The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%

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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.

More SaaS + Software Stats

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

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

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

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

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

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

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

The average company gets 16% of new ACV sales from up-sells and expansions, though companies with revenue between $10MM-$40MM are relying more heavily on up-sell and expansions

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

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000

More Growth Strategy Stats

In many SaaS businesses, sales reps play a key role in closing deals

In 2018, the global tech spending is forecast to amount to 3,212 billion U.S. dollars.

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

Revenue Churn vs Customer Churn – why are they different?

86% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority, both in terms of executive support and funding available

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

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

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