Statistic Info

To study churn, we need to look at a particular group of customers that signed up in a particular time period. We refer to these groups as cohorts. So you might have a Jan 2014 cohort which is comprised of all the customers that signed up in Jan 2014. We will then want to track how many customers we retain, and how the revenue for each cohort evolves over time. Here is a graph that shows what happens to the number of customers in a particular cohort over several years with three different monthly Customer Churn Rates.

For Entrepreneurs.com

More SaaS + Software Stats

How to Reduce Churn

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

A 2017 SaaS Capital survey showed that young companies actually have higher retention rates than more mature SaaS businesses

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

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

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

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

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

The best SAAS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

More Growth Strategy Stats

80% of venture capital investments take place in the enterprise

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

The very best SAAS business has a negative churn rate and will have a Dollar Retention Rate of greater than 100%

They may forget what you said, but they will never forget how you made them feel.

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

Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts

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

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

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

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50