Every year we take the opportunity to run a comprehensive survey of professionals at SaaS companies ranging from early startups to established businesses with over $100M in revenue. Our aim is to better understand the key performance indicators used by SaaS companies to run their business.
For our fifth annual SaaS Metrics survey, we have added several questions based on the comments and responses I have seen over the years. New topics covered this year include company spending on customer retention and the definition/measurement of customer health.
We are pleased to share some of the key takeaways from this year’s results:
- The SaaS industry continues to be challenged by high churn rates: More than two-thirds of the surveyed SaaS companies experienced annual churn rates of 5% or higher. Additionally, almost the same number saw an increase or no change in churn since the previous year.
- Upsell and expansion sales are a missed opportunity for SaaS vendors: For the large majority of SaaS companies surveyed (81%), only 20% or less of new revenue came from existing customers in the form of upsell and expansion sales.
- SaaS company growth rates are strongly influenced by customer retention and upsell: For the third year in a row, the survey indicates that the fastest growing SaaS companies have a significantly better record on churn and upsell.
- Customer retention cost, customer health, and customer lifetime value are the new frontier in SaaS metrics: SaaS companies continue to invest in tracking more metrics on their existing customers. The top new metrics companies plan to track in 2016 are customer retention cost, customer health, and customer lifetime value.
- Spending on customer retention is growing: More than half of the companies surveyed increased their spending on customer retention last year. Spending on staffing increased at a faster clip compared to spending on technology or programs, suggesting that companies are still more focused on building out their teams vs. putting in place the infrastructure to scale customer retention operations.
We hope these insights help you develop your own strategy to measure and monitor your business this year. For a deeper look, check out the full report.
A huge thank you to the 300+ participants who contributed to this year’s survey. We invite you to share what metrics your business cares about most, which are the most challenging to maintain, and what other topics you would like to see in the next SaaS Metrics Survey.