (CAC per new customer divided by average recurring revenue per customer). However, SasS companies with expected growth rates in the 20-50% range had a payback period of only 6.5 months, while those with expected growth rates over 50% had an average payback period of.drum roll.35 months! Ouch. While it makes sense to invest heavily in customer acquisition during high growth, SaaS Metrics Rule of Thumb #6 | Growth Creates Pressure to Reduce Total Cost of Service, highlights the importance of keeping average CAC per customer in check as you grow. Even if you’re angling toward an IPO with a churn rate under 10%, I think it’s near impossible to justify a 3 year payback period just to cover CAC. Talk about negative cash flow!!

Chaotic Flow

More SaaS + Software Stats

The global cloud computing market size is expected to grow from USD 371.4 billion in 2020 to USD 832.1 billion by 2025

Three uses for the SaaS Guidelines

The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9: generating $3.9 in revenue for every $1 lost to revenue churn

The median SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

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

After $10M in ARR, the median growth rate slows to just under 50%

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

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

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

More SaaS & Tech Growth Strategy Stats

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales

The global cloud computing market size is expected to grow from USD 371.4 billion in 2020 to USD 832.1 billion by 2025

Companies with longer contracts (2+ years) reported the lowest annual unit churn

It’s essential to have a point of view that puts a stake in the ground and breaks through the clutter.

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

The average company gets 16% of new ACV sales from up-sells and expansions, though companies with revenue between $10MM-$40MM are relying more heavily on up-sell and expansions

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

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

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

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

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