Benchmarking SaaS performance with David Skok’s latest survey
The results of the latest SaaS survey run by David Skok’s KBCM Technology Group are now out! I have found this work incredibly useful to benchmark SaaS operations and figure out best practices, performance and KPIs. I strongly recommend to those interested in SaaS to check out these two detailed posts on David Skok’s blog, they hold the full results and analysis:
For those of you just interested in highlights here are my main takeaways:
The survey covers 385 participants which is a substantial and significant sample. These are the main descriptive attributes collected. They give us a good idea of their profile.
- Median AAR in 2017: $6.7M, with 25% of companies doing >$25MM
- Median organic growth in ARR in 2017: 53% (39% for companies > $5M in ARR, and 35% for companies > $25M in ARR)
- Median team size (FTEs): 69
- Median number of customers: 323
- Portion of SaaS companies headquartered in the US: 63%
- Median annual contract value: ~$20K
- Subscription Gross MarginMedian: 77%
- CAC pay back period: 19-22 months
- $ Churn: 13 %
I have also selected a number of key insights, as shared by David’s team, which I think are really relevant to tracking performance and establishing meaningful KPIs. I have found them very helpful in the course of my own work:
- Companies focusing on the lower-end (Mid-market, SMB) grew much faster than those focused on larger customers.
- Median SaaS companies surveyed derive 30% of new ARR sales from up-sells and expansions.
- The best growth was achieved for contract value between $5-15K and $25-250K (less between $15 -25K or above $250K)
- The top two primary modes of distribution were field and inside sales, with smaller companies (<$5M) favouring inside sales (with 41% of sales coming from inside sales and 30% from field sales) , and larger companies (>$5M) favouring field sales ( with 28% of sales coming from inside sales and 46% from field sales).
- There is indication that companies relying on inside sales and those with a mixed go-to- market were growing faster than those using primarily field sales.
- Companies spending more on sales and marketing grow faster, but there appears to be diminishing returns above the 60-80% S&M spending levels for most ( % of revenue).
- As expected, companies which are focused mainly on enterprise sales have higher levels of professional services- about 10%.
- Primary pricing metric were: 39% seats and 25% usage / transactions.
- Distribution among those selling smaller contracts suffers much more significantly from higher churn.
Given the challenges and complexities of tracking SaaS sales performance I think those benchmarks and insights can be of great help.
