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:

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

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

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.

SaaS IPOs have more than doubled over the last 12 years

The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013

To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14

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

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

High-growth companies offer a return to shareholders 5 times greater than medium-growth companies

The very best SAAS companies keep monthly revenue churn at around 0.58%, that’s only about 7% revenue churn a year

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

More SaaS & Tech Growth Strategy Stats

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

SaaS solutions have the highest security features with 95% security failures due to human error

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

Sony’s PlayStation brand had accumulated approximately 38.57 million fans on the social network

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

SAAS companies invest between 80% and 120% of their revenue in sales and marketing in the first 5 years of their existence

How to Reduce Churn

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

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

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