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

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

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

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

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

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The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

When venture capitalists participate in seed rounds, the average round size is 3x larger

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

More Growth Strategy Stats

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

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

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

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

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

Growing faster has twice as much impact on share price as improving margins

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

Google only has a 30 percent female workforce

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18