The very best SaaS businesses have a negative revenue churn rate and will have a Revenue Retention Rate of greater than 100%

SaaS + Software
Statistic in Growth Strategy

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.

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After $10M in ARR, the median growth rate slows to just under 50%

How to Reduce Churn

The best place to hide a dead body is page 2 of Google search results.

51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution

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

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

The median SaaS business loses about 10% of its revenue to churn each year and that works out to about 0.83% revenue churn a month

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

Getting paid in advance is really smart idea if you can do it without impacting bookings, as it can provide the cash flow that you need to cover your cash problem

How To Make Pricing A Constant Process In Your Organization

More Growth Strategy Stats

In 2019, spending on IT services is expected to amount to 1,016 billion U.S. dollars worldwide

General Dynamics is a market leader in the aerospace and defense industry. In 2018, a total of 105,600 people were working at General Dynamics.

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

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

Analyzed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes

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

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

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

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

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

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