Quote Info

Upsells are a Secret to Growing the Business Twice as Fast The top 50% of growers generate more upsell business than their slower growing competitors. The difference in growth rates becomes more pronounced as the business scales into the $15M+ in annual revenue range where upselling companies grow more than twice as fast. In the early days of the business, net new account growth is a priority for most businesses but the growth rate data and CAC data indicate that upselling existing customers is an important and underemphasized key to growth.

Tomasz Tonguz

More SaaS + Software Stats

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

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

Median annual gross dollar churn was 8%, 7%, 6% and 8% in 2016, 2015, 2014 and 2013

Revenue per employee has been steadily increasing in SAAS companies. It serves as a great longitudinal measuring stick to understand the increasing or decreasing efficiency of the business

Growth rate accelerates in the expansion stage ($2.5M – $10M ARR)

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

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

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

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

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

More Growth Strategy Stats

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

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

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

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

The boom in the industry is creating more jobs for techies. Data reveals there were 627,000 unfilled positions in tech in April 2017

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

Is your SaaS business viable?

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

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

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