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As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn. Companies with shorter contracts (under 2 years) saw increased dollar churn compared to last year; contracts 2 years or longer were relatively consistent with prior survey results.

By definition, non-renewal rates are higher than gross dollar churn rates. However, it is interesting to see that the non-renewal rates are also higher for shorter duration contracts.

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More SaaS + Software Stats

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

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

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

The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

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

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

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

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

Increases in revenue growth rates drive twice as much market-capitalisation gain as margin improvements for companies with less than $4 billion in revenues

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

More Growth Strategy Stats

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense

80% of venture capital investments take place in the enterprise

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

Invention is 10% inspiration and 90% perspiration.

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

If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years

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

The median monthly revenue churn for large SaaS companies is 0.75%, translating into an annual revenue churn rate of 10%

The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

Increases in revenue growth rates drive twice as much market-capitalisation gain as margin improvements for companies with less than $4 billion in revenues