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

SaaS + Software
Statistic in SaaS & Tech Growth Strategy

Statistic Info

The median result is notably higher than compared to previous surveys, where the $1.07 and $0.92 were reported in the 2014 and 2013, respectively.Respondents (excluding the smallest companies) spent a median of $1.18 to acquire each dollar of new ACV from a new customer. The result drops to $1.06 if we include companies with <$2.5MM in revenues.

Note to regular ForEntrepreneurs readers: the way that CAC is measured in the question above is different to how I normally measure CAC in my other blog posts e.g.”SaaS Metrics 2.0 –  A Guide to Measuring and Improving What Matters“. In those posts CAC is the average amount that it costs to acquire a single customer. In the question above, CAC is measured as the cost to acquire a dollar of ACV (annualized contract value). This is very similar to my metric: “Months to recover CAC”. i.e. if it costs you a dollar to acquire a dollar of ACV, then it will take you 12 months to recover that CAC. For the median in the graphic above of $1.07 to acquire a dollar of ACV, that means it will take 12 x 1.07 = 12.84 (or about 13 months to recover.)

For Entrepreneurs.com

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

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

55% of SaaS companies rate Customer Retention as the key metric to measure

How to Reduce Churn

86% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority, both in terms of executive support and funding available

Analysed 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

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

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

Cloud application services (SaaS) to reach $126 billions by the end of 2021

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs

More SaaS & Tech Growth Strategy Stats

Women in western countries use the internet 17 percent more than their male counterparts

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year

To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

47% of millennials want to work at diverse companies, according to a recent study.

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

The average SaaS company spends just 6 hours determining their pricing strategy

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

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

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