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%.

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

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

It’s 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue

54% treat upselling and add-on sales as high priority

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

Our experiences with SaaS startups indicate that they usually start with a couple of lead generation programs such as Pay Per Click Google Ad-words, radio ads, etc

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

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%”

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

More Growth Strategy Stats

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

Software and online services are in a period of dizzying growth

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

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

The median monthly revenue churn for large SaaS companies is 0.75%, translating into an annual revenue churn rate of 10%

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

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

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The average SaaS company spends just 6 hours determining their pricing strategy

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales