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

As expected, companies that are focused mainly on enterprise sales have higher levels of professional services. In comparison with last year’s survey, attach rates ticked down for Enterprise and SMB (2015: Enterprise 26%, SMB 18%).

SaaS + Software Stats

• Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added
• 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
• A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses
• 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
• Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50
• At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR
• Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month
• The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling
• 51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

SaaS & Tech Growth Strategy Stats

• Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing
• The median TTM revenue growth rate + adj. EBITDA margin for publicly traded SaaS companies was ~37%, implying that just under one half met or exceed “The Rule of 40%”
• The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn
• 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
• Analysed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes
• Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases
• The median annual unit churn for SAAS companies was 10% in 2016
• The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8
• Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added