Delve into a decade of SaaS metrics trends, analyzing KeyBank's metrics over 11 years. Explore the challenges in meeting the 'Rule of 40' and potential shifts to the 'Rule of 60'. Gain insights on future industry trends and the evolving role of AI in outbound strategies.
SaaS industry sees rise in expansion revenue and customer acquisition costs.
Focus shifting towards upselling and cross-selling to existing customers in SaaS sector.
Deep dives
Longitudinal Benchmark Report Insights
The podcast discusses a longitudinal benchmark report on SaaS metrics, highlighting key trends over an 11-year period. The report aims to provide a bigger picture and insight into what the 'new normal' might look like in the SaaS industry. It points out significant increases in expansion revenue, gross margin, and customer acquisition costs over the years.
Rule of 30 and Expansion Revenue Analysis
The podcast delves into the rule of 30 and the increased emphasis on expansion revenue in the SaaS industry. It notes a substantial rise in the percentage of revenue coming from expansion sales, indicating a shift in business models towards more usage-based pricing strategies. The analysis suggests that companies are focusing more on upselling and cross-selling to existing customers.
Revenue Metrics Stability and Employee Efficiency Trends
The podcast highlights the stability in revenue per employee metrics in the SaaS sector, indicating a consistent performance around $140,000 per employee across different company sizes. It also addresses the challenges faced by SDRs in outbound sales efforts, emphasizing the increasing difficulty in generating quality conversations with prospective clients. The discussion points towards potential changes in the SDR role due to AI automation and evolving sales strategies.
SaaS metric benchmark trends over the last decade highlights the challenges associated with the rapid expansion and evolution of the B2B SaaS industry. Some of the significant changes that every SaaS industry stakeholder should understand include:
Expansion as a % of Revenue Growth
Gross Churn Rate
Net Revenue Rate
Customer Acquisition Cost Ratio (cost of acquiring a $ of Growth ARR - New and Expansion)
Rule of 40
ARR per FTE
Matt Harney - at Cloud Ratings did a great job at putting this report together and we highly recommend everyone take a look at: cloudratings.com/saas-benchmarks-historical/ to follow along with Dave "CAC" Kellogg and Ray "Growth" Rike as they break down the top findings and insights from this SaaS Metrics Benchmarks longitudinal report.