Statistic Info

When we looked at the fastest growing SaaS companies in our study (those with a CAGR of over 50%) we found an average Quick Ratio of 3.9.

These SaaS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn. They are, in other words, exactly the type of SaaS startup that Mamoon looks for when deciding where to invest.

And, as their high Quick Ratio implies, they have a great chance to continue growing quickly and healthfully, and eventually become one of those fabled SaaS companies with a run rate of more than $10 million.

However, once we started digging deeper, the story became a little more complicated (and more interesting).

InsightSquared

More SaaS + Software Stats

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

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

How To Make Pricing A Constant Process In Your Organization

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

SaaS IPOs have more than doubled over the last 12 years

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

The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

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

More Growth Strategy Stats

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

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

The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

The median annual unit churn for SAAS companies was 10% in 2016

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

Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

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

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

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

To establish a revenue or lead-commitment based on your funnel metrics and revenue-growth goals, work backward from the gross revenue amount that marketing is responsible for generating (generally around 40%)