Statistic Info

Executive Summary Summary of the top ?ndings 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 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.

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More SaaS + Software Stats

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

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

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

To establish a revenue or lead-commitment based on your funnel metrics and revenue-growth goals, work backward from the gross revenue amount that marketing is responsible for generating (generally around 40%)

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

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

The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8

The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013

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

Negative Churn and Expansion Revenue

More Growth Strategy Stats

The statistic shows the worldwide IT spending on enterprise software from 2009 to 2020.

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

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

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

In 2017, the global adoption rate for biotech soybean amounted to 77 percent.

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

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

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

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

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