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

SaaS + Software
Statistic in Growth Strategy

Statistic Info

An acceptable churn rate is in the 5 – 7% range ANNUALLY, depending upon whether you measure customers or revenue.

And BVP’s assertion is backed up by Pacific Crest in their Private SaaS Company Survey Results that show roughly 70% of SaaS companies in their survey had annual churn in the < 10% range, with 75% of those at 5% or under.

The way I read the results of Pacific Crest’s survey is that 30% of SaaS providers surveyed have an unacceptable level of churn.

Now what about the SaaS providers that aren’t included in surveys like that one or who don’t appear in the logo list of the top investor portfolios and who are just trying to grow? Are they doing better or worse?

sixteenventures.com

More SaaS + Software Stats

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%

If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer

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

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

Software and online services are in a period of dizzying growth

Three uses for the SaaS Guidelines

The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

Negative Churn and Expansion Revenue

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added

More Growth Strategy Stats

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%

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

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

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

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

Improve Your Pricing Schedule And Turn More Profit

As of December 2018, there were total 105,000 employees in Lockheed Martin, as compared to 126,000 employees in 2015.

In 2017, Foxconn Technology Group achieved revenue of 158.15 billion U.S. dollars.

Investment in marketing automation tools is expected to reach $25 billion by the year 2023

How to Reduce Churn

Looking for SaaS focused services?
SaaS Website Design
SaaS SEO Agency
SaaS PPC