SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

SaaS + Software
Statistic in Growth Strategy

Statistic Info

The median annual contract size (subscription component only) for the group was $25K per year. These results are somewhat above the previous survey medians of $21K, $21K, $20K in 2015, 2014 and 2013, respectively.

The median average contract length is 1.3 years. The median billing term is seven months in advance. These results are very comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing one month over 2015 to seven months.

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When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”

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

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

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

Customer Segmentation analysis will help point out which are your most profitable segments

The average company gets 16% of new ACV sales from up-sells and expansions, though companies with revenue between $10MM-$40MM are relying more heavily on up-sell and expansions

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business

More Growth Strategy Stats

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs

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

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

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

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

SaaS solutions have the highest security features with 95% security failures due to human error

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

Customer Segmentation analysis will help point out which are your most profitable segments

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

A University of Texas study showed that women ask for $7,000 less than their male counterparts in job interviews

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