An acceptable churn rate is in the 5 – 7% range ANNUALLY, depending upon whether you measure customers or revenue.
And BVP’s assertion is backed up by Pacific Crest in their Private SaaS Company Survey Results that show roughly 70% of SaaS companies in their survey had annual churn in the < 10% range, with 75% of those at 5% or under.
The way I read the results of Pacific Crest’s survey is that 30% of SaaS providers surveyed have an unacceptable level of churn.
Now what about the SaaS providers that aren’t included in surveys like that one or who don’t appear in the logo list of the top investor portfolios and who are just trying to grow? Are they doing better or worse?
In my experience, it’s quite often worse… and sometimes much worse (as you’ll see in a second).
Honestly, for those companies, it isn’t a lack of customers in the front door that is stopping their growth; it’s the constant flow of customers out the back door that is killing their business!
sixteenventures.comSoftware and online services are in a period of dizzying growth
At a 35% CAGR, it takes 10 years for a SaaS company to grow from $5M to $100M in ARR
56% treat “Existing Customer Renewals” as high priority
The 2015 median revenue growth rate was 44%, while the median projected growth rate for 2016 is 48%
The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18
The median annual unit churn for SAAS companies was 10% in 2016