Statistic Info

Respondents (excluding the smallest companies) spent a median $1.13 to acquire each dollar of new ACV from a new customer. The result drops to $1.00 if we include companies with <$2.5MM in revenues. The median spend to acquire each dollar of new ACV from a new customer this year is similar to last year’s result of $1.18.

Note to regular ForEntrepreneurs readers: The way CAC is measured here is different than how I normally measure CAC (see SaaS Metrics 2.0 –  A Guide to Measuring and Improving What Matters). In those posts CAC is the average amount that it costs to acquire a single customer. In this survey, CAC is measured as the cost to acquire a dollar of ACV (annualized contract value).

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More SaaS + Software Stats

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

The statistic shows the worldwide IT spending on enterprise software from 2009 to 2020.

How to Reduce Churn

SaaS organizations are now operating in over 100 countries

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

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

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

The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year

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

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

More Growth Strategy Stats

More than 1/2 of SAAS companies increased their spending on customer retention last year

The median SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers

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

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

Best-in-class SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

In 2017, Foxconn Technology Group achieved a net income of 135.37 billion New Taiwanese dollars, the equivalent to approximately 4.55 billion U.S. dollars.

How to Reduce Churn

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

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18