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

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Another key value of having these conversion rates is the ability to understand the implications of future forecasts. For example, lets say your company wants to do $4m in the next quarter. You can work backwards to figure out how many demos/trials that means, and given the sales productivity numbers – how many salespeople are required, and going back a stage earlier, how many leads are going to be required. These are crucial planning numbers that can change staffing levels, marketing program spend levels, etc.

More SaaS + Software Stats

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR

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

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

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

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

How To Make Pricing A Constant Process In Your Organization

The median SaaS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month

More Growth Strategy Stats

Internet Sales strategies have a significantly lower CAC of just $0.42

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

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.

How to Reduce Churn

The median monthly revenue churn for large SaaS companies is 0.75%, translating into an annual revenue churn rate of 10%

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

SaaS IPOs have more than doubled over the last 12 years

26% of SAAS companies with at least $15MM in GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher.

At Facebook, 15 percent of tech roles are staffed by women

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