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

Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000

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26% of SAAS companies with at least $15MM in 2015 GAAP revenue had a revenue growth rate + EBITDA margin of 40% or higher

Internet sales-driven companies have a much greater reliance on marketing, with 65% of the median company’s CAC budget devoted to marketing

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

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

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

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

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

More Growth Strategy Stats

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

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

The venture-backed companies that were acquired most often had a 7 percent share of female execs, as opposed to 3 percent at unsuccessful (unacquired) firms

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

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

Growing faster has twice as much impact on share price as improving margins

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

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

Only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases