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Upsells key to growth and scale
As shown in the chart below, companies that have made it past the $40MM revenue mark use upsells to drive a much higher percentage of their new Average Contract Value (ACV) than smaller companies. In fact, companies in the $40-75MM revenue range attribute twice as much new revenue to upsells as the median company.
Of course, it’s dangerous to imply causation here. There are a number of reasons why we might see this effect in later-stage companies. One unexciting possibility is that their overall growth in new business is slowing down and it’s skewing these percentages in favor of upsells. Let’s look at this data through another lens and explore how upsells are related to growth.
RJMetrics
More SaaS + Software Stats
The median annual contract value (ACV) was $25K, $21K, $21K, $20K in 2016, 2015, 2014 and 2013
More than two thirds of SAAS companies experienced annual churn rates of 5% or higher
54% treat upselling and add-on sales as high priority
More Growth Strategy Stats
Sony’s PlayStation brand had accumulated approximately 38.57 million fans on the social network
36% of SaaS businesses managed to reduce their revenue churn over the last 12-months
Three uses for the SaaS Guidelines
After $10M in ARR, the median growth rate slows to just under 50%
The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18