Quote Info

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

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

More than 1/2 of SAAS companies increased their spending on customer retention last 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

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

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

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

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

The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

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

SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time

More Growth Strategy Stats

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

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

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

SaaS IPOs have more than doubled over the last 12 years

Analysed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

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

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