SaaS Benchmarks: The Acquisition Cost and Churn Challenges

Many SaaS founders have similar questions like

• The reasonable churn rate for SaaS
• The good amount for contracted sales reps
• Amount of time to recover the acquisitions costs of users

A few years ago, all that was available were anecdotal evidence and conversations. However, now there have been some high-quality studies on Saas benchmarking.

Here’s the common thread — SaaS companies struggle to find customers across the board. The 2010 study shows a wide range of customer acquisition costs (CAC) and churn, which means there is no one right way to tackle these challenges for every company.

B2B SaaS Benchmarks Results – What is CAC in SaaS

SaaS companies vary a lot in their willingness to invest in customer acquisition. Some reports have given an average CAC payback of about a year and a half. However, SasS companies with expected growth rates over 50% had an even more extended payment plan at three years and 35 months on average. While it makes sense to invest during high growth periods heavily.

Service stresses that reducing total cost is essential as you grow because if your churn rate is low enough, then chances are good; they will be able to see profits sooner rather than later. Click To Tweet

SaaS Churn Rate Benchmarks Results

Churn rates are not the same across all companies. OPEXEngine found that SaaS companies targeting SMBs have higher churn than those with enterprise customers. This is because it’s harder to switch for an SMB, but also more likely they will go out of business.

As expected, churn benchmarks vary with the maturity of a company. The OPEXEngine SaaS benchmark report has a median rate for private companies in that category at 8.5% and 20% for those less than $10M in revenue; it is no surprise to see this number rise as startups are figuring out their sales model or settling down after improvements have been made.

In Sum

SaaS benchmark reports are beneficial to executives at all levels of a company. They provide insight into areas where improvement is needed and allow companies to focus on their strengths rather than wasting time trying new things.