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

High-growth companies generate 60% fewer sales opportunities than low-growth companies

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added

Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

Software and online services are in a period of dizzying growth

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

Analysed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

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

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It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

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

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales

If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years

Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing

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

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

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

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In 2018, the revenue of General Dynamics amounted to nearly 36.2 billion U.S. dollars.