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 SaaS & Tech 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

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs

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

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

Negative Churn and Expansion Revenue

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

SaaS IPOs have more than doubled over the last 12 years

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

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 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

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

More SaaS & Tech Growth Strategy Stats

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

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

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

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

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

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

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

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 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%

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

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