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

From sixteenventures.com
Statistic in SaaS & Tech Growth Strategy

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!

More SaaS + Software Stats

Net-revenue churn improves with larger Average Contract Value (ACV), likely due to more structural churn among SMB customers and higher switching costs associated with larger contracts

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

The fastest growing SAAS companies averaged $250k in MRR and were only losing around 3.2% of that revenue each month to churn

Because of the losses in the early days, which get bigger the more successful the company is at acquiring customers, it is much harder for management and investors to figure out whether a SaaS business is financially viable.

Three uses for the SaaS Guidelines

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

The median Customer Acquisition Cost (CAC) for upsells is just $0.28 per $1, less than a quarter of the $1.18 spent to acquire $1 of revenue from a new customer

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

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

As with unit churn, companies with longer contracts (2+ years) tend to report lower annual dollar churn

More SaaS & Tech Growth Strategy Stats

SaaS businesses face significant losses in the early years (and often an associated cash flow problem)

In 2017, the world invested around 3.4 billion U.S. dollars in small hydropower technologies, down from 3.9 billion U.S. dollars in 2016.

The median monthly revenue churn for large SaaS companies is 0.75%, translating into an annual revenue churn rate of 10%

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

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

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

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

The global cloud computing market size is expected to grow from USD 371.4 billion in 2020 to USD 832.1 billion by 2025

Google only has a 30 percent female workforce

Is your SaaS business viable?