Top 10 in Tech - What to know for Week ending January 7, 2022

Happy New Year and welcome to the Benchmark Holiday special! This is a compilation of useful benchmark data reported from across the webs in 2021 for you to put to good use.

SKOK

David Skokis a legend in the SaaS world, and I have written about his work extensively in the past and convinced him to speak at an event. His 2021 annual report in partnership with KBCM Technology Group (formerly Pacific Crest Securities) is here - absolutely comprehensive benchmarks for any SaaS business.

EXPANSION 1.

Acquiring customers is not enough for SaaS companies to sustain long-term success. Expansion strategies are pragmatic growth practices that any good SaaS company needs to grasp, as 36% of new ARR bookings are attributable to cross-sell/up-sell activities. Larger companies use this strategy more heavily than their smaller counterparts (2x more). This is likely due to not being so reliant on new acquisition focused as the business matures. Here is what good expansion looks like.

EXPANSION 2

Expansion is such a big deal that OpenView Partners have gone to town to benchmark this metric with an extensive Expansion SaaS Benchmarks report (it's a downloadable PDF). Product Led Growthbusinesses lead the pack!

RETENTION

To compliment #2 and #3 above, retention is deeply related to expansion regarding sustainable growth. Here is what reasonable retention goals should be benchmarked against (another downloadable PDF report) and how to strategically optimizefor this metric. Churn is still a problem overall. The YoY trend of a dollar churn decreased from 13.9% (20% of which was attributed to Covid) in 2020 back to 12.6%. This is back to similar 2019 levels (which was 12.5%).

PRODUCT LED GROWTH

As mentioned in #3 above (and from me from time to time in this newsletter), Product Led Growth(PLG) businesses lead the pack when it comes to expansion. PLG companies also deserve their own benchmark reports - so I got you covered with this one where you can benchmark 250+ PLG companies.

CAC

This one needs nuance, so the report breaks CACinto 3 main categories: blended, new, and up-sell/expansion. The median blended CAC comes at $1.20 for every $1 of revenue realized which sits slap bang between 2019 ($1.10) and 2020 ($1.32). New Customer CAC is up against 2019 ($1.34) and 2020 ( $1.60) - SaaS is increasingly competitive. Upsell/cross-sell is still cheap at $0.63 per $1 of ARR earned.

GROWTH

At the beginning of 2020, 39% growth was expected in January. By the end of June, it was reduced to 20% (in 2019, this was 36%). In 2021 the organic ARR growth levels were back up to a healthier 31% as the COVID disruptions start to settle, and overall growth forecasts are back to the same 36% seen in 2019.

MARKETING AND SALES

Hubspot continually benchmarks Pandemic-times data IRL for core business metrics like website traffic, email send and open rates, sales engagements, close rates, and more (aggregated from their global customer base of over 70,000 companies). It's a handy tool as a benchmark to measure your business against. Explore all the benchmark data here. They also took this a step further in 2021 by launching their (not another) State of Marketing Report for 2021.

WEB VITALS

Optimizing a User Experience is key to the long-term success of any service or product. Google is all over this and launched Web Vitals a few years back, a program that offers developers guidance about user experience. It's benchmarking very Google-based metrics: loading, interactivity, and visual stability.

SPEND

The average SaaS company burns $52m to get to $100m in ARR, and it takes under 9 years (8.7 to be exact). Figuring out how to optimize marketing spend of this burn in relation to growth rate is a crucial question, and this study doesn't show the benchmarks marketers want to hear: While the median sales and marketing spend maybe 36% of revenue, to really ramp ARR growth, you gotta blow a lot more. Percentage of revenue in isn't much more than percentage growth spend out.