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.

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If you are charging $500 per month, you can afford to spend up to 12x that amount (i.e. $6,000) on acquiring a new customer

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The best SaaS companies achieve 5-7% annual revenue churn – equivalent to a loss of $1 out of every $200 each month

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80% of venture capital investments take place in the enterprise

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

The median annual unit churn for SAAS companies was 10% in 2016

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

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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

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Software and online services are in a period of dizzying growth

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR

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

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

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