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

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?

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