70+ SaaS Churn Statistics for 2023

Dive into 2023’s SaaS statistics. Understand churn rates, user attrition, revenue impacts, and security trends. This guide provides insights for SaaS businesses, shedding light on challenges and growth strategies. Stay informed and prepare your venture for future developments.

In the ever-evolving landscape of Software as a Service (SaaS), understanding churn—customers ceasing to use a service—is crucial. Churn rate, a vital metric in this industry, offers insights into customer satisfaction, product-market fit, and business health. As SaaS models continue to dominate software delivery, the importance of mitigating churn cannot be understated.

General SaaS Churn Statistics

The SaaS (Software as a Service) realm continues its ascendancy in the business world, and as its popularity burgeons, so does the competition among providers. Delving into churn statistics offers companies invaluable insights to enhance their services and elevate customer loyalty.

• In a nutshell, the churn rate defines the share of customers who stopped using a product during a particular period.
• A third of SaaS companies report that their churn rate has increased during the last year.
• Most paid cloud subscribers log in less than once monthly.
• Only 14% of SaaS users engage with the software every week.
• A mere 17% of consistent subscribers use their SaaS solutions daily.
• One in ten newly acquired SaaS products goes unused during the first quarter.
• Companies used an average of 130 SaaS apps in 2022, an increase of 18% over 2021.
• A mere 32% of SaaS ventures achieved an annual attrition below 5%, while 20% saw rates surmounting 20%.
• Businesses surpassing $10 million in annual revenues typically witness an average churn rate of 8.5%.
• Over 32% of firms have experienced churn rates of 5%, while a similar percentage have faced rates between 5-10%.
• 17% of companies encountered churn rates between 10-15%, and close to 20% saw rates beyond 15%.
• Channel sales, as a distribution method, peak with a churn rate of 17%.

Have SaaS companies seen an increase in their churn rate recently?

Yes, a third of SaaS companies reported that their churn rate has increased during the last year. Additionally, over the preceding year, 30% of SaaS companies also noted a rise in their churn rates.

How do companies typically calculate their churn rate?

69% of companies consider the number of customers when calculating their churn rate.

Are SaaS users actively engaging with their software?

Only 14% of SaaS users engage with the software every week, while 17% of consistent subscribers use their SaaS solutions daily.

Do businesses with higher revenues experience a lower churn rate?

Businesses surpassing $10 million in annual revenues typically witness an average churn rate of 8.5%.

How are churn rates distributed across various firms?

Over 32% of firms have churn rates of 5%, a similar percentage between 5-10%, 17% between 10-15%, and close to 20% see rates beyond 15%.

What churn rates have emerging startups reported?

A striking majority of emerging startups have reported churn rates reaching 60%.

How do channel sales fare in terms of churn rate?

Channel sales, as a distribution method, peak with a churn rate of 17%.

User Attrition Rate Statistics

As the digital landscape continually shifts, keeping a close eye on user attrition rates becomes paramount for SaaS companies aiming for longevity. These rates, essentially a measure of customer departures over time, offer pivotal clues about product value, user satisfaction, and areas demanding improvement.

• SaaS entities with yearly revenues below $10 million typically experience a 20% attrition rate.
• Initial attrition percentages for SaaS firms working with major corporations range from 6% to 10%.
• In the infancy of a business’s lifecycle, attrition rates are notably elevated.
• The top quartile of SaaS enterprises experiences a monthly customer attrition of 1-2%.
• Rapidly growing businesses indicate that 34% have faced a churn rate higher than 10%.
• Conversely, 39% of these fast-growing companies saw churn rates less than 5%.
• Around 20% of high-growth companies reported a churn of 5-10%.
• Medium-growth firms predominantly registered medium churn, with 40% echoing this sentiment.
• A dominant 42% of slow-growing companies experienced high churn.
• In contrast, 62% evaluate churn rates by revenue.
• Outside these dominant metrics, 22% quantify it via user count or licenses.
• 16% measure churn by the frequency of product downgrades.

How does the initial attrition rate vary for SaaS firms working with major corporations?

Initial attrition percentages for SaaS firms working with major corporations range from 6% to 10%.

Do rapidly growing businesses face high churn rates?

Rapidly growing businesses indicate that 34% have faced a churn rate higher than 10%. Conversely, 39% of these companies saw churn rates less than 5%, and around 20% reported a churn of 5-10%.

How do medium-growth firms fare in terms of churn?

Medium-growth firms predominantly registered medium churn, with 40% echoing this sentiment.

How do companies typically evaluate churn rates?

While 62% of companies evaluate churn rates by revenue, outside these dominant metrics, 22% quantify it via user count or licenses. Additionally, 16% measure churn by the frequency of product downgrades.

What is the monthly customer attrition for top-performing SaaS enterprises?

The top quartile of SaaS enterprises experiences a monthly customer attrition of 1-2%.

Average User Lifespan Statistics

The average user lifespan within the SaaS domain paints a clear picture of customer loyalty and product longevity. A more extended lifespan often indicates superior customer satisfaction and denotes the longevity of the product in the users’ daily routines or business processes.

Conversely, a shorter span may hint at potential areas of improvement or market shifts. As we venture into these statistics, it’s essential to interpret them within the broader ecosystem of SaaS trends and customer expectations.

• For contracts lasting over 2.5 years, the churn rate is fixed at 8.5%.
• Contracts that span less than a year average a churn of 16.7%.
• Contracts lasting one to one and a half years record a 15% churn, slightly higher than monthly contracts at 14%.
• As they advance in their lifecycle, SaaS companies see a deceleration in growth. Top-tier firms with revenues between $1 million to $8 million see 70% annual growth, whereas those in the $8 million to $30 million bracket grow at about 45% annually.
• The median growth trajectory for B2B SaaS enterprises stands at 35%.
• Initial stages for SaaS businesses often see lower customer retention. However, this improves as the firm grows and aligns better with the market needs.
• For B2B SaaS companies, the pinnacle of customer retention rates oscillates between 80% and 90%.

How does churn vary for shorter contracts?

Contracts that span less than a year average a churn of 16.7%. Contracts lasting between one to one and a half years record a 15% churn, which is slightly higher than monthly contracts that sit at 14%.

How do growth rates vary for top-tier SaaS firms based on their revenues?

Top-tier firms with revenues between $1 million to $8 million experience a 70% annual growth, whereas those in the $8 million to $30 million bracket grow at about 45% annually.

Do SaaS businesses experience changes in customer retention during their initial stages?

Yes, initial stages for SaaS businesses often see lower customer retention. However, retention improves as the firm grows and better aligns with the market needs.

What is the peak customer retention rate for B2B SaaS companies?

For B2B SaaS companies, the pinnacle of customer retention rates oscillates between 80% and 90%.

Reasons For User Churn Statistics

Diving into the reasons for user churn offers invaluable insights into areas of improvement, unmet customer expectations, and potential market gaps. Churn, an inevitable aspect of any business, especially in the SaaS domain, can be mitigated but never entirely eliminated.

However, understanding its root causes can pave the way for enhanced customer experiences and tailored solutions. As we delve into these reasons, let’s approach them not as challenges but as opportunities to grow and adapt.

• 42% of customers report that the quality of support affected their decision to stop using a SaaS application.
• Due to subpar onboarding, SaaS businesses witness an annual departure of 13% of their clientele.
• 84% of small to medium enterprises grapple with issues when adapting to new SaaS platforms.
• 56% of tech leaders in large corporations feel that suites like Google Workspace and Office 365 aren’t leveraged to their full potential. Additionally, 40% have similar sentiments about collaborative applications.
• 50% of respondents said they plan to increase the number of cloud providers they use in the next two years.
• 29% of respondents indicated that they would change at least one of their cloud providers in the coming two years.

How does the quality of support affect customer retention in SaaS applications?

42% of customers report that the quality of support influenced their decision to stop using a SaaS application.

Do small to medium enterprises face challenges when adapting to new SaaS platforms?

Yes, 84% of small to medium enterprises grapple with issues when adapting to new SaaS platforms.

What do tech leaders think about collaborative applications?

40% of tech leaders in large corporations have similar sentiments about collaborative applications as they do about suites like Google Workspace and Office 365, feeling they are not utilized to their fullest.

Are there plans among respondents to diversify their cloud providers?

Yes, 50% of respondents said they plan to increase the number of cloud providers they use in the next two years.

Do respondents anticipate changing their current cloud providers?

29% of respondents indicated that they would change at least one of their cloud providers in the coming years.

What impact does onboarding have on customer retention for SaaS businesses?

Due to subpar onboarding, SaaS businesses witness an annual departure of 13% of their clientele.

Revenue Impact Of Churn Statistics

The financial implications of churn can’t be understated. As much as churn signifies user sentiments and product alignment, it also directly impacts an organization’s bottom line. The fluctuations in revenue due to churn can influence a company’s strategies, budget allocations, and future planning.

This section delves into the financial repercussions and revenue trends affected by churn rates, providing a holistic perspective on the tangible monetary impacts of customer attrition.

• A SaaS startup may have up to a 60% revenue churn rate.
• The revenue churn rate is the percentage of revenue lost from returning customers or subscription renewals who choose not to renew.
• Elite SaaS companies boast a dollar retention figure surpassing 100%.
• Venture capital funding to tech companies saw a 53% decrease from the first quarter of 2022 to 2023.
• 60% of respondents noted that finance decision-makers don’t have a seat at the table for strategic planning discussions, and only 28% said they have the final say in those decisions.
• Elite SaaS businesses showcase a net revenue retention of 110%.
• The higher the Average Revenue Per Account (ARPA) for a company, the lesser its monthly net MRR attrition rate. 47% of firms boasting an ARPA over $1k register negative churn.
• A mere 2% of SaaS companies with an ARPA less than $25/month achieve net retention rates surpassing 100%.
• Contrarily, in the B2B SaaS sector, 49% of enterprises with an ARPA above $1k/month boast a net retention exceeding 100%.

What is the typical revenue churn rate for a SaaS startup?

A SaaS startup may experience up to a 60% revenue churn rate.

Has there been a change in venture capital funding to tech companies recently?

Yes, venture capital funding to tech companies saw a 53% decrease from the first quarter of 2022 to 2023.

Do finance decision-makers typically have a say in strategic planning discussions?

60% of respondents noted that finance decision-makers don’t have a seat at the table for strategic planning discussions, and only 28% said they have the final say in those decisions.

How does the Average Revenue Per Account (ARPA) impact a company’s monthly net MRR attrition rate?

The higher the ARPA for a company, the lesser its monthly net MRR attrition rate. Specifically, 47% of firms boasting an ARPA over $1k register negative churn.

In the B2B SaaS sector, how does ARPA correlate with net retention rates?

In the B2B SaaS sector, 49% of enterprises with an ARPA above $1k/month boast a net retention exceeding 100%.

Churn Reduction Strategies Statistics

Addressing the root causes of churn is a continual challenge for many SaaS businesses. The importance of implementing effective strategies to minimize customer attrition can’t be emphasized enough.

By leveraging data-driven insights and understanding user needs, businesses can tailor their approaches to prevent customer departures.

• Upselling to an existing SaaS customer is four times more economical than acquiring a new one.
• For enhanced customer service, 64% of clients are ready to pay extra.
• Sales or support outreach increases engagement for 70% of those trying out the service.
• 89% indicated that onboarding new clients was a top executive priority. Renewal of current clients was a focus for 59%, and 46% emphasized on upsells and additional sales.
• Top-performing SaaS enterprises with a CAGR above 50% have a typical Quick Ratio of 3.9:1.
• In a 2022 survey, 86% of respondents said their hybrid cloud or multicloud tool investments would increase, and 95% said their success depended on those and other SaaS technologies.
• Nearly 44% of SaaS vendors provide users with a trial period at no cost. Diving deeper into this, 18% have a 14-day trial offering, while 41% extend it to a month.
• When it comes to pricing structures, 17% of SaaS companies lean towards a freemium approach.

Are clients willing to pay more for enhanced customer service?

Yes, 64% of clients are ready to pay extra for enhanced customer service.

Does sales or support outreach affect engagement?

Absolutely, sales or support outreach increases engagement for 70% of those trying out the service.

How do executives prioritize onboarding new clients compared to other activities?

89% indicated that onboarding new clients was a top executive priority. Meanwhile, renewal of current clients was a focus for 59%, and 46% emphasized on upsells and additional sales.

Do SaaS vendors typically provide trial periods for their users?

Nearly 44% of SaaS vendors provide users with a trial period at no cost. Breaking this down, 18% have a 14-day trial offering, while 41% extend it to a month.

What pricing structures are common among SaaS companies?

When it comes to pricing structures, 17% of SaaS companies lean towards a freemium approach.

SaaS Security Statistics

Security has always been at the forefront of concerns for both SaaS providers and their users. As cloud services grow in prevalence, so do the vulnerabilities and threats they face. Ensuring data protection, maintaining user trust, and understanding potential risks are paramount in today’s digital age.

• Over the past two years, 55% of top security personnel reported having faced SaaS-related security breaches, showcasing an upward trend of 12% since 2021.
• 43% of the examined companies have encountered at least one security challenge due to SaaS misconfigurations.
• For 35% of the responding businesses, the primary challenge with SaaS settings is the excessive number of individuals with permissions to adjust security parameters.
• 46% of the surveyed organizations inspect their SaaS configurations only once a month or less, while 5% don’t verify them at all.
• In the past year, 43% of IT experts introduced a SaaS application capable of storing confidential data.
• 42% of interviewed IT professionals face difficulties in overseeing SaaS user operations securely.
• In a 2022 study, 59% of participants highlighted the termination of employees as a significant SaaS-related worry.
• Security risks associated with ex-employees retaining access to SaaS applications comprise 22% of overall security concerns.
• SaaS misconfigurations cause as many as 63% of organizational security problems.

How common are security challenges due to SaaS misconfigurations among companies?

43% of the examined companies have encountered at least one security challenge due to SaaS misconfigurations.

What is a primary challenge businesses face regarding SaaS settings?

For 35% of responding businesses, the main challenge with SaaS settings is the excessive number of individuals with permissions to adjust security parameters.

How frequently do organizations inspect their SaaS configurations?

46% of the surveyed organizations check their SaaS configurations only once a month or less, and a concerning 5% don’t verify them at all.

How big of a security concern is ex-employees retaining access to SaaS applications?

Security risks tied to ex-employees keeping access to SaaS applications constitute 22% of overall security concerns.

What percentage of organizational security issues are caused by SaaS misconfigurations?

SaaS misconfigurations lead to as many as 63% of organizational security problems.

Summary

The world of SaaS is ever-evolving, with metrics and statistics painting a vivid picture of its dynamism and growth potential. As we’ve journeyed through these numbers, we see the monumental role SaaS platforms play in shaping business ecosystems, influencing user behaviors, and driving revenue models.

From understanding churn rates to discerning security concerns, this deep dive into SaaS statistics provides a comprehensive view for industry professionals, stakeholders, and enthusiasts. As the digital landscape progresses, staying informed with such data will be crucial to adapt and thrive. Here’s to a future where SaaS continues to redefine boundaries and set new benchmarks!

Sources:

1. “How Does E-Commerce Vary by Product Category?” by CBRE
2. “Ecommerce Penetration By Category?” by Oberlo
3. “US Ecommerce by Category 2021” by Insider Intelligence
4. “E-Commerce’s Share of FMCG Sales, by Category” by MarketingCharts
5. “Essential eCommerce Statistics 2023 [Facts and Trends]” by Thrive My Way