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

Statistic Info

In the past, we have benchmarked the revenue per employee of large publicly traded SaaS companies and determined that the average is about $200k of revenue per person. But, that analysis examined revenue per employee that only one point in time.

High-growth companies scale their teams very quickly. In fact, the companies in the sample set grew their teams by 56% annually over five years, which nets out to about 8.5x growth, from 204 employees to 1750 employees on the median.

Despite the massive growth of these organizations, the best companies are able to maintain or even accelerate their revenue per employee. In fact, increases in revenue per employee as a company scales is an incredibly positive sign of the health of the business. It indicates that the company is achieving economies of scale. Those economies of scale may exist as a consequence of a strong brand, monopoly-like characteristics within their market segment, improving sales efficiency, increases in contract size, better rates of customer upsells, etc. But in all cases, it’s a hallmark of a company whose economics are improving with time.

More SaaS + Software Stats

To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14

SAAS companies with >$250K median ACV book nearly 25% of their contracts at 3 years or longer

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

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

80% of venture capital investments take place in the enterprise

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9: generating $3.9 in revenue for every $1 lost to revenue churn

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

How to Reduce Churn

More Growth Strategy Stats

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

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

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

How to Reduce Churn

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

In 2019, spending on IT services is expected to amount to 1,016 billion U.S. dollars worldwide

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

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; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey