Welcome to The 2020 Great Big List of SaaS Stats and Benchmarks!
By 2021, the global SaaS workload is poised to reach 380 million.
Source: Anderson Frank
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For 89% of SaaS businesses, new customer acquisition is the top growth activity.
Source: Invesp
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According to the SaaS sales benchmarks, software development companies with an annual growth rate of 20% have only an 8% chance of surviving.
Source: Nifty
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SaaS adoption in the healthcare industry grows at a rate of 20% per year.
Source: MyLabRetriever
In 2018, the global SaaS workload grew to 206 million and is predicted to reach 380 million by 2021.
Source: Anderson Frank
The corporate mobile SaaS market is predicted to reach $7.4 billion by 2021.
Source: Strategy Analytics
SaaS organizations operate in over 100 countries.
Source: DevSquad
Retail and consumer goods are seen to register the highest growth rate.
Source: MarketsandMarkets
SaaS organizations are now operating in over 100 countries.
Source: Crunchbase
Cyber attacks and lack of skilled workers could hamper the sector’s growth.
Source: MarketsandMarkets
Increased automation and agility are seen to fuel the SaaS market’s growth.
Source: FinancesOnline
Only 2% of UK businesses are not on the cloud.
Source: DevSquad
Cyber attacks and lack of skilled workers could hamper the sector’s growth.
Source: FinancesOnline
SaaS business churn varies incredibly depending on their customer base. SMBs have a high churn rate and low contract cost. Large organizations have much higher retention. These deals involve larger contracts and in turn, more revenue.
Source: ProfitWell
26% of the EU is using the cloud.
Source: DevSquad
90% of businesses in Asia and the Pacific use or plan to use a multi-cloud environment.
Source: DevSquad
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The forecast compound annual growth rate of the SaaS market is 18%.
Source: MarketsandMarkets
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The average startup spends 92% of first-year revenue on customer acquisition.
Source: Insivia
SaaS companies in the $7.5MM-$15MM range are among the fastest growers.
Source: ForEntrepreneurs
High-growth companies offer a return to shareholders 5 times greater than medium-growth companies.
Source: Mckinsey
High-growth companies are 8X more likely to reach $1 billion in revenues than those growing less than 20%.
Source: Mckinsey
Since 2010, the average spend on SaaS applications per company had steadily risen year-over-year.
Source: Blissfully
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.
Source: InsightSquared
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.
Source: InsightSquared
The top growth activity for SaaS businesses is the acquisition of new customers at 89%, with renewals by customers in second place at 59% and upselling and add-on sales in third place at 46%.
Source: BlueTree.ai
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.
Source: InsightSquared
Yearly churn rate for SaaS companies targeting SMBs is 58%.
Source: Point Nine Capital
Early churn rate for SaaS businesses serving large organizations varies from 6-10%.
Source: DevSquad
An acceptable churn rate is perceived as between 5% and 7%, depending on the size of the organization.
Source: Sixteen Ventures
Companies that have larger contracts and earn more annually have less churn.
Source: ProfitWell
Non-renewal rates are higher than gross dollar churn rates and higher for shorter duration contracts.
Source: ForEntrepreneurs
For a contract length of 2.5 years or more, the churn rate is 8.5%.
Source: Reply.io
The churn rate depends on the SaaS business scale and maturity. SaaS statistics show that companies making more than $10 million in revenue have an average churn rate of 8.5%; while those that make less than $10 million are likely to have a churn rate of a whopping 20%.
Source: 99Firms
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The median annual churn rate of SaaS businesses that make less than $10 million annually is 20%.
Source: 99Firms
Medium SaaS companies lose 5% of revenue to churn annually.
Source: CoBloom
SaaS sales statistics show that the way the product is sold greatly impacts the churn rates. Field sales have noted the lowest churn rates of 11.8% which is below the median rate. Inside sales and Internet sales have seen churn rates of 14% each, while channel sales is the distribution method with the highest rate of 17%.
Source: Reply.io
If your customers are logging in to a mobile app, there is a 4 times higher chance for retention compared to the ones that use a web interface. Investing in a mobile platform is a must as it provides great user experience which, in turn, brings about high retention rates.
Source: Reply.io
Two-thirds (or 32%) of the companies have reported churn rates of 5%, while the other 32% have experienced churn rates of 5-10%. 17% of the respondents had experienced churn rates of 10-15%, and almost one-fifth had churn rates beyond 15%.
Source: Totango
The yearly churn rates can differ from 6-10% acquiring large organizations, to 58% for those that target SMBs.
Source: Tomasz Tunguz
The monthly retention rate for customers logging in to a mobile app is 41.5%. If your customers are logging in to a mobile app, there is a 4 times higher chance for retention compared to the ones that use a web interface.
Source: Reply.io
Sales teams making the sales process, tools and software more personal are converting more leads.
Source: HubSpot
To date, the best SaaS IPO year was 2018, with 17 new public vendors collecting a total of $5.1 billion, which is twice higher than the next highest year.
Source: FinancesOnline
The median cost to acquire $1 of annual recurring revenue (ARR) for a new customer is $1.32. Using upselling strategies with existing customers, the cost drops significantly to $0.71.
Source: CardConnect
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85% of the largest SaaS companies have a blog.
Source: 99Firms
18% of the top SaaS companies have their own podcasts.
Source: 99Firms
36% of SaaS companies use their blogs to share educational content.
Source: 99Firms
48% of companies have an average of one-year SaaS contracts.
Source: DevSquad
13% of companies have month to month SaaS contracts.
Source: DevSquad
11% of companies have SaaS contracts that are for three years or more.
Source: DevSquad
The biggest functional market globally for cloud applications is Customer Relationship Management (31.6%).
Source: CardConnect
Second is Human Capital Management with 14.7%, followed by ERP Services and Operations Management with 8.4%.
Source: CardConnect
48% of respondents reported an average contract length of one year. 13% reported typical contracts were month-to-month, whilst 11% said their average contract length was three years or more.
Source: CardConnect
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38% of SaaS companies said they do not offer any free trials or ‘freemium’ for their product or service.
Source: SaaS Marketing Trends
The median startup spends about 92% of the first-year average contract value on the sale itself.
Source: Tomasz Tunguz
SaaS companies are using free trials to speed up the consumer decision process and those having the most success are not making their customers commit right away.
Source: Beamer
Companies that do not ask for credit card info when signing up users for a free trial generate 2x as many paying customers.
Source: Chargebee
Just over half of companies surveyed by Totango said they had increased their spend on customer retention in the previous twelve months.
Source: Totango
Leads that speak with a sales representative on the phone are 70% more likely to become paying customers.
Source: SuperOffice
The average SaaS company spends just 6 hours determining their pricing strategy.
Source: PriceIntelligently
More than 50,000 SaaS vendors offer over 30% discount to their customers, which adversely affects their revenues and customer perception of their brand.
Source: PriceIntelligenly
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50% of SaaS companies still depend on user-based pricing.
Source: CoBloom
26% of SaaS companies make a judgment call in order to set the prices.
Source: CoBloom
40% of SaaS companies take a value-based approach to setting prices.
Source: CoBloom
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25% of SaaS companies copy competitor's pricing.
Source: CoBloom
10% of SaaS companies take a cost-plus approach.
Source: CoBloom
31% of SaaS companies say they offer very little discount.
Source: CoBloom
Seat-based pricing is the most popular model but usage-based pricing comes as a close second with 38% of companies implementing it. Additionally, companies that use usage-based pricing would say that their price and value align.
Source: 99Firms
According to the software industry statistics, SaaS companies are generally distancing themselves from the trend of offering discounts. Only 31% of companies offer a small discount while 38% provide an occasional discount of 10-25%.
Source: 99Firms
84% of new SaaS customers from free trials are unique website visitors.
Source: Invesp
The projected increase in businesses’ SaaS spending is 44%.
Source: Flexera
In 2020, the average company uses at least 34 SaaS products.
Source: CloudTech
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38% of companies say that they are running almost completely on SaaS.
Source: DevSquad
86% of businesses that use SaaS significantly experience relatively higher employee engagement.
Source: DevSquad
73% of businesses plan to make all their systems SaaS by the end of 2020.
Source: DevSquad
54% of CIOs expect to use cloud software for mission-critical cases in the next 3 years.
Source: Flexera
84% of businesses say they have a multi-cloud strategy.
Source: Flexera
Public cloud spending is expected to increase by 24% by the end of 2020.
Source: Flexera
Usage of Customer Success (CS) platforms rose from 25% to 43% from 2015-2018, and is expected to see more growth by the end of 2020.
Source: Higher Logic
67% of customers say their standard for good experiences is higher than they’ve ever been.
Source: iperceptions
80% of customers say the experience a company provides is as important as its products and services.
Source: iperceptions
76% of customers say they expect companies to understand their needs and expectations.
Source: iperceptions
74 percent of people will likely switch brands if they find the purchasing process too difficult.
Source: iperception
64% of customers find the customer experience (CX) more important than price when purchasing something.
Source: iperceptions
A study done by Accenture determined that $1.6T is lost every year in the US as a result of poor customer service.
Source: iperceptions
Research from the Temkin Group found that companies that earn $1 billion annually can expect to gain, on average, an additional $775 million over 3 years of investing in customer experience (with SaaS companies standing to earn the most, at $1 billion).
Source: Higher Logic
And there you have it.
We hope you found this roundup insightful and illuminating!
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