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

SaaS + Software
Statistic in Growth Strategy

Statistic Info

High-growth companies scale their teams very quickly. In fact, the companies in the sample set grew their teams by 56% annually over five years, which nets out to about 8.5x growth, from 204 employees to 1750 employees on the median.

Despite the massive growth of these organizations, the best companies are able to maintain or even accelerate their revenue per employee. In fact, increases in revenue per employee as a company scales is an incredibly positive sign of the health of the business. It indicates that the company is achieving economies of scale. Those economies of scale may exist as a consequence of a strong brand, monopoly-like characteristics within their market segment, improving sales efficiency, increases in contract size, better rates of customer upsells, etc. But in all cases, it’s a hallmark of a company whose economics are improving with time.

Tomasz Tonguz

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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”

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

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

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

SaaS organizations are now operating in over 100 countries

The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

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

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

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

More Growth Strategy Stats

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

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

Analyzed 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

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

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

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

General Dynamics is a market leader in the aerospace and defense industry. In 2018, a total of 105,600 people were working at General Dynamics.

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Cloud application services (SaaS) to reach $126 billions by the end of 2021

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

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