Statistic Info

Cost of Customer Acquisition is About 11 Months’ of Revenue The median startup spends about 92% of first year average contract value on the sale, implying an 11 month payback period on the CAC. An additional months’ revenue is required to upsell a customer and about the same is required to close a renewal.

Tomasz Tonguz

More Tech Services Stats

The average SaaS company spends just 6 hours determining their pricing strategy

55% of SaaS companies rate Customer Retention as the key metric to measure

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

How to Reduce Churn

Internet Sales strategies have a significantly lower CAC of just $0.42

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

After $10M in ARR, the median growth rate slows to just under 50%

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

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

Growing faster has twice as much impact on share price as improving margins

More Growth Strategy Stats

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

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

Companies with longer contracts (2+ years) reported the lowest annual unit churn

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

Cloud-hosted applications have a 99% uptime

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

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

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

When venture capitalists participate in seed rounds, the average round size is 3x larger