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

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.

SaaS & Tech Growth Strategy Articles

• Why Link Building is Crucial for Your SEO Strategy in 2023
  Why Link-Building is Crucial for Your SEO Strategy in 2023Link building is an essential part of search engine optimization and is imperative to a successful SEO strategy. It involves acquiring links from other websites to your own website in order to improve its authority and search engine rankings. In other words, link-building is the process […]
• An Applied Innovation Model
  Innovation and creativity are becoming increasingly valuable as the need for unique solutions to business problems becomes more salient. Cognitive psychologist Scott Barry Kaufman argues that the creative process can be viewed in four stages: 1. Preparation – identify the problem and perform research 2. Incubation – passive, unconscious period where innovation “percolates” 3. Illumination […]
• Your Guide to All Things EdTech: Go-To-Market, Branding, Positioning
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• 13 Strategies to Boost SaaS User Retention and Renewals
  Improving your retention rate can mean the difference between growing your company and running it into the ground. Read specific strategies you can use to improve your SaaS retention rate.
• Personas and The “Broken Telephone” Game
  We've all played the telephone game.
• 7 Key SaaS Growth Strategies
  Customers aren't just going to appear; marketing teams need to proactively reach them in creative ways. In the current marketing landscape, brands have a near limitless number of ways to reach potential customers.
• Brand Strategy Framework
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• Blue Ocean Strategy
  Today, Andy shares with us what a "Blue Ocean" strategy is and how to implement it in your business and marketing strategies. Blue Ocean StrategyA Red Ocean is an ocean where there's a lot of competition, a lot of people fighting and a lot of blood in the water, which makes it really hard to sell […]
• How To Assess Your Brand, Website, Marketing & Competitors
  There are two things required to reach a destination - first to know where you want to go, but second to also know where you stand today.

SaaS + Software Stats

• 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
• 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%
• Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added
• As SaaS companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth
• The median annual unit churn for SAAS companies was 10% in 2016
• Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.
• SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence
• All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing
• Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

SaaS & Tech Growth Strategy Stats

• 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
• The median monthly revenue churn for large SaaS companies is 0.75%, translating into an annual revenue churn rate of 10%
• Three uses for the SaaS Guidelines
• It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue
• Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less
• High-growth companies generate 60% fewer sales opportunities than low-growth companies
• The global cloud computing market size is expected to grow from USD 371.4 billion in 2020 to USD 832.1 billion by 2025
• In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%
• Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015