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

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

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

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

SaaS IPOs have more than doubled over the last 12 years

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

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

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

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

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

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

More Growth Strategy Stats

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

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

73% of organizations indicated nearly all their apps will be SaaS by 2021

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

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

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

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

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

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

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