

RV210 - How GTM Efficiency Impacts Revenue Multiple and Enterprise Value | Go To Market Live Episode 29
17 snips Sep 3, 2024
Discover how SaaS companies can optimize marketing and sales spend for enhanced enterprise value. Learn about the innovative GTM efficiency percentage and its implications for revenue multiples. The discussion emphasizes the need for sustainable growth over traditional metrics, addressing challenges like rising churn rates and customer acquisition costs. Insights into the evolving landscape of customer success offer strategies for navigating critical funding stages and ensuring cost-efficient growth. Tune in for actionable advice on overcoming scaling challenges!
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GTM Efficiency And Growth Are The Core KPIs
- GTM efficiency percentage and growth rate together explain a mature SaaS company's valuation better than many traditional KPIs.
- Chris argues these two numbers replace CAC payback, LTV:CAC, Rule of 40 and magic number for top-level assessment.
How GTM Efficiency Is Calculated
- GTM efficiency = trailing 12 months go-to spend divided by net new ARR, multiplied by 100.
- A lower percentage is better and each 100% roughly equals one year of CAC payback.
Efficiency Strongly Correlates With Revenue Multiple
- Public SaaS firms with GTM efficiency under ~175% have median 10x revenue multiples versus ~3.6x for >250%.
- Improving efficiency materially increases enterprise value even at equal revenue.