Quote Info

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

(For more on how to calculate LTV and CAC, click here.)

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.

For Entrepreneurs.com

More SaaS + Software Stats

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

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

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

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

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

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

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

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

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

More Growth Strategy 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

Analyzed 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

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

At Facebook, 15 percent of tech roles are staffed by women

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

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

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

The average SaaS company spends just 6 hours determining their pricing strategy