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

Statistic Info

•PLG companies use product to drive user acquisition, expansion and retention

•PLG products are extremely sticky –people log in regularly and users share the products with colleagues and friends

•These businesses tend to boast amazing NPS scores

•The virality of user adoption and significant goodwill built with users enables PLG business to successfully (and efficiently) accelerate growth via cross-sell / upsell over time

More SaaS + Software Stats

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

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

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

SaaS IPOs have more than doubled over the last 12 years

Customer Segmentation analysis will help point out which are your most profitable segments

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

Best-in-class SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

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”

More Growth Strategy Stats

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

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

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

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

How to Reduce Churn

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

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

Is your SaaS business viable?

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