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

Statistic Info

Inside Sales Driven Companies Grow Fastest Inside sales driven distribution companies grow about 40% faster than companies using field sales, web sales or channel, or about 37% revenue growth per year.

Price the Product Between $1k to $25k Annually to Optimize Growth Companies with contract sizes of $1k to $25k grow the fastest, about 26% faster or 35% y/y. I suspect there are two reasons to support this pattern. First, purchases under $25k tend to require fewer approvals which decreases sales cycle. Second, these accounts can be closed by inside sales reps which are far less expensive than field sales. On the same sales investment, a startup may be able to hire three or four inside sales reps for each field sales rep.

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.

More SaaS + Software Stats

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

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

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

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

Between the SMB and Enterprise customer types, the top-quartile performers not only have net-revenue churn that is 14% to 23% percentage less than the average performers but also have net-revenue churn that is negative in an absolute sense

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

The median 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%

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

Is your SaaS business viable?

More Growth Strategy Stats

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

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

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

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

Smaller SAAS companies reported more frequent use of third-party providers as their primary application delivery method, while the largest companies were more likely to use self-managed servers

How to Reduce Churn

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

36% of SaaS businesses managed to reduce their revenue churn over the last 12-months

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

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts