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The results of our analysis show that top-quartile-growth performers have much lower net-revenue churn than mean performers. The analysis also shows that net-revenue churn improves with larger average contract value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts (Exhibit 1). In particular, between the SMB and the SMBs-and-enterprises customer types, top-quartile performers not only have net-revenue churn that is 14 to 23 percentage points less than mean performers but also have net-revenue churn that is negative in an absolute sense. Negative net-revenue churn means that these top-quartile performers would continue to grow even if they did not acquire any new customers (their ACV expansion in existing accounts is greater than any revenue churn from existing customers).

Mckinsey

More SaaS + Software Stats

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%

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

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs

55% of SaaS companies rate Customer Retention as the key metric to measure

Revenue per employee has been steadily increasing in SAAS companies. It serves as a great longitudinal measuring stick to understand the increasing or decreasing efficiency of the business

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

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

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

More Growth Strategy Stats

How Often Should The Pricing Committee Be Meeting And Making Changes?

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business

In 2017, Foxconn Technology Group achieved revenue of 158.15 billion U.S. dollars.

The median SaaS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month

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

Improve Your Pricing Schedule And Turn More Profit

The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

80% of venture capital investments take place in the enterprise

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