Statistic Info

They are, in other words, exactly the type of SaaS startup that you should look for when deciding where to invest.

And, as their high Quick Ratio implies, they have a great chance to continue growing quickly and healthfully, and eventually become one of those fabled SaaS companies with a run rate of more than $10 million.

InsightSquared

More SaaS + Software Stats

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

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

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

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

How to Reduce Churn

Customer Segmentation analysis will help point out which are your most profitable segments

The median annual unit churn for SAAS companies was 10% in 2016

More Growth Strategy Stats

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

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

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales

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

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

The global cloud computing market size is expected to grow from USD 371.4 billion in 2020 to USD 832.1 billion by 2025