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Upsells key to growth and scale

As shown in the chart below, companies that have made it past the $40MM revenue mark use upsells to drive a much higher percentage of their new Average Contract Value (ACV) than smaller companies. In fact, companies in the $40-75MM revenue range attribute twice as much new revenue to upsells as the median company.

Of course, it’s dangerous to imply causation here. There are a number of reasons why we might see this effect in later-stage companies. One unexciting possibility is that their overall growth in new business is slowing down and it’s skewing these percentages in favor of upsells. Let’s look at this data through another lens and explore how upsells are related to growth.

RJMetrics

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%

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

How to Reduce Churn

The median SaaS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month

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

80% of venture capital investments take place in the enterprise

Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there

SaaS companies in the $7.5MM-$15MM range are among the fastest growers

The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

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

More Growth Strategy Stats

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR

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

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

A University of Texas study showed that women ask for $7,000 less than their male counterparts in job interviews

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

For SaaS companies valued at over $1billion, the median amount of financing raised is $206million

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

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies