SaaStr

SEPTEMBER 14, 2020

During these phases, make sure to calculate your CAC payback. This is crucial to analyzing a period back, and finding out how much it costs to acquire a customer. You must figure out payback on a monthly basis. To find this, divide by the gross margin. This is important today since there is so much uncertainty in COVID.

Technical Review 290

Technical Review Cloud Software Review Technology 290

SaaStr

NOVEMBER 5, 2021

a 16-18 month payback period) … since this is in part what the capital is for. I see these SaaS businesses not make adjustments for these costs, and time and time again almost run out of money even with a seemingly decent CAC and Magic Number. It doesn’t even include rent, benefits, etc. or so (e.g.,

Scale 250

Scale SaaS Acquisition Benchmarks 250

Baremetrics

SEPTEMBER 26, 2021

Most SaaS companies keep track of their customer acquisition cost (CAC) and customer lifetime value (LTV), but how about your CAC:LTV ratio or months to recover CAC? The crystal-clear dashboard gives you a holistic view of your revenue, expenses, and profit for a specified period. Cost of customer acquisition (CAC) v.

Metrics 95

Metrics SaaS Payments SaaS Customer Lifetime Value 95

SaaStr

DECEMBER 4, 2023

So i f deals take longer to close, you’re spending more money and paying people longer, so your customer acquisition costs are increasing, payback takes longer to materialize, and your LTV to CAC goes down. During that same price increase time period, they reduced churn by 60% because of this flexible pricing structure.

SaaS Payments 206

SaaS Payments Payment Services Payments Payment Features 206

SaaStr

SEPTEMBER 27, 2023

Companies need to pay more attention to factors like: Burn multiple CAC efficiency The most important metric right now is likely the burn multiple. One metric to look at is the CAC payback period — how long it takes to recoup a dollar. Now, investors care much more about healthy and sustainable growth.

AI 194

AI Underperforming Technical Team Cloud Strategy 194

The Angel VC

MARCH 23, 2016

I received a lot of great feedback on the template and the original post remains one of the most viewed posts on this blog up to this day. For Basic and Pro customers, the model allows you to project ARPA development using a given ARPA at the beginning of the planning period along with assumptions on monthly ARPA increases.

SaaS Payments 217

SaaS Payments Headcount SaaS Payment Methods 217

OPEXEngine

JULY 26, 2022

Yet, it is important to track Magic Number in conjunction with underlying or contributing KPIs like the CAC or expansion CAC, the CAC payback period, and Net Dollar Retention Rate. These are metrics that every management team should also be watching and analyzing.

Marketing 52

Marketing SaaS Benchmarks Metrics 52

Chart Mogul

JULY 6, 2023

If you want, you can learn more about churn basics and benchmarks on our blog. Net MRR Churn Rate = (Churn + Contraction MRR) – (Expansion & Reactivation MRR) / (MRR at start of period) A quick example: let’s say a subscription SaaS business charges $10 a month per user seat. What is net negative churn?

Benchmarks 52

Benchmarks Churn SaaS Customer Lifetime Value 52

User Pilot

JANUARY 8, 2024

This is particularly important in SaaS, where the CAC payback period is anything from a few months to over one year. For instance, use educational blog posts for awareness, case studies for consideration, and product demos for decision-making. You must communicate the value of accessing the gated content.

Acquisition 105

Acquisition Strategy Social Media Underperforming Technical Team 105

OPEXEngine

MAY 22, 2020

For diagnostics purposes, compound metrics, like LTV/CAC or CAC payback period, for example, don’t tell you what you need to fix – is your CAC too high, or your retention and/or SaaS gross margin too low? CAC : Customer Acquisition Cost. LTV : Lifetime Value.

Metrics 52

Metrics SaaS Deferred Revenue Benchmarks 52

SaaStr

DECEMBER 22, 2023

But there’s a single metric that can reflect market demand, product market fit, how well a GTM engine is executing, and the quality of the product- and that is the CAC (customer acquisition cost) payback period. If you achieve all of the above, you can shrink the CAC payback period. The takeaway?

Scale 237

Scale Scaling Strategy Sales Hiring 237

SaaStr

JANUARY 5, 2023

One constant challenge, however, is figuring out if you are at the bottom of that curve (after a contraction but bouncing back) or the top (a period of growth heading into a downturn). Fundamental metrics (like ARR, CAC Payback, or Burn Rate) will never stop being important; they’re industry standards for a reason.

Sales Hiring 38

Sales Hiring Acquisition Forecasting Outsourced Development 38

Point Nine Land

JUNE 18, 2023

Everything you always wanted to know about cohort analysis (but were afraid to ask) Back in 2012, I wrote a blog post titled “Know your user cohorts” , which began like this: “One of the most important tools to better understand the usage of a web application — or a service, a game or a mobile app, it doesn’t matter — is a cohort analysis.

SaaS Payments 128

SaaS Payments Payment Services Payments SaaS 128

Intercom, Inc.

NOVEMBER 7, 2018

However, periodically marketers seem to go through a wave of collective insanity where we forget about the ‘long term’ part of the discussion and start to chase growth at any cost. Payback Periods. What is Customer Acquisition Cost (CAC)? How Customer Acquisition Cost (CAC) works day-to-day.

Acquisition 202

Acquisition Scale Advertising Customer Lifetime Value 202

SaaStr

MAY 12, 2023

Using multi-input, far-future metrics like LTV and IRR A million blog posts will tell you that LTV is important. There’s all sorts of rules about how LTV : CAC should be bigger than 3 and all that. You’re just getting less actually done, while killing your team. Do less, better.

Engineering 217

Engineering Sales Hiring Interviewing Scale 217

Aaron Beashel

MAY 5, 2014

People like Sean Ellis , Neil Patel , Chris Hexton , Peep Laja and many others choose to share their knowledge of online marketing via blog posts and eBooks and it is all available for us to learn completely free as long as we have the desire. raise awareness of your product and drive traffic to the website.

Engineering 100

Engineering Scale SaaS Acquisition 100

SaaStr

OCTOBER 1, 2020

CAC ration. LTV to CAC ratio. CAC payback period. Flawed churn rates impact LTV and LTV/CAC ratios. One main way Kellogg likes to think of SaaS companies is “a leaky bucket full of ARR”. Once you can see and understand the ARR engine of a company, then calculate core SaaS economic metrics. Lifetime value.

Churn 218

Churn Retention Acquisition Benchmarks 218

OPEXEngine

JULY 6, 2021

If, however, a business spent five dollars to acquire one dollar of recurring revenue, the payback on the capital invested is much less attractive, resulting in a lower valuation compared to a more capital-efficient business. Some of the most common include the Rule of 40, customer acquisition cost (CAC) payback period, and retention rates.

Software Review 52

Software Review Retention Enterprise Technical Review 52

OPEXEngine

MARCH 30, 2021

If, however, a business spent five dollars to acquire one dollar of recurring revenue, the payback on the capital invested is much less attractive, resulting in a lower valuation compared to a more capital-efficient business. Some of the most common include the Rule of 40, customer acquisition cost (CAC) payback period, and retention rates.

Software Review 52

Software Review Retention Enterprise Technical Review 52

User Pilot

FEBRUARY 22, 2023

Retention is essential for a number of reasons: it is cheaper than user acquisition, helps you lead users to a high overall lifetime value, ensures you retain users past the payback period, and transforms active users into your best, most loyal marketing tool. Payback period and profitability. Customer lifetime value.

Retention 95

Retention Customer Lifetime Value Onboarding Churn 95

Baremetrics

NOVEMBER 10, 2019

Say, your customer acquisition efforts are starting to pay off, and you need to keep an eye on your Customer Acquisition Cost (CAC). Select All Dates for the report period, and make sure to display columns by month. First, select “All time” as the time period from the dropdown on the top right. Reporting Models.

Deferred Revenue 111

Deferred Revenue SaaS Payments Sales Hiring Payment Services 111

SaaStr

FEBRUARY 21, 2020

David is also the author of foreentrepreneurs.com the must read blog in the world of SaaS metrics. When is to early to measure unit economics and CAC? * How does David think about payback period on a per rep basis? What have been his lessons on optimizing payback period for sales reps?

Scale 189

Scale Sales Hiring Underperforming Technical Team Sales Recruiting 189

OPEXEngine

FEBRUARY 4, 2020

Today we’re taking a deep-dive into one of the most crucial SaaS metrics around: customer acquisition cost (CAC). CAC t = Sales & Marketing Cost t / # New Customers t. CAC AND CUSTOMER SUCCESS. Most CAC calculations intentionally exclude the costs and revenue associated with customer success strategies.

Acquisition 45

Acquisition Underperforming Technical Team Metrics Customer Success 45

SmartKarrot

OCTOBER 15, 2020

Of the many business metrics that are used in the customer success niche, customer acquisition cost (CAC) accounts to be a crucial one. It is CAC that decides the strength of a client base and how to make a profit out of that. . Simply put, the lesser the value is for CAC, the better it is for your company. Basic CAC Formula.

Acquisition 19

Acquisition Scale Transportation Customer Success 19

SaaStr

MARCH 12, 2019

LTV:CAC greater than three, payback period greater than 12. It’s gonna drive our CAC. And if you’re telling me that as you watch that the LTV:CAC is greater than three and the payback is less than 12, when you run through your pricing and your comp plan and your conversion rates, awesome. Let’s scale.

Scale 206

Scale Sales Hiring Revenue VP of Engineering 206

OpenView Labs

NOVEMBER 16, 2021

Before they know it, analysis paralysis sets in, and they find themselves consumed by a virtual alphabet soup of SaaS metrics and corresponding acronyms (CAC, ARR, ACV, LTV, to name a few). Essentially, this metric is the marketing component of CAC (see below). Customer Acquisition Cost (CAC). Average Time to Recover CAC.

Benchmarks 71

Benchmarks Scale Metrics Sales Recruiting 71

SaaStr

NOVEMBER 21, 2020

So for us, having a strong vision of the future and understanding what changes the brands would have to go through over a long period of time to succeed, it wasn’t sufficient. In terms of the sales reps doing it, payback is one of my biggest passions, which is probably a sign that I need to get out more.

SaaS Payments 246

SaaS Payments Scale Payment Services Payment Solutions 246

SaaStr

MAY 21, 2019

So, the benchmarks will say you can have a slightly lower retention rate but that also means, in order to solve your LTV to CAC, you also can’t spend as much on a CAC payback to acquire those customers. If it took you two extra months to fundraise, your value just dropped by 40% because the markers were so volatile.

Cloud 166

Cloud Scale Finance Retention 166