Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month in Market Research
Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month in SaaS & Tech Growth Strategy
Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added in Market Research
Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers in SaaS & Tech Growth Strategy
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% in Market Research
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 in SaaS & Tech Growth Strategy
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” in SaaS & Tech Growth Strategy
If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer in Market Research
Companies with longer contracts (2+ years) reported the lowest annual unit churn in SaaS & Tech Growth Strategy
SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer in SaaS & Tech Growth Strategy
The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer in Market Research
The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers in Market Research
The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013 in SaaS & Tech Growth Strategy
The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8 in SaaS & Tech Growth Strategy
More than 1/2 of SAAS companies increased their spending on customer retention last year in SaaS & Tech Growth Strategy
SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time in SaaS & Tech Growth Strategy
High-growth companies generate 60% fewer sales opportunities than low-growth companies in SaaS & Tech Growth Strategy
Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there in SaaS & Tech Growth Strategy
To establish a revenue or lead-commitment based on your funnel metrics and revenue-growth goals, work backward from the gross revenue amount that marketing is responsible for generating (generally around 40%) in Market Research
SAAS companies that are focused mainly on enterprise sales have higher levels of professional services in SaaS & Tech Growth Strategy
Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales in SaaS & Tech Growth Strategy
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 in SaaS & Tech Growth Strategy
Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing in Market Research
SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence in Market Research
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 SaaS & Tech Growth Strategy
Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less in Market Research
Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts in SaaS & Tech Growth Strategy
The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month in SaaS & Tech Growth Strategy
Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013 in SaaS & Tech Growth Strategy
The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100% in SaaS & Tech Growth Strategy
The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year in SaaS & Tech Growth Strategy
The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn in SaaS & Tech Growth Strategy
Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015 in SaaS & Tech Growth Strategy
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 SaaS & Tech Growth Strategy
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 in SaaS & Tech Growth Strategy
Growing faster has twice as much impact on share price as improving margins in SaaS & Tech Growth Strategy
Customer Segmentation analysis will help point out which are your most profitable segments in Conversion Optimization
Our experiences with SaaS startups indicate that they usually start with a couple of lead generation programs such as Pay Per Click Google Ad-words, radio ads, etc in SaaS & Tech Growth Strategy
The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel in Conversion Optimization
In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal in SaaS & Tech Growth Strategy
If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business in SaaS & Tech Growth Strategy
Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn? in SaaS & Tech Growth Strategy
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 in SaaS & Tech Growth Strategy
