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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

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

Improve Your Pricing Schedule And Turn More Profit

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

How To Make Pricing A Constant Process In Your Organization

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

Internet Sales strategies have a significantly lower CAC of just $0.42

Software and online services are in a period of dizzying growth

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

As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn

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

More Growth Strategy Stats

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

Invention is 10% inspiration and 90% perspiration.

Revenue per employee has been steadily increasing in SAAS companies. It serves as a great longitudinal measuring stick to understand the increasing or decreasing efficiency of the business

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

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

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 largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

54% treat upselling and add-on sales as high priority

How to Reduce Churn

orecasts suggest that global blockchain technology revenues will experience massive growth in the coming years, with the market expected to climb to over 23.3 billion U.S. dollars in size by 2023.