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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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More SaaS + Software Stats

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

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost

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

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

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

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

The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling

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

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

More Growth Strategy Stats

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

56% treat “Existing Customer Renewals” as high priority

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

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

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

SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

If the numerator of your quick ratio is growing that means your revenue is growing. It’s important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn

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.

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