Jun 19, 2023 · 22m · top-founders
Top 5 SaaS Performance & Revenue Efficiency Metrics that Matter in 2023
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this SaaSOpen conference presentation, RevOps Squared founder Ray Rike delivers an expert guide to the essential SaaS efficiency benchmarks—including CAC payback, CAC ratios, GRR, NRR, CLTV:CAC, and the Rule of 40—demonstrating how capital efficiency and balanced growth directly drive enterprise value.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 3.9% of the talking time here. How this is scored →
Nathan as informed peer 0.0 Guest teaching 0.0 Guest disagreement 0.0 Nathan pushing back 0.0
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 17:20 Calling early CLTV to CAC meaningless
Ray forcefully rejects claims of high CLTV to CAC ratios for early-stage companies, arguing they lack meaningful churn data.
Hardest push from Nathan ▶ 0:00 Nathan sets high bar for conference contentNathan sets expectations in the episode intro by emphasizing the high filtering bar for speakers and actionable data.
Biggest teaching moment ▶ 15:35 Explaining NRR benchmark distortionsRay educates founders on why standard subscription companies should avoid benchmarking retention against usage-based models like Snowflake.
Nathan holds their own ▶ 0:00 Nathan highlights getlatka databaseNathan demonstrates domain authority in the intro by referencing his proprietary platform and repository of SaaS metric interviews.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Ray Rike's Background and Benchmarking Overview | 0 | 0 | 0 | 0 | Solo conference presentation by Ray Rike outlining his entrepreneurial background and introducing the SaaS performance metrics framework. There is no active host dialogue. | |
| Deep Dive into Customer Acquisition Cost (CAC) Payback Period | 0 | 0 | 0 | 0 | Ray delivers a monologue analyzing CAC payback period benchmarks across varying ACV brackets and ARR milestones without host intervention. | |
| Analyzing Blended, New, and Expansion CAC Ratios | 0 | 0 | 0 | 0 | Keynote presentation detailing blended, new, and expansion CAC ratios, featuring a brief one-line agreement from moderator Ben. | |
| Understanding Gross Dollar Retention (GRR) and Renewal Cohorts | 0 | 0 | 0 | 0 | Solo lecture explaining gross and net revenue retention, available to renew (ATR) cohorts, and comparing seat-based versus usage-based models. | |
| Demystifying Customer Lifetime Value to CAC (CLTV:CAC) | 0 | 0 | 0 | 0 | Ray provides a solo breakdown explaining why early-stage CLTV:CAC calculations are misleading and introduces Rule of 40 benchmarks. | |
| Constructing a Leading and Lagging Metrics Framework | 0 | 0 | 0 | 0 | Ray concludes his solo presentation by outlining leading versus lagging metrics frameworks and reviewing enterprise value correlation data. |
Statements from this episode (18)
Salesforce cut sales and marketing to 36% of revenue under investor pressure
“Their sales and marketing expense to revenue four months ago, 46%, with a 17% growth. So now they're at 36%. Why? Because investors said your sales and marketing expenses are way too high.”
Rule of 40 is now the metric most correlated with SaaS valuation
“But it's now the number one SAS metric as correlated to enterprise value in the next 12 months revenue. A year ago, it was number five. Growth is still number two. But balanced growth with profitability is number one.”
CAC ratio is superior to the SaaS Magic Number
“CAC ratio to me is superior to the rule of 40. Why? I'm sorry. The SAS magic number. Why? Because you can measure how much sales and marketing investment you need to make for one dollar of new name ARR, and How much sales and marketing, customer success invest…”
CLTV to CAC ratio is meaningless for $1M ARR SaaS startups
“If someone says, I'm concerned about your CLTV to CAC ratio at a million dollars, you need to wonder why you're working with that person, because it's pretty meaningless”
Rike: CAC Payback Must Always Be Gross Margin-Adjusted
“Payback period should always be a gross margin adjusted calculation.”
Rike: CAC Payback Correlates With ACV Rather Than Total ARR
“Whether you're a five million dollar ARR, SAS company, or 20, that has a lot less correlation to CAC payback period. Than the size of your average annual contract value.”
Median CAC payback for $100k+ ACV SaaS is 22 months
“Because if you're at the hundred K or greater, CAC payback period, 22 months at median.”
SaaS customer acquisition efficiency typically drops at $7M to $15M ARR
“When you hit kind of 10 to fifteen million, it gets more difficult to acquire new customers. Why? You've hit the cream of the crop. Now you might be getting those early majority buyers. If you look at the crossing the chasm technology life cycle adoption curve…”
Rike: Median SaaS Blended CAC Ratio Was $1.33 in 2022
“In twenty-twenty-two, companies were investing about a dollar 33 of sales and marketing expense fully loaded, that means comp, benefits, everything, to get one dollar of new or expansion arr.”
Rike: Median New Customer CAC Ratio Is $1.58
“New looks at how much sales and marketing expense did I invest to pursue new customer logos and ARR from those new customers. So you see it's much higher. It's a dollar 58. Because it's harder to grow ARR from new customers.”
Rike: Median Expansion CAC Ratio Is 69 Cents
“But if you go to expansion cap ratio, which is Organic expansion, so if you have a usage-based pricing or PLG, but it's more upsells, cross-sells, where you actually have a sales-led motion. Look at that median. 69 cents.”
Ray Rike: Median SaaS gross revenue retention is 85% to 87%
“So typically you'll see a median somewhere around that 8586, 87%.”
Ray Rike: Gross revenue retention must only measure renewal-eligible cohorts
“The best practice for gross revenue retention is you only measure it for that cohort of customers that actually had an availability to renew.”
Rike: Early Seat-Based SaaS Companies Typically See 104% to 110% NRR
“If you are a true annual subscription, seat-based or whatever other, you are going to be more in that 104 to 110%, especially early on.”
Rike: CLTV:CAC is meaningless without at least one to two renewal cycles
“If you haven't had at least one, but more and more appropriately, two renewal cycles, this is a meaningless metric. Why? Because you really don't know what your churn rate is.”
Median SaaS CLTV to CAC benchmark is now 4x
“You can see that kind of four is the median. It used to be three, now it's four.”