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

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There are two other terms which you might see used, which are the counterparts to churn:

• CRR (Customer Retention Rate) which is equal to 1 – Customer Churn Rate
• DRR (Dollar Retention Rate) which is equal to 1 – Dollar Churn Rate

So a business that has a negative churn rate, will have a Dollar Retention Rate of greater than 100%. These are some of the very best SaaS business out there. Examples of DRR greater than 100% include: Zendesk: 123%, NewRelic 115%, Box: 130%, Rally Software 127%.

More SaaS + Software Stats

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

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

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

High-growth companies generate 60% fewer sales opportunities than low-growth companies

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

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%

Customer Segmentation analysis will help point out which are your most profitable segments

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

Best-in-class SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

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

More Growth Strategy Stats

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

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

It’s 9x cheaper to retain existing customers than acquire new customers: costing $0.13 to acquire any additional dollar of revenue

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts. Source: ForEntrepreneurs

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

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

80% of venture capital investments take place in the enterprise

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added