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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SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime). If a customer is happy with the service, they will stick around for a long time, and the profit that can be made from that customer will increase considerably. On the other hand if a customer is unhappy, they will churn quickly, and the business will likely lose money on the investment that they made to acquire that customer. This creates a fundamentally different dynamic to a traditional software business: there are now two sales that have to be accomplished:

1. Acquiring the customer
2. Keeping the customer (to maximize the lifetime value).

Because of the importance of customer retention, we will see a lot of focus on metrics that help us understand retention and churn. But first let’s look at metrics that help you understand if your SaaS business is financially viable.

More SaaS + Software Stats

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

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

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

Growing faster has twice as much impact on share price as improving margins

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

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

The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

Negative Churn and Expansion Revenue

More Growth Strategy Stats

A University of Texas study showed that women ask for $7,000 less than their male counterparts in job interviews

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

It’s essential to have a point of view that puts a stake in the ground and breaks through the clutter.

They may forget what you said, but they will never forget how you made them feel.

Women in western countries use the internet 17 percent more than their male counterparts

Invention is 10% inspiration and 90% perspiration.

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

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

As of December 2018, there were total 105,000 employees in Lockheed Martin, as compared to 126,000 employees in 2015.

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