Totango's 3rd Annual SaaS Metrics Survey Report: The big take-away from this year’s survey underscores the importance of customer success in the SaaS business model – and why it is imperative for SaaS companies to be relentlessly focused on delivering recurring value to customers.

1. 3rd Annual
SaaS Metrics Survey
2013

2. Contents
Methodology …………………………………….. 3
Survey Participant Profile ………………….. 5
Executive Summary …………………………… 9
Survey Results & Analysis ………………… 11

3. Methodology

4. Totango surveyed 257 executives at SaaS companies
about the key performance indicators used to run
their businesses.
Similar surveys were also conducted in 2011 and
2012, giving Totango unique insights into SaaS trends.

5. Survey Participant Profile

6. Job Function
Marke?ng
14%
24%
3%
Customer
Success
/
Account
Mgmt
Sales
10%
Products
23%
12%
14%
Title
Opera?ons
9%
Customer
Support
C-­‐Level
Other
32%
18%
Director
VP
Manager
Other
18%
23%

7. Revenue Distribution
100
89
90
Number of companies
80
70
60
54
48
50
40
33
30
21
20
10
0
<$1M
$1-10M
$10-50M
Annual Revenue
$50-100M
Note:
Total
does
not
add
up
to
257
companies
(12
respondents
did
not
complete
this
ques?on)
>$100M

8. Annual Revenue Growth
66
Number of companies
70
55
60
50
40
38
All 257 respondents
30
23
20
17
10
0
0-10%
10-25%
25-50%
49
50
60
Number of companies
58
50
50-75%
75-100%
>100%
45
40
30
Excluding companies
<$1M in revenue
(203 respondents)
27
17
20
15
50-75%
75-100%
10
0
0-10%
10-25%
25-50%
>100%

9. Executive Summary

10. •
The fastest growing companies in SaaS are the ones that have
mastered controlling churn and driving upsell in their customer base.
Revenue from existing customers becomes more and more important to
SaaS companies as they grow.
There is a clear relationship between revenue growth of SaaS companies
and managing existing customers.
This underscores the importance of customer success and delivering
recurring value to customers in the SaaS business model.
•
SaaS companies are still heavily focused on tracking metrics around
new customer acquisition vs. existing customers.
This is changing however, with a growing recognition among SaaS
executives on the need and importance of tracking key metrics on existing
customers.

11. Survey Results &
Analysis

12. State of SaaS Metrics: The state of business metrics within SaaS companies
is improving, with a marked increase in executive satisfaction compared to
earlier years. However, the overriding sentiment indicates that significant
work still needs to be done.
Satisfaction with SaaS metrics
27%
15%
37%
31%
Not satisfied and investing to
improve it
34%
32%
35%
25%
Not satisfied and learned to live
with it
14%
Good enough
Very pleased
15%
17%
19%
2011
2012
2013

13. Executive focus on new customers vs. existing customers: SaaS vendors
continue to place a heavier focus on acquiring new customers compared to
managing revenue from existing customers (renewals and upsell).
Level of executive priority and funding for
… new customer acquisition
87%
… existing customer renewals
10% 3%
58%
… upsell/add-on sales
27%
51%
High
Medium
26%
Low
15%
23%

14. The heavier focus on customer acquisition is also reflected in the metrics
SaaS companies track. There is generally higher maturity and prevalence of
customer acquisition metrics vs. existing customer metrics.
Which metrics do you track
Website unique visitors
88%
Number of new trial signups or free accounts
69%
Conversion rates (free to paying)
65%
Customer Acquisition Cost (CAC)
49%
Churn
70%
Product usage statistics
64%
Revenue per user
56%
Add-on / expansion sales
53%
Customer health
47%
Customer Lifetime Value (CLV)
Net Promoter Score (NPS)
Customer
acquisition
metrics
41%
27%
Existing
customer
metrics

15. However, there is clear recognition among SaaS executives on the need and
importance of tracking metrics on existing customers. This is reflected in the
significant number of executives who plan to begin measuring revenuerelated metrics on existing customers.
Which metrics do you plan to track
Website unique visitors
Number of new trial signups or free accounts
Conversion rates (free to paying)
5%
Customer
acquisition
metrics
9%
14%
Customer Acquisition Cost (CAC)
Churn
Product usage statistics
Revenue per user
Add-on / expansion sales
Customer health
Customer Lifetime Value (CLV)
Net Promoter Score (NPS)
37%
24%
28%
30%
Existing
customer
metrics
33%
42%
49%
46%

16. Free Trials and Freemium: The majority of SaaS vendors have a free trial or
freemium offering as a way to acquire paying customers, though a significant
number (33%) still do not. Of the companies that do, more than half derive
>25% of their new business through trial and freemium conversions.
What percentage of new business comes from free trials and freemium
18%
0-10%
33%
10-25%
14%
25-50%
>50%
8%
27%
No free trial/freemium

17. Churn: The majority of SaaS vendors still measure churn at an aggregate
level as a percentage of overall customers and associated revenue lost. Only
a few companies look at churn at a more granular level such as product
downgrades or reduction in licenses within accounts.
How do you measure churn
By # customers
73%
By revenue
56%
By # users/licenses
By product downgrade
26%
15%
Note:
Total
adds
up
to
more
than
100%
since
each
respondent
could
select
mul?ple
op?ons

18. A sizable number of companies have high (>10%) and medium (5-10%) churn
indicating that there is significant scope for SaaS vendors to impact growth
and revenue by improving customer retention.
Annualized revenue churn
15%
0-5% churn
38%
17%
5-10% churn
10-15% churn
>15% churn
30%

19. Upsell and add-on sales: Excluding customers who churn, the increase in
revenue from existing customers is <20% for a majority of SaaS vendors.
Year-over-year revenue increase from existing customers
16%
4% 2%
7%
>80% upsell
60-80% upsell
40-60% upsell
28%
20-40% upsell
0-20% upsell
43%
Decline/no increase

20. Impact of churn and upsell on growth: As a group, the fastest growing
companies (>75% YoY revenue growth) have a significantly better record on
churn and upsell, underscoring the critical role of managing revenue from
existing customers in the SaaS business model.
Growth vs. Churn
Growth vs. Upsell
100%
90%
29
28
90%
23
80%
70%
17
60%
50%
35
25
40%
30%
20%
10%
45
70%
43
29
28
Respondents
Respondents
80%
100%
60%
25-­‐75%
Growth
Low
Churn
Medium
Churn
>75%
Growth
High
Churn
25
40%
30%
20%
0%
<25%
Growth
69
50%
10%
0%
37
27
20
4
21
9
<25%
Growth
25-­‐75%
Growth
High
Upsell
Medium
Upsell
Note:
Low
churn
=
<5%;
Medium
churn
=
5-­‐10%;
High
churn
=
>10%
High
upsell
=
>40%;
Medium
upsell
=
2`0-­‐40%;
Low
upsell
=
<20%
>75%
Growth
Low
Upsell

21. Customer engagement monitoring for cloud apps
•
•
•
•
Impact conversion rates
Reduce churn
Drive customer success
Increase customer lifetime value
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