2014 SaaS Survey: Insights into Sales and Marketing Spend & Churn

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Two weeks ago, we were excited to share some of the results from the 2014 SaaS Survey conducted by David Skok of Matrix Partners and Pacific Crest Securities. We were excited to lend our support and bring additional respondents to this year’s survey, which collected data from 300+ SaaS companies on their growth and go-to-market strategies, and have been very interested in David’s take on the findings.

This week, he’s sharing results from Part 2 of the survey, which compares application delivery methods, operational costs and gross margins, contract terms, churn rates, capital requirements and accounting methods. We’re highlighting a few results here, but be sure to check out the full results available on David’s blog.

How is Your SaaS Application Delivered?

SaaS Delivery Stats

Just over half of companies surveyed currently use Self-Managed Services to deliver their SaaS applications. Over the next three years, however, companies will shift toward third-party delivery solutions.

Sales & Marketing Spend vs. Projected Growth Rate (Excluding Companies <$2.5MM in Revenue)

SaaS Sales and Marketing Spend

SaaS companies that spend more on sales & marketing (as a % of revenue) expect to grow at a faster rate than those that spend less. Interestingly, at 35% growth there is a step function, with little increase in sales & marketing spend % thereafter.

Actionable tips: Two takes on managing your sales & marketing spend:

Annual Gross Dollar Churn (Excluding Companies <$2.5MM in Revenue)

SaaS Churn Stats

Annual gross dollar churn (without the benefit of upsells) is 6%. This result is lower than the 2013 result of 8%, but higher than the 5% we found in 2012.

Actionable tips:

For more insights and analysis from this year’s SaaS Survey, visit David Skok’s blog where you can also leave comments and sign up to participate in next year’s survey.