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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%.

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

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

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

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.

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

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

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

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

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%

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

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

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

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

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

Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

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

If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years