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Private SaaS Company Research

Private-SaaS-Company-Research

The  goal of the Private SaaS Company Research is to provide useful strategic and operational benchmarking data and insights to sales and marketing professionals at SaaS companies

KBCM Technology Group conducted a private SaaS company survey of almost 400 companies based on 2016 results.

Some highlights of the Private SaaS Company Research include:

  •  Median employees (FTEs): 78
  • Median customer count: 356 73% headquartered in the U.S.
  • ~$21K median annual contract value (ACV), with 26% of respondents below $5K and 13% above $100K
  • 41% use Field Sales, and 27% use Inside Sales as predominant mode of distribution

Private SaaS Company Research – Annual Recurring Revenue (ARR)

The Median Annual Recurring Revenuewas $8.5M

  • Over 45% have an ARR that is greater than $10M per year
  • Over 20% have an ARR that is greater than $25M per year
  • Lowest revenue point was $500K
  • Highest revenue point was over $100M

Private SaaS Company Research – Full Time Employees (FTEs)

The Median Number of FTEs was 78

  • Almost 52% of companies surveyed have more than 75 FTEs
  • Over 48% have fewer than 75 FTEs
  • The smallest companies (just over 10%( have fewer than 15 FTEs
  • The largest companies (almost 6%) have more than 500 FTEs

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Private SaaS Company Research – ARR per FTE Efficiency

The overall median for annual revenue per FTE was $100K

The overall median for annual revenue per FTE (excluding companies <$5MM) was $137K

  • The lowest amount of ARR per FTE was $25K for companies with less than $500K in ARR
  • The highest amount of ARR per FTE was $186K for companies with over $100M in ARR

Private SaaS Company Research – ARR Organic Growth Rate

The Overall Median ARR Growth Rate was 47%

The Overall Median ARR Growth Rate was 37%% (excluding SaaS companies with <$5M in ARR)

  • The median growth rate drops to 25% percent for companies with over $25M in ARR
  • Approximately 20% of companies with over $25M in ARR experienced growth rates over 50%

Private SaaS Company Research – ARR Organic Growth Rate

The Median ARR Organic Growth Rate for Companies Surveyed was 37%, (excluding SaaS companies with less than $5M in ARR)

  • The organic growth of approximately 53% of companies was less than 40%
  • The organic growth of almost 40% of companies was within 20% to 60%

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Private SaaS Company Research – Contract Size

The Median Growth Rate as a function of contract size for Companies Surveyed was 38%, (excluding SaaS companies with less than $5M in ARR)

The Breakdown of Median Growth Rate as a Function of Contract Size:

  • <$5K – median growth 31%
  • $6K – $15K – 51% median growth
  • $16K – $25K – 40% median growth
  • $26K – $50K – 35% median growth
  • $51K – $100K – 47% median growth
  • >$101K – 43% median growth

Private SaaS Company Research – Sales Strategy

The Median Growth Rates of Companies surveyed by Sales Strategy (excluding SaaS companies with less than $5M in ARR in 2016) was:

  • Median Growth rates for Field Sales – 36%
  • Median Growth rates for Inside Sales – 38%
  • Median Growth rates for Internet Sales – 41%
  • Median Growth rates for Channel Sales – 59%
  • Median Growth rates for Hybrid Sales – 40%

Private SaaS Company Research – Target Customer

The Median Growth Rates of Companies surveyed as a function of target customer (excluding SaaS companies with less than $5M in ARR in 2016) was:

  • Median Growth rates for Enterprise Customers (>1000 employees)- 38%
  • Median Growth rates for Enterprise & Middle Market Customers (100-999 employees) – 32%
  • Median Growth rates for Middle Market & SMB Customers – 40%
  • Median Growth rates for SMB (20-100 employees) & VSB (<20 employees) Customers – 39%
  • Median Growth rates for Mixed Customers – 32%

Private SaaS Company Research – Sales & Marketing Spending

The Median Sales & Marketing spend of companies surveyed (excluding SaaS companies with less than $5M in ARR in 2016) was 37%:

The Breakdown of Sales & Marketing Spend as a Function of Growth:

  • For companies that grew less than 10% in ARR, the median sales and marketing spend was 32%
  • For companies that grew less than 10% – 20% in ARR, the median sales and marketing spend was 30%
  • For companies that grew less than 20% – 30% in ARR, the median sales and marketing spend was 33%
  • For companies that grew less than 30% – 40% in ARR, the median sales and marketing spend was 37%
  • For companies that grew less than 40% – 50% in ARR, the median sales and marketing spend was 48%
  • For companies that grew less than 50% – 60% in ARR, the median sales and marketing spend was 51%
  • For companies that grew less than 60% – 70% in ARR, the median sales and marketing spend was 51%
  • For companies that grew greater than 70% in ARR, the median sales and marketing spend was 50%
  • Private SaaS Company Survey Research – Primary Mode of Distribution

Private SaaS Company Research – Primary Mode of Distribution

SaaS companies with more than $5M in ARR in 2016

  • Field Sales – 48%
  • Inside Sales – 22%
  • Internet Sales – 5%
  • Channel Sales – 5%
  • Hybrid Sales – 20%

Private SaaS Company Research – Primary Distribution Model

SaaS companies with less than $5M in ARR in 2016

  • Field Sales – 31%
  • Inside Sales – 35%
  • Internet Sales – 11%
  • Channel Sales – 5%
  • Hybrid Sales – 18%

Private SaaS Company Research – Contract Size

What is the primary distribution model as a function of the contract size of the initial purchase?

Initial SaaS Purchase: <$1K: 14% ISRs, 43% Internet, 5% CSRs, 38% Mixed
Initial SaaS Purchase: $1K – $5K: 18% FSRs, 41% ISRs, 11% Internet, 7% CSRs, 23% Mixed
Initial SaaS Purchase: $6K – $15K: 28% FSRs, 38% ISRs, 4% Internet, 8% CSRs, 23% Mixed
Initial SaaS Purchase: $16K – $25K: 40% FSRs, 42% ISRs, 2% CSRs, 16% Mixed
Initial SaaS Purchase: $26K – $50K: : 45% FSRs, 27% ISRs, 7% CSRs, 21% Mixed
Initial SaaS Purchase: $51K – $100K: 80% FSRs, 5% ISRs, 2% CSRs, 12% Mixed
Initial SaaS Purchase: $101K – $250K: 79% FSRs, 4% ISRs, 8% CSRs, 8% Mixed
Initial SaaS Purchase: >$251K: 91% FSRs, 9% ISRs

Private SaaS Company Research – Customer Acquisition Cost (CAC)

How much do private SaaS companies spend on $1 of new ARR from a new customer (excluding companies <$5M in 2016 ending ARR)?

  • Median = $1.15
  • Highest- more than $3
  • Lowest- less than $0.25

Just under 60% of respondents spent between $1.41 to $0.51 of each dollar of new ARR to acquire a new customer

Private SaaS Company Research – Customer Acquisition, Up-Sells, Expansions & Renewals

What are the CAC ratios for private SaaS companies to acquire new customers, up-sells, expansion sales and renewals (excluding companies <$5M in 2016 ending ARR)?

  • New ARR from New Customer – median is $1.15
  • Up-sells to Existing Customer – median is $0.57
  • Expansions – median is $0.30
  • Renewals – median is $0.15

Private SaaS Company Research – CAC by Size of Company

What are the CAC ratios for private SaaS companies to acquire new customers as a function of company size (excluding companies <$5M in 2016 ending ARR)?

  • $5M to $7.5M: Median CAC Ratio was $1.04
  • $7.5M to $15M: Median CAC Ratio was $1.08
  • $15M to $30M: Median CAC Ratio was $1.27
  • $30M to $50M: Median CAC Ratio was $1.08
  • $50M to $100M: Median CAC Ratio was $1.37
  • > $100M: Median CAC Ratio was $1.24

Private SaaS Company Research – Sales & Marketing Costs

Overall, the median company devotes 30% of their S&M expenses to marketing, with the remainder allocated
to sales. However, Internet Sales-driven companies have a much greater reliance on marketing at 75%.

Sales and marketing expenses vary by distribution strategy

  • Field Sales Strategy – 71% of expenses are dedicated to sales while 29% are spent on marketing
  • Inside Sales Strategy – 67% of expenses are dedicated to sales while 34% are spent on marketing
  • Internet Sales Strategy – 25% of expenses are dedicated to sales while 75% are spent on marketing
  • Channel Sales Strategy – 68% of expenses are dedicated to sales while 32% are spent on marketing
  • Hybrid Sales Strategy – 66% of expenses are dedicated to sales while 34% are spent on marketing

Private SaaS Company Survey Research – CAC Payback Period

  • The median CAC Payback period was 18 months, based on a gross margin basis and excluding companies with <$5M in 2016 ending ARR)
  • Approximately 50% of respondents recover CAC in 1 to 2 years

Note: Implied CAC Payback Period: Defined as # of months of subscription gross profit required to recover the fully-loaded cost of acquiring a customer; calculated by dividing self-reported CAC ratio by subscription gross margin

Private SaaS Company Survey Research – Up-sells & Expansions

  • The median respondent received 19% of new ARR sales from upsells and expansion sales
  • Larger companies relied more heavily (up to 2x more) on up- sells and expansions

Private SaaS Company Research – Unit Churn

The annual unit churn rate for respondents,excluding companies with <$5M in 2016 ending ARR was 11%

Note: Annual Unit Churn: Percentage churn of # of paid customers at year-end 2015 that were still customers at year-end 2016

Private SaaS Company Research – Gross Dollar Churn

The annual gross dollar churn rate for respondents,excluding companies with <$5M in 2016 ending ARR was 8%

Note: Annual gross dollar churn is the % of dollar ARR under contract at the end of the prior year which was lost during the most recent year (excludes the benefits of up-sells and expansions

Private SaaS Company Research – 399 Respondents by Geography

TOTAL U.S. : 293

  • Northern California / Silicon Valley 63
  • Boston / New England 39
  • Midwest / Chicago 30
  • New York Metropolitan Area 29
  • Pacific Northwest 25
  • Southeast U.S. 23
  • Texas 22
  • Colorado / Utah 17
  • Southern California 16
  • Mid-Atlantic / DC 15
  • Other U.S. 14

TOTAL Non-U.S. : 106

  • Europe 42
  • Canada 33
  • Latin America 11
  • Australia / New Zealand 8
  • Asia 7
  • Israel 5

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