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Companies typically track three churn metrics: customer churn, gross-revenue churn, and net-revenue churn. The most comprehensive of these three metrics is net-revenue churn, as it captures both the dollar value lost from churning customers and the dollar value gained from expansion revenue (which comes from both up-selling and cross-selling to existing customers). Our analysis showed several results:

  • Across all three customer types, companies in the top quartile of growth maintained lower net-revenue churn than mean performers.
  • The net-revenue performance of the top-quartile-growth performers was driven most significantly by advantages in gross-revenue churn as opposed to logo churn or revenue expansion (upsell/cross sell) within existing accounts.
  • Companies that excel at lowering gross-revenue churn emphasize several key customer-success best practices throughout their organizations.
Mckinsey

More SaaS + Software Stats

SaaS, and other recurring revenue businesses are different because the revenue for the service comes over an extended period of time (the customer lifetime)

Customer Segmentation analysis will help point out which are your most profitable segments

The fastest growing SaaS companies raise an average of $9.5M in Series A funding

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

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

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

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

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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

How to Reduce Churn

At Twitter, 10 percent of tech roles are staffed by women

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54% treat upselling and add-on sales as high priority

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