Topline E80: David Spitz on the Evolution of SaaS Metrics and GTM Efficiency
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Oct 21, 2024 David Spitz, a former investment banker and SaaS metrics expert, joins the discussion to address the challenges of GTM efficiency. He introduces a new metric that highlights the troubling trend of declining efficiency in revenue generation among SaaS companies. David analyzes the evolving landscape shaped by economic factors, advocating for a shift from aggressive growth tactics to sustainable practices. The conversation also touches on the need for adaptive pricing models and the struggles of unicorns delaying their IPOs, providing insights into the future of the SaaS industry.
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GTM Efficiency Metric
- David Spitz developed the GTM efficiency metric to measure sales and marketing spend against net ARR changes.
- This metric reveals declining efficiency in public SaaS companies, challenging the narrative of increased efficiency despite slower growth.
Calculate and Compare GTM Efficiency
- Calculate GTM efficiency by dividing sales and marketing expenses by the net change in ARR over a rolling 12-month period.
- Compare your company's GTM efficiency to similar companies and your own historical performance.
Interpreting GTM Efficiency
- GTM efficiency isn't solely determined by absolute values; trends matter significantly.
- A higher ratio might be acceptable for younger, faster-growing companies focused on new customer acquisition.