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

Statistic Info

Executive Summary Summary of the top findings from the latest SaaS Metrics Survey. Customer retention cost, customer health, and customer lifetime value are the new frontier in SaaS metrics 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 staffing 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 influenced by customer retention and upsell For the third year in a row, the survey indicates that the fastest growing SaaS companies have a significantly 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

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

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 top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling

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

In contrast, only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

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

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

Negative Churn and Expansion Revenue

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

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

More Growth Strategy Stats

What Levers are available to drive Growth

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.

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

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

Software and online services are in a period of dizzying growth

As of December 2018, there were total 105,000 employees in Lockheed Martin, as compared to 126,000 employees in 2015.

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

For SaaS companies valued at over $1billion, the median amount of financing raised is $206million

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

36% of SaaS businesses managed to reduce their revenue churn over the last 12-months