Benchmarkit 2024 SaaS Performance Metrics Benchmark Report

Live from Schenectady, New York, it's SaaS Talk with the Metrics Brothers, Growth and CAC.

And I'm Growth, better known as Ray Wright, the founder and CEO of Benchmarkit.

And I'm Dave Kellogg, also known as CAC, but better known as an EIR at Balderson Capital, author of Kellogg Blog, and independent consultant.

And together we are the Metrics Brothers.

We are indeed. And Ray, we go together like Eleven and Mike from Stranger Things.

Stranger Things? I'm not a big fan. Tell me why you say that.

Well, Ray, because I know this week we're doing the 2024 B2B SaaS Performance Benchmarks Report that you guys put out. And when I read that, I started to feel like you've been spending some time, some serious time in the Upside Down.

Well, I want to understand a little bit more about that. But before we do, let's hear from our presenting sponsor.

The Metrics Brothers is proudly sponsored by Benchmarkit, the B2B AI and software industry's largest, broadest, and most contextualized benchmarking index. Dave Kellogg and Ray Groth Wright have put the Metrics Brothers podcast on hiatus for the remainder of 2026. All episodes we have ever recorded are still available on your favorite podcasting app. You can reach Dave @kellogg and Ray on LinkedIn @rayreich. Thank you so much for listening to the Metrics Brothers podcast.

Okay.

Okay, Dave, tell me about this upside-down world I'm living in.

So, one of the things I noticed, Ray, before we jump into the highlights from this report, which I know you're going to take us through, when I read it as part of the prep, I noticed that you had done something unusual. Which is you had put some of the axes upside down in my mind. For example, on slide 6 in your report, if you look at the axes on the new customer CAC ratio, the top is 1.1, and then it goes— it going down, it goes 1.2, 1.3, blah blah blah, up to 2.1. So, so that's my joke about the upside down, because I feel like you made a lot— not a lot, but at least numerous of these axes go the other way from what I've seen in other benchmark reports and from what I've seen in your prior benchmark reports. So, so, so what's up with this life in an alternative dimension, right?

Well, that's a, that's a good catch. I can see you actually read and looked at the details of the report. Thank you for that, Dave. The reason being, typically in my kind of nomenclature world, the higher the percentile, the better. Like in SAT scores, I want to get 99th percentile. However, with some metrics, bigger is not always better. An example is CAC payback period. 24 months is not better than 18 months. So last year what I did was I flipped the legend where sometimes 75th percentile is on top, sometimes 75th percentile was on bottom. But this year, based upon feedback, I always kept the legend the same, and that is on the vertical axis it's always 75th percentile on top and 25th percentile at bottom. But based upon what the metric score was, if bigger is better, it was on top. But if smaller was better, it was on top. And I'll, I'll talk about that when we talk about CAC ratio, Dave.

All right, so, so you're basically arguing that things like the CAC ratio and CAC payback period are like golf, that, that, that a lower score is better. And because you always wanted 75th percentile to be the top of that kind of I-bar— can't remember the actual name for that type of chart, uh, but the top of the I-beam— you therefore inverted Which I found confusing. I'm sure you're gonna get feedback from other people on it over the year, so we don't need to drill into it here. But, but readers of the report, if you're following along in your hymn book, as I like to say, just be aware of this.

Perfect.

Well, thank you for highlighting that, and thank you for reading it so closely. But let's just at a high level talk about the 2024 report. So in partnership with a lot of great companies, including Sage, Intacct, Maxio, Mosaic, Baker Tilly, Paddle, we surveyed 936 private B2B SaaS companies that we could use the data, and then we put these metrics into 5 pillars of enterprise value, Dave, whether they're capital efficiency metrics or operational efficiency or customer acquisition, customer retention, and customer expansion. And then because the goal is to contextualize these benchmarks, what we did was we segmented all the metrics where we had enough data by revenue, company size, average annual contract value, by pricing model, by go-to-market motion, by region of the world, even by product category. So that's the way we try to segment and provide filters for the benchmarks, Dave.

Yeah, I like the organization of the report this year. I thought that was an improvement.

So we're learning every year, and by having this podcast with you this year, I'm looking for a lot of great feedback online to the The over 10,000 followers we now have on the podcast, Dave.

Hey, hey, I saw we were number 1 on like Tuesday, March 5th or something. I was looking at the stats that we hit the top of the charts at least one time.

Yeah, we've been the number 1 business management podcast on Apple Podcasts 3 times over the last 5 months. Often we're right there between number 2 and number 10. So nice work there, Cap.

Thank you to our listeners. We appreciate it. And, and we, we watch.

So the first topic with growth rate, everyone was talking about efficient growth. Now this is on page 21. And what I really wanted to do, and I'm going to put my glasses on here because sometimes my charts are too small, but the trend line is no surprise. No one's going to jump up and down and say, I'm amazed at this. But in 2021, 42% was the median growth rate for the population. Last year it was 30%. This year the median's at 17%. And that's okay for total population, but on the same page, we included this chart that shows growth rate by company size measured by annual recurring revenue. And what's interesting here for me, Dave, for the first time, under $1 million was less than 100%, with the median being at 77%. And when you go to the enterprise-class companies, kind of that $100 million and above, they almost mimic the growth rate for public SaaS companies last year with a median of 12%. So anything jump out at you here on the company growth rate?

Yeah, I mean, in general, at the bottom of slide 21, you expect to see growth shrink as a function of size. I think the, the question I have is just how much did it shrink? And those 12% growths are getting pretty small. And that's not just above $100 million, it looks to also be the median at, uh, $50 million plus, really. And, and $50 million is not that big to be growing 12%. If you're $50 million and growing at 12%, there's no IPO in your immediate future, uh, at all, Given IPO is probably $250 to $300 billion, maybe $300 billion minimum these days. So, um, yeah, these, these— we're definitely in a downturn. These growth rates need to rebound if a lot of these companies want to get back on the IPO track.

Well, being an early-stage company CEO multiple times, Dave, optimism is abundant here. So if you go to the next slides, and that is the planned growth rate, those CEOs out there think that 2024 was going to be a rebound to higher growth. But what's interesting to me was if you look at that median growth rate last year, it was 27%. The planned growth rate for that same population of companies, 936, was 35%. And at the very— well, at the top quartile, starting at 75th percentile, where growth rate was 60% last year, they're planning for a 66% growth rate. So I won't go into the buy company size yet, but are you surprised that we have such optimism continuing in the industry?

Um, no. I mean, I think, Ray, look, you should probably create the Ray Reich patented, uh, SaaS optimism index number, which is next year's planned growth divided by this year's growth, right? So 66 divided by 60. Um, and we can start tracking that as a metric to see kind of how optimistic people are. I think it would also be interesting to know, and I know you don't track this, but If you grew 27% last year on median, in the median quartile, what was your plan? Were you hitting or making plan? Because to me, the, the, the, the most optimistic scenario is we missed plan, grew 27%, and nevertheless planned to grow 35%. Uh, that would add an extra kind of turbo boost to the optimism index. But, but no, I think people understand the, the median last year growth rates are not enough, so people need to step on the gas and they're planning for growth. And as I think I said in my 2024 predictions, I thought this was going to be a good year. It's proven to be a pretty tough first half, but I still remain optimistic in the second half.

Yeah, well, the other thing that was really interesting was looking at this by company size. And I was thinking for sure it's going to be the smallest companies under $1 million who are going to be the most optimistic. But in fact, they're the most conservative. You know, they had actual growth of 77% at median last year. This year, they're only planning for 42%. But then you go to the larger companies that are aspiring to go public or have a nice strategic acquisition in the greater than $100 million cohort. And there was only about 14 companies in that cohort that are still private. So it's small, Dave. But 12% was the actual growth rate in 2023, but they're planning for 29%. And I thought that was the epitome of optimism.

Yeah, I think it's, um, it's a little bit also reflective maybe of PE ownership. I'm not sure, um, because PE companies want them growing around 20-25%. I think you can actually see that in these numbers, right? Kind of the minimum growth plan a PE owner wants is 20-25%, and you can see it in the plan numbers almost regardless of the actual numbers. The other SaaS metric, Ray, that this actually relates to, close to your optimism index but backward-looking, not forward-looking, is growth endurance. as we talked about a few episodes ago, which is this year's growth divided by last year's growth, all actuals. And I think we realize that historically growth retention was around 80%. So if you were growing as the small segment is right now at 77%, we rounded up to 80%, the next year on average the predictor would be 66%, right? 80% of 80%—

64%.

64%, sorry. Or if you're growing at, you know, 30%, then you should grow at 24%. So this represents an inversion basically in all categories. Well, except for the sub-million dollar one here on slide 23, but In general, the other thing to remember about growth endurance is historically it ran around 80%, meaning that next year's growth rate should be around 80% of last year's growth rate, just empirically, not planning, but actuals. And I think in Janelle's report it had dropped to 69%, if I remember correctly, that growth rates and growth endurance had taken a fairly major hit in this new, more difficult world.

Yeah, you're exactly right. It went from 80% to 65%. But boy, I hope they don't do growth endurance If these numbers become reality, if you just did it 24 over like 22 through 23, it's going to be like 110% growth in George, which is not accurate. You got to do it over a longer time frame. Have to. Okay, so topic number three. This is the thing that probably jumped out at me the most. We were talking all about efficient growth for 2023, but the blended CAC ratio. which really looks at how much did you invest in sales and marketing expenses on a fully loaded basis and divide it by the amount of new ARR, which includes new logo ARR plus existing customer expansion ARR. It went from $1.32 at median in 2022 to $1.61. That's a 22% increase. So we saw growth rates come down, And we saw the cost of acquiring new ARR went up 22%. And by the way, Dave, that was while sales and marketing as a percent of expenses have went down over the last 2 years. So to me, this is not efficient revenue growth or a positive trend for unit economics.

So assume you're looking here at slide 8, blended CAC ratio, and the median in '21 was 1.3, then 1.3 again in '22, and it's gone up to 1.6 in '23. So I agree with your assertion that we're growing slower and less efficiently. The other thing about this chart in particular that catches my attention, Ray, is that the bar gets— what do I want to call this? The middle 3 quartiles? No, the middle 50% bar. That's what that is, right? This bar that covers from the 75th to the 25th percentile, that bar got a lot bigger. Instead of stretching from what looks about 0.6 points or half a point, it's now stretching 1, nearly 1.5 points. So, so basically the standard deviation got wider, a lot wider.

A lot wider. And especially if you look at the lowest performing quartile, which I say starts at the 25th percentile and below, it went up to $2.60 of sales and marketing expenses to generate $1 of new ARR, Dave, which as we know, that's just not sustainable over Yeah, and this is the—

as Ray calls it, the blended CAC ratio. I would call this the kinder CAC ratio, uh, i.e., it's kinder because it includes expansion, right? The, the more ruthless CAC ratio is just a new customer CAC, uh, which is even less kind. Yeah, so for the blended CAC to be 2.6, that's getting up there.

Now the other thing that I do show there is the expansion CAC ratio, and boy, I should be able to tell you what slide that is in report. It's slide 18. An expansion CAC ratio—not many people calculate this, Dave. It was less than 100 was the end out of the 936 that actually calculate expansion CAC ratio. And what this attempts to do—and you and I have always had a little bit different perspective on this—but David Spitz from KeyBank Capital Markets kind of came up with this maybe seven eight years ago to try to measure how much did you spend to grow one dollar of expansion ARR from existing customer base. Now, last year I didn't feel comfortable publishing it because I just didn't feel the N was large enough, but it was 69 cents, which was pretty consistent with the year before. This year it was a dollar, a dollar of sales and marketing, including customer success expenses, to grow $1 of expansion. If you look at that compared even back in 2021, That's a 42% increase in expansion CAC ratio. And I actually called 5 companies just to do a quick audit of this because you always want to question survey-based benchmarks. And the number one reason was they significantly reallocated both marketing and sales resources to existing customer expansion. So they spent more on expansion, but they generated it much less efficiently.

Ray, are you doing this on a net new ARR basis or just a new ARR basis?

No, just new. I do not include down sells or churn.

Oh, interesting. Okay, so I thought you might given how bad it was. Uh, okay, so it's actually worse. Uh, yeah, that's— my rule of thumb for that is around 0.6, I think, which sounds like is what your data is, that expansion CAC. It should cost you 60 cents to get a dollar of ARR from an existing customer. You get a dollar of new ARR from existing customer independent of any other customers churning. Uh, so it's, it's not a net new ARR metric. So, so yeah, I mean, that, that's tough out there. I, I thought the answer was going to be because there was more churn, but you're, you're just saying the answer is it's just— I think we're spending roughly the same amount of money and we're getting less of it, but maybe we're spending less money and getting more than commensurately less. I'm not sure.

We're actually allocating a larger percentage of sales and marketing expenses to expansion versus new in 2023.

Okay. Okay. Oh, okay. That would help explain it. Okay.

Now, I'm not going to spend a lot of time on page 6, which is the new logo CAC ratio. But what's interesting there is because we reduced the amount of money we were spending on new customer acquisition because everyone knew it was going to be harder, the actual unit economic of efficiency, new CAC ratio at median remained level, Dave. But just like you mentioned earlier, the range between 25th and 75th percentile Or standard deviation went up dramatically. There's almost a 2x standard deviation between 75th and 75th percentile this year with $1.11 of sales and marketing being the top quartile starting point, but $2.03 being the enter into the lowest quartile or 25th percentile. Any questions on new CAC ratio?

So basically you're saying in '23, the blended CAC ratio was 1.61. And the new across all segments, and the new was 1.76, implying— what does that imply? It implies there wasn't that much expansion ARR, I think, right? There's not a very big gap. Normally there's a much larger gap.

Yeah, in fact, if you look at it, we're not going to talk about it today, but expansion ARR was at median with this particular population was 30 5% of new AR, of total new AR.

However, to my rule of 30, right?

Yeah, it's going back. But if you look at $20 million and above, it's closer to 40 to 50%, Dave.

All right, got it. And I think what maybe is also driving the, the lack of divergence in blended versus new is the increased cost of expansion. That is correct. So, so, okay, got it.

Okay, boy, I can't believe we're getting close to 20 minutes already, but this is the one I really wanted to make sure we covered today, and that's net revenue retention, also known as net dollar retention. Now we know that public market data shows that, you know, in 2021, in most of 2022, it was about 120% was NRR. 2023 for public companies is 110%, and Q1 of '24 was 109%. But for private companies in 2023, we now are at a median of 101% NRR, just above that 100% kind of minimum that I think you should be targeting. That's down from 103% last year and from 105% in 2021, Dave.

Yeah, not, not surprising. Um, you know, disappointing. Maybe it's cold out, as I often say. Uh, what it means is we're doing a whole bunch of work just to hold the base flat, which is far better than letting the base shrink, don't get me wrong. So those customer success investments are well spent, but, but the net is the base is holding steady, not increasing. And one of the things that makes SaaS companies worth a lot of money is the fact that, hey, if the base is going to expand it, you know, your service— because they didn't show this, but if you look at like IPO-tracked companies, you might see 120%, right, in the old days. So hey, if your base is going to grow by 120% every year compounded by doing nothing, quote unquote, that's going to be a very great, you know, base on which to build. And now what we're actually saying in this segment, this report, and you may want to talk about who— I can't remember if you did yet, Ray, about who responded. But across this broader, more democratic sample, we're saying, hey, your average SaaS company is just hanging on, holding the base flat.

Yeah, you know, that's a great question. And, you know, I didn't mention it, but if you look at the population of that 936, about 22% were less than $5 million. About 24% were $5 to $20 million, and about 13 or 14% were $20 to $50 million. But it's in the report, Dave. If people go to the back of the participant profile, they can actually see the cohorts segmented by company size, by ACV, product category, and even region of the world.

Have you ever done by backing yet? I know we've talked about that, whether you're VC-backed, PE-backed, or bootstrapped. Is that an enhancement request for the next year, or is that something you've already done?

We have done it, and this year we didn't publish the data from it, and we just— we're overwhelming people. But we do have the data if anybody wants it.

Ah, very good. No, good. You— good to know you have it, because I think, you know, backer type is gonna— it's gonna be a very interesting way to cut these metrics.

Totally agree. Well, in interest of time, I'm gonna jump to the last one, and it's one when we looked at the OpenView report maybe 20-some episodes ago You really like the ARR per employee cut. So we have that here on page 32. And what you will notice is, you know, nothing really jumps out at you except for me, the $20 million to $50 million range. We have a pretty narrow band, $209,000 of ARR per employee. And then when we get to the $50 to $100 million band, it jumped to $281,000, almost $282,000. Which is getting awfully darn close to that magical $300,000 or greater that to go public you probably need to be at. So I don't know if anything jumped out at you at page 32 here, the ARR per employee.

Yeah, these numbers strike me as high. It's not surprising in the smallest segment to see a median of $61,000, but jumping immediately to basically $190,000 and then $200,000 and then even $300,000, those are high numbers in my mind. I always use mentally $200,000 as the rule— is the kind of rule of thumb for what you want to get to. And maybe, you know, look, as you get bigger, this figure goes up because you have compounding in the base and you've got all this existing stuff you sold years ago that's hopefully just been renewing. So that's a great way to drive up ARR. But I think $300,000 is a high benchmark. I can't remember what OpenView said, but the thing that most strikes me here, because my rule of thumb is $200,000 as being like pretty good, not IPO track, but pretty good, but just how quickly, and maybe it's because people have been cutting headcount, you jump from the kind of sub-$100,000 level to the boom, a nearly $200,000 level. Even at small size of only $5 to $20 million.

Yeah. Well, I was just reading another report the other day that in the Bay Area last year, we lost— the net negative was 38,000 tech employees just in the Bay Area last year. So to me, that's exactly what has happened is we've reduced the amount of full-time employees. And even though revenue didn't grow as fast, if you reduce by 10 to 15%, you're going to increase your ARR per employee by 15%, right?

Indeed, indeed. Now, Ray, as metrics brothers, we should care a lot about presentation, and we talked about upfront about how you redesigned the report to support the notion that 75th was always top. But I have to ask you, do you use commas in the upside down? Either commas or kilodollars. Come on, Ray, this one's hard to read.

Okay, you know what, I must admit I had a new designer also this year. He had a few different ideas. And I kind of let him run with it. So I appreciate the feedback. It's a good one.

Don't delegate, Ray. Micromanage. That's my advice.

There you go. Okay. Well, that's it for today's episode. Dave, I really appreciate you taking a look at the report and for all your great questions.

Thanks, everybody. Thanks for joining us. Great report, Ray.

And to our listening audience, if you want to see all these details interactively, you can go to benchmarkit.ai and just look at the 2024 benchmarks on the benchmarks menu. And you can see all these benchmarks filtered by whatever company profile attribute you want. Talk to you later, Dave.

See you, Ray.

The Metrics Brothers AI, SaaS, and More is a production of The Metrics Brothers Growth and CAC and a member of the Benchmarkit Podcast Network. By accessing this podcast, you acknowledge that The Metrics Brothers make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided or the humor content of the jokes told. Ray? Information, opinions, and recommendations presented are, according to our spouses, probably wrong and provided for information purposes only. This podcast should not be considered professional or, for that matter, unprofessional advice. We disclaim any and all liability for any direct, indirect, indirect, misdirect, incidental, special, ordinary, consequential, inconsequential, or other damages arising out of any use of or God help you reliance upon the information presented here. Ray Growthreich is based in New York City and available on X at Ray Reich.

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