Quote Info

A great way to understand any business model is to answer the following simple question:

Can I make more profit from my customers than it costs me to acquire them?

This is effectively a study of the unit economics of each customer. To answer the question, we need two metrics:

  • LTV – the Lifetime Value of a typical customer
  • CAC – the Cost to Acquire a typical Customer

(How to calculate LTV and CAC)

Entrepreneurs are usually overoptimistic about how much it costs to acquire a customer. This probably comes from a belief that customers will be so excited about what they have built, that they will beat a path to their doors to buy the product. The reality is often very different!

ForEntrepreneurs.com

More SaaS + Software Stats

Our experiences with SaaS startups indicate that they usually start with a couple of lead generation programs such as Pay Per Click Google Ad-words, radio ads, etc

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

80% of venture capital investments take place in the enterprise

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

SaaS IPOs have more than doubled over the last 12 years

How Often Should The Pricing Committee Be Meeting And Making Changes?

Cloud-hosted applications have a 99% uptime

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

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

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”

More Growth Strategy Stats

73% of organizations indicated nearly all their apps will be SaaS by 2021

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

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

Three uses for the SaaS Guidelines

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

Is your SaaS business viable?

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

In 2020, China is expected to generate 55 billion U.S. dollars in the global medical technology market.

For SaaS companies valued at over $1billion, the median amount of financing raised is $206million

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.