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

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.

More SaaS + Software Stats

When venture capitalists participate in seed rounds, the average round size is 3x larger

All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing

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

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

Companies with longer contracts (2+ years) reported the lowest annual unit churn

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

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

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

The median average contract length is 1.3 years and the average billing term is seven months in advance in 2016. Comparable to 2015, with average contract length shortening from 1.5 to 1.3 years and average billing period increasing by one month from 2015 to 7 months

More Growth Strategy Stats

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

In 2017, Foxconn Technology Group achieved revenue of 158.15 billion U.S. dollars.

At Twitter, 10 percent of tech roles are staffed by women

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

Japanese company Hitachi accounted for three percent of the world’s market for diagnostic imaging in 2017.

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

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

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

As of December 2018, there were total 105,000 employees in Lockheed Martin, as compared to 126,000 employees in 2015.

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