Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing

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Overall, the median company devotes 30% of their CAC to marketing expenses, with the remainder allocated to sales. However, internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing. Besides a slight shift towards greater marketing spend by field sales companies, the results are largely consistent with last year’s results.

More SaaS + Software Stats

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

How to Reduce Churn

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

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

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

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

Software and online services are in a period of dizzying growth

As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn

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

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

More Growth Strategy Stats

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

Analyzed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

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

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

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

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%)

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

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

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”