Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

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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.

As contract sizes increase, gross dollar churn consistently trends downwards (presumably related to longer contract terms). This year’s results were largely consistent with last year’s. However, churn trended up markedly for the smaller size contract groups (<$5K median ACV).

More SaaS + Software Stats

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

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

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

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

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

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

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

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

The average company gets 16% of new ACV sales from up-sells and expansions, though companies with revenue between $10MM-$40MM are relying more heavily on up-sell and expansions

When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”

More Growth Strategy Stats

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)

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

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

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

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

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

56% treat “Existing Customer Renewals” as high priority

The median annual unit churn for SAAS companies was 10% in 2016

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