Use the free tool below to find out how far your SaaS business has to go...
Most SaaS business will eventually hit a growth ceiling - a deadly phase in the company lifecycle where the number of customers churned is equal to the number added. How far have you got?
As the total customer base of a SaaS business grows, a fixed percentage churn represents a larger and larger number of customers leaving every month. E.g. with a customer base of 1000, 5 percent is 50 customers, but at 10,000, 5 percent is 500 customers.
For most SaaS businesses, that monthly churn rate number will eventually equal the number of customers joining, making it a deadly point in the SaaS lifecycle.
Approaching the growth ceiling, the growth of the SaaS business will slow. Assuming no corrective action is taken, it will eventually stop altogether.
Your business will hit its growth wall in
At the growth wall, growth will slow dramatically, as you’ll have reached 75% of possible growth at your current growth and churn rates.
Your business will hit its growth ceiling in which is 16 months from today.
At the growth ceiling, you won’t be able to grow any more.
Your business won’t grow past 500 customers and 1000000 in recurring revenue.
(At your current growth and churn rates.)
Increasing your growth ceiling can be done in one of the following ways -- or, more often, a combination of all three.
Adding more new customers: increasing the growth rate so that it outpaces the customers churned once more
Reducing the churn rate: cutting the number of lost customers so that the overall customer base continues to grow again
Increasing average revenue per user: ensuring new customers are contributing more to the bottom line than the customers that are leaving, thereby increasing revenue while keeping the number of customers constant