Top 10 in Tech - What to know for Week ending July 10, 2020

Welcome to the Benchmark special! I’ve been asked for this a few times and I’m on the road this week. So this is a compilation of benchmark data reported from across the webs….

1. SKOK: David Skok is a legend in the SaaS world and I have written about his work extensively in the past, as well as convincing him to speak at events. His 2019 annual report in partnership with KBCM Technology Group (formerly Pacific Crest Securities) is here - comprehensive benchmarks for any SaaS business. 
2. EXPANSION Acquiring customers Isn’t enough for long-term success, expansion strategies are pragmatic growth practices that any good SaaS company needs to get a grip on as 37% of new ARR bookings is attributable to cross-sell/up-sell activities. Here is what good expansion looks like. OpenView Partners have gone to town to benchmark this metric with an extensive Expansion SaaS Benchmarks report. Product Led Growth businesses lead the pack!
3. RETENTION. To compliment #2 above, retention is deeply related to expansion in regard to sustainable growth, and here is what good retention goals should be benchmarked against and how to optimize them.
4. CAC: This one needs nuance, so the David Skok report referenced at #1 has broken it down into blended, new, up-sell, and expansion. Median blended is every $1 of ARR generated costs $1.14. Net new is almost double ($1.34) of up-sell ($0.78) and 3x expansion (sitting at a neat $0.50). This chart alone highlights why having a customer-focused strategy is critical for growth. 
5. GROWTH: Median organic ARR growth for the year surveyed (2018) was 36%. Thus is across 424 SaaS businesses distributed globally (but 2/3 of which were US-domiciled). This rate is pretty evenly split across different contract size businesses - so there is no obvious relationship between ACV and growth. Companies surveyed average median ARR of $8.7m 
6. MARKETING AND SALES: Hubspot continues to benchmark Pandemic-times data 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 an incredibly useful tool as a benchmark to measure your business against. Explore all the benchmark data here or check this week's summary here. Chorus.ai is doing something similar by benchmarking sales organizations (daily!) across their user base. A recent Tomasz Tunguz summary can be found here.
7. GTM: Current and pragmatic Go-To-Market benchmarks are presented in this deck from Tomasz Tunguz and the team at Redpoint Ventures. Some good findings from their survey: 1) If SDR/BDR teams hit their numbers, so do Account Executives; 2) Most sales teams ramp Account Executives in about six months; 3) Marketing teams spend 5-10% of a companies ARR. David Skok also observes that the primary mode of Sales and Marketing efforts remains Field Sales based, with Inside Sales taking a very close second strategy for smaller businesses (under $10m ARR)
8. WEB VITALS: Optimizing a User Experience is key to the long term success of any service or product. Google is all over this and just launched Web Vitals, a program that offers developers guidance about user experience. It’s benchmarking very Google based metrics: loading, interactivity, and visual stability.
9. PROFESSIONAL SERVICES: It’s a weird open secret that a lot of B2B SaaS businesses generate a significant amount of revenue from implementation and deployment projects, often captured as revenue from Professional Services, due to deployment and configuration complexity. So what are the revenue benchmarks for a SaaS Business to captured revenue through professional services? On average it caps out at 11% of all annual revenue with Enterprise focused businesses but even at the lower end of town it’s still 5% of revenues with SMB focused businesses.
10. SPEND: Figuring out how to optimize marketing spend and growth rate is a key question and this study doesn’t show great benchmarks - the percentage of revenue in pretty much equals percentage growth out, but with an ever-increasing range of outcomes as spend increases per business. More solid benchmarks are with the Sales vs Marketing spend ratios which stay at about 2:1 regardless of market-facing strategies (although Mixed is a bit of an outlier). 

POD OF THE WEEK: Of course it’s going to be How to Succeed at SaaS with David Skok
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BONUS: INFLUENCERS - Across multiple forms of media, influencer ads spark a greater emotional response and stick with users for longer than non-influencer ads do. Want more? Here is the 2019 benchmark report for influencer marketing. Influencer marketing spend is projected to hit as high as $15 billion globally by 2022.