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).

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More than 1/2 of SAAS companies increased their spending on customer retention last year

Three uses for the SaaS Guidelines

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%

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”

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

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

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

86% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority, both in terms of executive support and funding available

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

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

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

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

Invention is 10% inspiration and 90% perspiration.

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

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

The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year

The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9: generating $3.9 in revenue for every $1 lost to revenue churn

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

Internet Sales strategies have a significantly lower CAC of just $0.42