the ultimate saas statistics collection: 50+ benchmarks for software startups
TRANSCRIPT
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THE ULTIMATE SAAS STATISTICS
COLLECTION50+ Benchmarks for Software Startups
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1) SAAS GROWTH STATISTICS
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KEY TAKEAWAYS• It isn't enough to grow: your SaaS company needs to grow faster than your
competitors.
• The biggest SaaS companies tend to be the fastest growing, in terms of revenue and team size.
• It's significantly cheaper to upsell and retain than it is to acquire new customers.
• The fastest growing SaaS companies generate $3.9 in revenue for every $1 they lose to churn.
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• If a software company grows at 20% annually, it has a 92% chance of ceasing to exist within a few years. (Tomasz Tunguz)
• The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18. (ForEntrepreneurs)
• It's 4x cheaper to upsell existing customers than acquire new customers: costing just $0.28 to acquire an additional dollar of revenue. (ForEntrepreneurs)
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• 86% of SaaS businesses treat "New Customer Acquisition" as their highest growth priority, both in terms of executive support and funding available. (Totango)
• 56% treat "Existing Customer Renewals" as high priority. (Totango)
• 54% treat upselling and add-on sales as high priority. (Totango)
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• It's 9x cheaper to retain existing customers than acquire new customers: costing $0.13 to acquire any additional dollar of revenue. (ForEntrepreneurs)
• Publicly-traded SaaS companies have an average Revenue Per Employee of $200,000. (Tomasz Tunguz)
• The fastest growing SaaS companies scale their organisations extremely rapidly: growing their teams by an average of 56% each year. (Tomasz Tunguz)
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• The median startup spends 92% of first year revenue on customer acquisition, taking 11-months to payback their Customer Acquisition Cost. (Tomasz Tunguz)
• The fastest growing SaaS companies have an average Quick Ratio of 3.9: generating $3.9 in revenue for every $1 lost to revenue churn. (Insight Squared)
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2) SAAS CHURN STATISTICS
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KEY TAKEAWAYS• Churn appears to be strongly correlated with company growth, and bigger companies are likely
to have lower churn.
• The fastest growing SaaS companies also prove to be the most adept at reducing and controlling their revenue churn.
• Churn is difficult to control, with a near equal proportion of SaaS businesses seeing increases, decreases and no change in their churn levels.
• Many SaaS companies conflate monthly revenue churn and annual revenue churn: while a 5% annual revenue churn is something to aspire to, 5% monthly churn will kill your business.
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• Best-in-class SaaS companies achieve 5-7% annual revenue churn - equivalent to a loss of $1 out of every $200 each month. (Sixteen Ventures)
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• The median monthly revenue churn for large SaaS companies is 0.75%, translating into an annual revenue churn rate of 10%. (Tomasz Tunguz)
• In contrast, the median churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%. (Chaotic Flow)
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• 36% of SaaS businesses managed to reduce their revenue churn over the last 12-months. (Totango)
• 30% saw an increase in annualised revenue churn, and the remaining 34% managed to keep their churn rates constant. (Totango)
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• 39% of the fastest growing SaaS companies were able to keep their yearly revenue churn below 5%. (Totango)
• In contrast, only 30% of medium growth companies, and 29% percent of low growth companies, were able to maintain a revenue churn rate below 5%. (Totango)
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3) SAAS PRICING STATISTICS
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KEY TAKEAWAYS• Small improvements to your pricing strategy can yield massive
improvements to your revenue and growth.
• Less than half of SaaS companies offer a free trial: a figure which appears to be declining. Of those free trials, the most common trial length is 30-days.
• Almost half of all SaaS companies still rely on user-based pricing.
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• A 1% increase in pricing strategy yields an average 11% increase in profit. (Harvard Business Review)
• The average SaaS company spends just 6 hours determining their pricing strategy. (Price Intelligently)
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• 44% of SaaS companies offer a free trial. (Totango)
• 41% of free trial-offering SaaS companies use a 30-day trial. (Totango)
• 18% offer a 14-day free trial. (Totango)
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• 17% use a freemium pricing model. (Totango)
• 41% list their pricing on their website. (Totango)
• 46% of SaaS businesses have "per user" pricing strategies. (Totango)
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4) SAAS SALES STATISTICS
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KEY TAKEAWAYS• Lead quality and deal size are more important to rapid growth than number
of leads alone.
• It costs significantly more to acquire a new customer than it does to upsell or retain existing customers.
• Internet sales methods are more popular with smaller SaaS startups, but most post-investment SaaS companies make the switch to more "traditional" sales methodologies - often in spite of significantly higher CAC.
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• High-growth SaaS companies generate 40% more leads, per month, than their slower growing counterparts. (Insight Squared)
• However, those same high-growth companies generate 60% fewer sales opportunities than low-growth companies. (Insight Squared)
• High-growth SaaS companies close deals that are 2.8x the average size of deals closed by low-growth companies. (Insight Squared)
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• 51% of large (revenue >$2.5million) SaaS companies use field sales as their primary method of distribution. (ForEntrepreneurs)
• In contrast, only 8% of large companies use internet sales strategies. The proportion of companies relying on internet sales increases as company size decreases. (ForEntrepreneurs)
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• Active trial users that are contacted by a sales rep are 70% more likely to buy the paid service than those that aren't. (Totango)
• 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. (ForEntrepreneurs)
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• To generate a single dollar of new customer revenue, Field Sales strategies have an average Customer Acquisition Cost (CAC) of $1.14. (ForEntrepreneurs)
• In contrast, Internet Sales strategies have a significantly lower CAC of just $0.42. (ForEntrepreneurs)
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5) SAAS CONVERSION RATE STATISTICS
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KEY TAKEAWAYS
• If you want to maximise the number of retained customers generated from your free trial, don't ask for a credit card.
• Best-in-class SaaS companies achieve a 2% end-to-end (visitor to paying customer) conversion rate.
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• SaaS companies that allow sign-ups without a credit card generate twice as many paying customers from their free trial. (Totango)
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• If a free trial requires a credit card, the average visitor to retained customer conversion rate is 0.6%. (Totango)
• If a credit card is not required, the visitor to retained customer conversion rate increases to 1.2%. (Totango)
• Best in class SaaS companies achieve a visitor to retained customer conversion rate of 2%. (Totango)
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6) SAAS CUSTOMER SUCCESS STATISTICS
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KEY TAKEAWAYS• The vast majority of SaaS users login to a service once a
month (or less), creating a real need to actively engage users and increase their time spent within the solution.
• Upselling appears to have a real impact on growth, with the fastest growing SaaS companies reporting much higher upselling than smaller, slower growing companies.
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• 50% of paying customers log in to their SaaS service less than once a month (or not at all). (Totango)
• Just 17% of paying customers login to their SaaS service on a daily basis. (Totango)
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• The median SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers. (RJMetrics)
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• The largest SaaS companies (>$75million yearly revenue) attribute 2.5x as much new revenue to upselling than the smallest SaaS companies (<$1.25million): 28% versus 11%. (RJMetrics)
• The top 50% of the fastest growing SaaS businesses generate much higher upsells than their competitors. The larger the business, the greater the impact of upselling. (Tomasz Tunguz)
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7) SAAS INVESTMENT STATISTICS
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KEY TAKEAWAYS• Investment as a whole is increasing, and the majority of this
growth is taking place in the enterprise.
• It's possible to raise Series A investment without a single dollar in revenue: just don't count on it.
• To become a unicorn, a SaaS company needs to raise an average of $206 million in funding.
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• SaaS IPOs have more than doubled over the last 12 years. (Tomasz Tunguz)
• All types of investment have grown, year-on-year, with the biggest growth during the seed stage of financing. (Tomasz Tunguz)
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• 80% of venture capital investments take place in the enterprise. (Tomasz Tunguz)
• When venture capitalists participate in seed rounds, the average round size is 3x larger. (Tomasz Tunguz)
• The fastest growing SaaS companies raise an average of $9.5M in Series A funding. (Tomasz Tunguz)
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• 27% of these companies were able to raise Series A investment with $0 in MRR - relying on networks and previous ventures to provide their credibility. (Tomasz Tunguz)
• Average round size has been increasing by 11% per year. (Tomasz Tunguz)
• For SaaS companies valued at over $1billion, the median amount of financing raised is $206million. (Tomasz Tunguz)
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