Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

Quote Info

That way we could put our best customer service reps to work in an effort to save the situation. It turns out that we can do that by instrumenting our SaaS applications and tracking whether our users are engaged with the key sticky features of the product. Different features will deserve different scores. For example if you were Facebook, you might score someone who uploaded a picture as far more engaged (and therefore less likely to churn), than someone who simply logged in and viewed one page.

Similarly if you sold your SaaS product to a 100 person department, and only 10 people were using it, you would score that differently to 90 people using it. So the recommendation is that you create a Customer Engagement Score, based on allocating points for the particular features used. Allocate more points for the features you believe are most sticky. (Later on you can go back and look at the customers who actually churned, and validate that you picked the right features as a predictor of who would churn.) And separately score how many users are engaged with specific scores.

More SaaS + Software Stats

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

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

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

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

For a SaaS business of almost any scale, the valuation impact of better retention is in the tens of millions over time

Customer Acquisition Cost (CAC) = sum of all sales & marketing expenses/ number of new customers added

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

Achieving a SaaS Quick Ratio of 4 is a good benchmark for young, high-growth companies but the equation changes as those companies reach scale

56% treat “Existing Customer Renewals” as high priority

Internet Sales strategies have a significantly lower CAC of just $0.42

More Growth Strategy Stats

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

Sony’s PlayStation brand had accumulated approximately 38.57 million fans on the social network

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 generate 60% fewer sales opportunities than low-growth companies

Revenue Churn Rate = (RCR) (MRR at beginning of month – MRR at end of month) – MRR in upgrades during month / MRR at beginning of month

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

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

Three uses for the SaaS Guidelines

Companies that spend more on sales and marketing (as a % of revenue) generally grew at a faster rate than those that spent less

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)