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David Skok has noted that there is a problem with using this formula, as you may have several expensive people in the team that should scale to handle a larger number of customers as you grow. In this case, your CAC will be too high. David suggested making a very simple adjustment to the Sales & Marketing expenses to take only a portion of those salaries and expenses in the early days. This will provide a better indication of how CAC will look in the future when you are at scale.

 

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More SaaS + Software Stats

Negative Churn and Expansion Revenue

If your Net Revenue Churn is high (above 2% per month) it is an indicator that there is something wrong in your business; this will become a major drag on growth

The global cloud computing market size is expected to grow from USD 371.4 billion in 2020 to USD 832.1 billion by 2025

The average company booking professional services revenue on new deals is equivalent to 16% of the first year subscription value. Professional services margins are approximately 22%

It’s 9x cheaper to retain existing customers than acquire new customers: costing $0.13 to acquire any additional dollar of revenue

The median cost for a SaaS company to acquire a dollar of new customer revenue is $1.18

In 2017, IBM generated 37.8 billion U.S. dollars in global IT services revenue, making it the largest IT services company in the world in terms of net sales

In all SaaS businesses there will likely come a moment where they realize that not all customers are created equal

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

The median annual unit churn for SAAS companies was 10% in 2016

More Growth Strategy Stats

As companies scale their growth engines, a slightly-above-average churn rate becomes harder and harder to offset with net new revenue growth, especially when the goal is to outpace it by 4x

Three uses for the SaaS Guidelines

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

Revenue per employee has been steadily increasing in SAAS companies. It serves as a great longitudinal measuring stick to understand the increasing or decreasing efficiency of the business

80% of venture capital investments take place in the enterprise

56% treat “Existing Customer Renewals” as high priority

Revenue Renewal Rate= (MRR up for the renewal at beginning of month- MRR not renewed at the end of month)/ MRR up for renewal at beginning of month)

Customer Segmentation analysis will help point out which are your most profitable segments

Moving from $1.5 million with an eye towards $10 million in ARR is a tough a task and will take an excellent VP of sales to get you there

The average SaaS business generates 16% of its new Annual Contract Value (ACV) from upselling to existing customers