Summed up quite simply by the old adage “knowledge is power”, the value of information has been reinforced time and time again.
with this in mind, let’s take a journey into the wonderful world of SaaS stats and benchmarks!
Businesses selling into the enterprises generate most of their ARR through field sales (>50%), with some inside and channel sales; self-service accounts for a very small percentage of enterprise sales.
When the numerator of your quick ratio is growing that means your revenue is growing. It’s very important important to keep increasing revenue to counter any MRR (Monthly Recurring Revenue) that is lost to churn.
A SaaS business that doubles revenue every year for 5 years, but has a relatively poor expected customer life of 3 years, would still exhibit very good gross revenue retention rates at least through its first 6 years until the percentage of older customers begins to outweigh the percentage of new ones.
The gap between net and gross retention grows larger as SaaS businesses get bigger, and cross-selling, up-selling and price increases almost completely offset the loss of revenue from weaker underlying retention.
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.
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.
Only as businesses mature and reach scale, do their underlying retention rates become better known. It is very possible that larger companies are doing better work on customer success and retention than it appears, but the benefits are more than offset due to the natural aging of their customer base.
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.
The sustained improvement in retention associated with a Customer Success leader (6 percentage points) will improve total revenue, growth, and profitability leading to an expected 74% increase in enterprise value in 5 years.
While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution.
Analyzed by contract value, field sales are primarily evident for companies with median deals over $25K. Inside sales strategies are most popular for companies with $1K-$25K median deal sizes.
The average company gets 16% of new ACV sales from up-sells and expansions, though companies with revenue between $10MM-$40MM are relying more heavily on up-sell and expansions.
Startups report a CAC payback of 9-12 months on average; however, this is overly optimistic – 12-18 months is more common when factoring in gross margins and fully loaded acquisition costs.
SaaS companies that are focused mainly on enterprise sales have higher levels of professional services. Attach rates for Enterprise and SMB leveled out at 18% and 12% in 2016 and stayed consistent into 2017.
While a slight improvement from 71% in 2017, 63% of SaaS startups still have no female Board members. Only 13% of companies surveyed have full parity between gender within their leadership teams, 8% at the Board-level (which is double 2017).
And there you have it.
We hope you found this roundup insightful and illuminating!