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

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

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

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

The 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%

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

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

Negative Churn and Expansion Revenue

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

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

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

More Growth Strategy Stats

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

Is your SaaS business viable?

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

The median TTM revenue growth rate + adj. EBITDA margin for publicly traded SaaS companies was ~37%, implying that just under one half met or exceed “The Rule of 40%”

At Facebook, 15 percent of tech roles are staffed by women

80% of venture capital investments take place in the enterprise

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

Increases in revenue growth rates drive twice as much market-capitalisation gain as margin improvements for companies with less than $4 billion in revenues

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

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?