Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

From Totango
Statistic in SaaS & Tech Growth Strategy

The SaaS industry continues to be a challenged by high churn rates Spending on customer retention is growing SaaS companies continue to invest in tracking more metrics on their existing customers. The top new metrics companies plan to track in 2016 are customer retention cost, customer health, and customer lifetime value. More than two-thirds of the surveyed SaaS companies experienced annual churn rates of 5% or higher. Additionally, almost the same number saw an increase or no change in churn since the previous year. More than half of the companies surveyed increased their spending on customer retention last year. Spending on sta?ng increased at a faster clip compared to spending on technology or programs, suggesting that companies are still more focused on building out their teams vs. putting in place the infrastructure to scale customer retention operations. Upsell and expansion sales are a missed opportunity for SaaS vendors For the large majority of SaaS companies surveyed (81%), only 20% or less of new revenue came from existing customers in the form of upsell and expansion sales. SaaS company growth rates are strongly in?uenced by customer retention and upsell For the third year in a row, the survey indicates that the fastest growing SaaS companies have a signi?cantly better record on churn and upsell, underscoring the critical role of managing revenue from existing customers in the SaaS business model.

More SaaS + Software Stats

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

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

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

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

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

56% treat “Existing Customer Renewals” as high priority

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

54% treat upselling and add-on sales as high priority

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 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%

More SaaS & Tech Growth Strategy Stats

General Dynamics is a market leader in the aerospace and defense industry. In 2018, a total of 105,600 people were working at General Dynamics.

In 2017, the world invested around 3.4 billion U.S. dollars in small hydropower technologies, down from 3.9 billion U.S. dollars in 2016.

in 2016, women-led companies received $1.46 billion in investments from venture capitalists. Male-led companies, on the other hand, received $58.2 billion

54% treat upselling and add-on sales as high priority

80% of venture capital investments take place in the enterprise

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

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

SaaS IPOs have more than doubled over the last 12 years

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

56% treat “Existing Customer Renewals” as high priority