Quote Info

This is because they have to invest heavily upfront to acquire the customer, but recover the profits from that investment over a long period of time. The faster the business decides to grow, the worse the losses become. Many investors/board members have a problem understanding this, and want to hit the brakes at precisely the moment when they should be hitting the accelerator.

In many SaaS businesses, this also translates into a cash flow problem, as they may only be able to get the customer to pay them month by month.

For Entrepreneurs.com

More SaaS + Software Stats

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

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

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

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

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

Best-in-class SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

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

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

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

To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14

More Growth Strategy Stats

How to Reduce Churn

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

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.

orecasts suggest that global blockchain technology revenues will experience massive growth in the coming years, with the market expected to climb to over 23.3 billion U.S. dollars in size by 2023.

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

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

Software and online services are in a period of dizzying growth

As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn

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

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