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.

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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

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

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

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

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

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

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

More Growth Strategy Stats

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

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

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

A 1% increase in pricing strategy yields an average 11% increase in profit

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

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

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

How to Reduce Churn

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate