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Account Churn is very important because it gives a very clear percentage of the customers that are leaving you. It takes away the bias from larger accounts so that you aren’t left with one large customer paying for all of your revenue – which is a dangerous situation to be in

InsightSquared

More SaaS + Software Stats

More than two thirds of SAAS companies experienced annual churn rates of 5% or higher

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

How to Reduce Churn

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

Less than 20% of new revenue came from existing customers in the form of up-sell and expansion sales

55% of SaaS companies rate Customer Retention as the key metric to measure

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

High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; which may have a dramatically negative effect on your company’s growth. Source: Mckinsey

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

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

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

The average Quick Ratio of fastest growing SaaS companies (those with a CAGR of over 50%) is 3.9: generating $3.9 in revenue for every $1 lost to revenue churn

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

Even if a software company is growing at 60% annually, its chances of becoming a multibillion-dollar giant are no better than 50/50

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

Negative Churn and Expansion Revenue

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

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

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