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2015 SaaS Industry Survey Results:
Follow me @matthewjhoward
Keeping Score & Measuring
Success for Modern Software
Marketers
December 9, 2015
1. Data, Data, Data (See Handout)
2. Context Setting (Elephant in the Room)
3. Story Time (Because we’re marketers)
4. Back to the Data (How do you stack up?)
4 Things
Software eats the world.
Data dominates all.
Transparency rules.
Nothing is immune.
Software + data
leads to
automation,
transparency, and
disruption in all
things including…
The other elephant in the room!
B2B marketing.

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B2B marketing
disruption answers to
different names…
REVOPS
#SMARKETING #GROWTHHACKING
RevOps happens when product,
marketing and sales use software
tools to work together in a non-stop,
continuous effort that spans the
entire funnel from target personas, to
suspects, to prospects, to customers.
Looks like this…
RevOps is like DevOps…
Automated by software
Driven by data
Measured in real time
Authentically collaborative
Designed by engineers

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“For the fourth year in a row, we
surveyed 305 companies to
gather benchmark data with
regard to growing a successful
SaaS business.”
-- David Skok, Matrix Partners
Demographics of 305
Companies
• Median revenue = $4M (82% < $25M)
• Median employees = 47 (range of 2 to 1,200)
• Median customer count = 300 (72% < 1,000)
• Median ACV = $21k (21% < $5K and 17% > $100K)
• Sales Model = 41% primarily direct, 21% primarily inside
• Headquarters = 70% in U.S.
CAC ACV LTV DRR ETC
Data, Data, Data
Ratios, Acronyms, and Lingo…
I am going to put
a story out there:
if you like it, you
can take it. If you
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right back.
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SaaS marketers are like single people who
treat every day like Valentine’s…
 Spend heavily on dates to find new
friends (customers)
 Seek hugs and love ($) in return
 Diligently maximize benefits from
existing friends (upsell)
Hugs & Love
are the universal
currency of SaaS.
In this sense,
Of course,
not all
friends are
equal.
Therefore…
SaaS Marketers
carefully measure
spend to acquire new
friends.
CAC = Cost of Acquiring
Customers

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And they measure
number of hugs per
friend, per year.
ACV = Annual Contract Value
And hugs received over
lifetime.
LTV = Life Time Value
They measure dating
efficiency two different
ways…
CAC/ACV (lower is better)
$1 CAC generates $2 ACV = 0.5 / 6 month payback
ACV/CAC (higher is better)
Generate $1,000,000 ACV from $500,000 CAC investment = 2.0 sales efficiency
$@!t happens.
So SaaS marketers also
measure breakups...
Churn

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…and total annual hugs
minus breakups.
DRR = Dollar Retention Rate
Ultimately, SaaS
marketers have 3 types of
friends:
• Friends with Benefits
• Friends with Costs
• Friends with Biggest
Benefits
Friends with benefits
stick around and give
many hugs over time.
LTV > 3X CAC
Friends with costs
give few hugs and
leave early.
LTV < 3X CAC

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Friends with biggest benefits
not only stick around...
but they give more hugs the
longer they stay.
LTV > 10 X CAC
4 rules of SaaS dating:
1. Target wisely
2. Spend accordingly
3. Measure carefully
4. Love the ones you’re
with
Define your strategy
and take aim with the
most efficient dating
models.
1. Target Wisely.
Web driven sales players allocate 65% to marketing.
Inside sales models allocate 38% spend to marketing.
2. Spend
Accordingly.
Top performers grow
>35% and spend
>40% of revenue on
dates because they
have solid payback
and abundant access
to capital.
Others spend less.
Note: Public players with >$100m spend
44% on revenue on dating.

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3. Measure Carefully
 SMB dating
 Spend $1.18
 Acquire $1 of new ACV
 CAC/ACV Ratio = 14
months
 Sales Efficiency = 0.84
 One year contracts
 Lower churn
 Moderate upsell
Note: Hubspot spend $15k to acquire
$24k. CAC/ACV = 7 months. Sales
Efficiency = 1.6. Both metrics 2X
better than median above. 5 year
contract means LTV = 8X CAC
 Enterprise dating
 Spend $1.50
 Acquire $1 of new ACV
 CAC/ACV Ratio = 18 months
 Sales Efficiency = 0.66
 Multi-year contracts
 Lowest churn
 Highest upsell
Note: Spend $90k to acquire $60k in
ACV. CAC/ACV = 18 months. Sales
efficiency = 0.66. 5 year contract
means LTV = 3X CAC
 Consumer dating
 Spend $0.50
 Acquire $1 of new ACV
 CAC/ACV Ratio = 6 months
 Sales Efficiency = 2.0
 Month-to-month
 Higher churn
 Lower upsell
Sample: Spend $60 to acquire
$180. CAC/ACV = 6 months.
Sales Efficiency = 2. 2 year
contract means LTV = 6X CAC
Top performers are
fanatical about farming
and have a higher % of
new ACV from upsells.
4. Love the Ones
You’re With…
Players with >$40m in revenue generate 37%
of new ACV from upsells.
 Spend $0.28
 Acquire $1.00 of up-sell
 Median CAC/ACV = 3 months
 Sales Efficiency = 3.5
Up-Sales Cost
24% of New Sales
Renewals Cost 11%
of New Sales
 Spend $0.13
 Acquire $1.00 of renewals
 Median CAC/ACV = 1 month
 Sales Efficiency = 7.6
So, it's all about the hugs!
And that's why SaaS
marketers treat every day like
Valentines.

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Now back to the data!
2015 SaaS Industry Survey Results for Marketers
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Insight
2015 median growth is up from
37% reported in 2013 and 42%
reported in 2014.
Insight
Since many of the fastest
growers are among the smallest
companies. Eliminating them
brings median growth rates down
10% points.
Insight
Companies in the $5-$7.5 M
range are among the fastest
growers – with the median much
greater than the median of
companies half their size.
Insight
Highlighted range represents the
33% to 67% percentile of data.
Companies >$2.5m and < $10m
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Insight
There appears to be no
relationship between median
contract size and growth other
than a bump-up for the $100K-
$250K group which could be
skewed by sparse data.
Insight
Compared to last year, inside
sales is becoming more popular
as primary distribution model..
Median growth among field sales
dominated companies slightly
lagged inside sales dominated
companies by 6% points, but led
internet sales by 8% points.
Channel sales dominated
companies grew significantly
faster, though the data is sparse.
Mixed also performed well.
Insight
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target customer strategies are
growing the fastest.
Otherwise, at least for companies
>$2.5MM in revenues, there
aren’t significant differences.
Insight
Field sales remains the most
popular way to sell, with 41% of
participants employing it as their
primary mode of distribution.
NOTE: this is a surprise to David
Skok, because most of his
companies employ inside sales.

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Insight
In this year’s results, we see
noticeably more companies using
inside sales.
Analyzed by contract value, field
sales dominates for companies
with median deals over $50K
ACV and more or less
disappears when median deal
sizes are below $15K ACV.
There’s meaningful bifurcation
among the $15K-$25K and
$25K-$50K groups.
Insight
The median sales efficiency
metric of $1.18 is notably higher
than previous surveys.
$1.07 and $0.92 were reported in
the 2014 and 2013, respectively.
Note: CAC in this case is
measured as the cost to acquire
a dollar of ACV.
Alternatively you can measure
“months to recover CAC” – i.e. if
it costs you a dollar to acquire a
dollar of ACV, then it will take you
12 months to recover that CAC.
For the median of $1.18 to
acquire a dollar of ACV, that
means it will take 12 x 1.18 =
14.16 (or 14 months to recover.)
14 months
to recover
Insight
It’s is a MUCH cheaper to mine
revenue from existing customers
via upsells and renewals.
The median CAC per $1 of AVC
upsells is $0.28, or about 24% of
CAC to acquire $1 of ACV from a
new customer.
The median CAC per $1 of ACV
renewals is $0.13, or 11% of the
CAC to acquire $1 of AVC from a
new customer.
Insight
As expected, field sales has the
most expensive CAC at $1.14,
followed by inside sales at $0.90.
Channel and online distribution
have significantly lower CACs at
$0.66 and $0.42, respectively.
Compared to previous years, all
modes have shown increases
except Internet, which is down
from $0.54 to $0.42.

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Insight
Overall, the median SaaS
company devotes 31% of their
CAC to Marketing expenses, with
the remaining 69% allocated to
Sales expense.
However, Inside Sales- and
Internet Sales-driven companies
have a much greater reliance on
Marketing, with 38% and 65% of
their CAC budgets devoted to
Marketing, respectively.
Insight
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companies have 20% longer
CAC payback periods than those
primarily using Inside Sales,
which in turn have approximately
20% longer CAC payback
periods than those relying
primarily on Internet Sales.
Insight
The median respondent gets
16% of new ACV sales from
upsells; larger companies rely
more heavily on upsells. This is
largely consistent with prior
years’ results.
Insight
Almost across the board, the
fastest growers tended to have
noticeably more reliance on
upsells.

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saassaastocksaastock on tour
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SaaStock NYC 2018SaaStock NYC 2018
SaaStock NYC 2018

A high growth SaaS playbook. 12 metrics to drive success. 2 goals, present a simple model to understand SaaS business and show what levers a CEO can pull to get the most impact

saas metricsgrowthstartup
Insight
Professional services play a
minor role for most, with the
median SaaS company booking
proserv revenues on new deals
equivalent to 18% of first year
subscription contract value.
Median P.S. margins are approx.
20%.
Insight
Compared with previous surveys,
attach rates ticked up
significantly across the board
(2014 survey: Enterprise 18%,
SMB 8%, VSB 6%, Mixed 9%).
As expected, companies which
are focused mainly on enterprise
sales have higher levels of
professional services.
Insight
Median subscription gross
margins are 78% (nearly identical
when removing the smallest
companies from the group).
These numbers are virtually
unchanged from the 2014, 2013
and 2012 results.
Insight
Approximately 30% of companies
derive some amount of new ACV
from “freemium” strategies,
though virtually no one drives
their business on it..
“Try Before You Buy” is much
more commonly used: 60%
derive revenues through this
strategy, and 30% derive the
majority of their new ACV
through “Try Before You Buy”.
These results are very consistent
with previous years.

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A webinar hosted by Smart Insights: Break down the jargon, and understand the concepts needed for a solid data driven approach for your marketing. Learn how to build a KPI dashboard with the right metrics, with insights from key industry influencers, for you to find nuggets of insights that drive your business in a profitable direction. To hear the accompanying audio: https://www.brighttalk.com/webcast/8551/220651

metricsweb analyticsmarketing
[DIY] How to price your SaaS product
[DIY] How to price your SaaS product[DIY] How to price your SaaS product
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SaaS (Software as a Service) has singlehandedly emerged as the single largest disruption in business model in the last decade. SaaS companies suddenly made available enterprise quality technology to people (and businesses) across the world. SaaS public companies made ~$70Bn (at a ~70% gross profit) while adding ~$700Bn in MCap on the Nasdaq. But there is one thing that sets SaaS apart. A 70% gross profit means that the every $1 of revenue can add $0.70 to your profits & $9.5 to your enterprise value. Which makes for – Pricing, the single largest needle spinner (after the product and service, of course) in a SaaS companies life. Looking for that one small thing that makes a big change? Start here. Disclaimer: Please note that these are our views are based on our experience in being advisors and working hands-on with various organizations. They are for the limited purpose of educating the leaders of a company. The rationale and the procedure to be followed can vary significantly based on the context, stage, exact nature & size of the business.

cfopricingsaas
Decoding the KPI Kaleidoscope with Sandfox Advisors
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Metrics are important to investors because they provide visibility into a SaaS company's revenue growth, sales efficiency, and customer retention. Key metrics include monthly recurring revenue/annual recurring revenue to measure topline growth, revenue churn to understand customer retention, and customer acquisition cost and lifetime value to assess the efficiency and profitability of the growth strategy. Maintaining high growth, strong sales efficiency through a favorable magic number ratio above 1, and low revenue churn are positive signs for investors.

#saastr #saastrannual2023
Insight
The median reported sales
commission rate is 9% of ACV –
which is consistent overall with
prior year results.
Insight
The survey results indicate that
median sales commission rates
are only slightly higher for Field
Sales versus Inside Sales.
Insight
In 2014, “Elephant hunters”
(>$250k median ACV) had
materially lower commission
rates (7%). We note that the
2015 results are consistent with
results from two years ago.
There was a high degree of
consistency in commission rates
across contract sizes.
Insight
The most significant changes this year include: 1) Upsells: this year just 45% paid full commission rates
on upsells, vs. 58% in last year’s group; 2) This year just 32% paid no additional commission on longer
term contracts vs. 42% in last year’s group. Not surprisingly, commissions on renewals are typically
deeply discounted, with a median rate of 2%. Upsells command a median rate of 8%, and nearly half of
the companies pay full commissions on upsells.

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marketingecommerce
Shifting your focus to retention
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The increasing number of online retailers on one side and slowing growth of online user population on the other side are the driving forces of change in e-commerce. Number of returning customers is in decline as new competitors are entering the market. Cost of advertising is rising. One-time customers are not profitable anymore so online retailers need to shift focus to retention. In this talk we'll walk you through the process of building the new framework. We'll deep-dive into data-driven digital marketing framework, explain how to use CRM data to enhance your segments and finish up with case studies expaining how to use the new metrics to identify top customers and maximize your profits.

retentionclvchurn
The Key Drivers for SaaS Success
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SaaS/subscription businesses are much more complex than traditional businesses, and SaaS performance cannot be measured in the same way as traditional businesses are measured. Based on a talk given at the SaaStr Annual Conference in San Francisco, this slide deck offers a comprehensive and detailed look at the key metrics that are needed to understand and optimize a SaaS business, and how these can be used to drive SaaS success. This presentation includes information on: - An intro to SaaS metrics - Unit economics - LTV and churn: An in-depth look - Variable pricing axes - Months to recover CAC - The primary unit of growth: Sales - Understanding public SaaS companies

saasgrowthsaas metrics
Insight
One natural question to ask is
whether companies which pay
higher commissions on renewals
experience lower churn. The
following chart suggests that
there is little correlation between
commissions on renewals and
gross churn.
Insight
Companies offering 7% or
greater commissions on
renewals have experienced the
highest growth rate.

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2015 SaaS Industry Survey Results for Marketers

  • 1. 2015 SaaS Industry Survey Results: Follow me @matthewjhoward Keeping Score & Measuring Success for Modern Software Marketers December 9, 2015
  • 2. 1. Data, Data, Data (See Handout) 2. Context Setting (Elephant in the Room) 3. Story Time (Because we’re marketers) 4. Back to the Data (How do you stack up?) 4 Things
  • 3. Software eats the world. Data dominates all. Transparency rules. Nothing is immune.
  • 4. Software + data leads to automation, transparency, and disruption in all things including… The other elephant in the room! B2B marketing.
  • 5. B2B marketing disruption answers to different names… REVOPS #SMARKETING #GROWTHHACKING
  • 6. RevOps happens when product, marketing and sales use software tools to work together in a non-stop, continuous effort that spans the entire funnel from target personas, to suspects, to prospects, to customers.
  • 8. RevOps is like DevOps… Automated by software Driven by data Measured in real time Authentically collaborative Designed by engineers
  • 9. “For the fourth year in a row, we surveyed 305 companies to gather benchmark data with regard to growing a successful SaaS business.” -- David Skok, Matrix Partners
  • 10. Demographics of 305 Companies • Median revenue = $4M (82% < $25M) • Median employees = 47 (range of 2 to 1,200) • Median customer count = 300 (72% < 1,000) • Median ACV = $21k (21% < $5K and 17% > $100K) • Sales Model = 41% primarily direct, 21% primarily inside • Headquarters = 70% in U.S.
  • 11. CAC ACV LTV DRR ETC Data, Data, Data Ratios, Acronyms, and Lingo…
  • 12. I am going to put a story out there: if you like it, you can take it. If you don't, send it right back. -Ron Burgundy
  • 13. SaaS marketers are like single people who treat every day like Valentine’s…  Spend heavily on dates to find new friends (customers)  Seek hugs and love ($) in return  Diligently maximize benefits from existing friends (upsell)
  • 14. Hugs & Love are the universal currency of SaaS. In this sense,
  • 16. Therefore… SaaS Marketers carefully measure spend to acquire new friends. CAC = Cost of Acquiring Customers
  • 17. And they measure number of hugs per friend, per year. ACV = Annual Contract Value
  • 18. And hugs received over lifetime. LTV = Life Time Value
  • 19. They measure dating efficiency two different ways… CAC/ACV (lower is better) $1 CAC generates $2 ACV = 0.5 / 6 month payback ACV/CAC (higher is better) Generate $1,000,000 ACV from $500,000 CAC investment = 2.0 sales efficiency
  • 20. $@!t happens. So SaaS marketers also measure breakups... Churn
  • 21. …and total annual hugs minus breakups. DRR = Dollar Retention Rate
  • 22. Ultimately, SaaS marketers have 3 types of friends: • Friends with Benefits • Friends with Costs • Friends with Biggest Benefits
  • 23. Friends with benefits stick around and give many hugs over time. LTV > 3X CAC
  • 24. Friends with costs give few hugs and leave early. LTV < 3X CAC
  • 25. Friends with biggest benefits not only stick around... but they give more hugs the longer they stay. LTV > 10 X CAC
  • 26. 4 rules of SaaS dating: 1. Target wisely 2. Spend accordingly 3. Measure carefully 4. Love the ones you’re with
  • 27. Define your strategy and take aim with the most efficient dating models. 1. Target Wisely. Web driven sales players allocate 65% to marketing. Inside sales models allocate 38% spend to marketing.
  • 28. 2. Spend Accordingly. Top performers grow >35% and spend >40% of revenue on dates because they have solid payback and abundant access to capital. Others spend less. Note: Public players with >$100m spend 44% on revenue on dating.
  • 29. 3. Measure Carefully  SMB dating  Spend $1.18  Acquire $1 of new ACV  CAC/ACV Ratio = 14 months  Sales Efficiency = 0.84  One year contracts  Lower churn  Moderate upsell Note: Hubspot spend $15k to acquire $24k. CAC/ACV = 7 months. Sales Efficiency = 1.6. Both metrics 2X better than median above. 5 year contract means LTV = 8X CAC  Enterprise dating  Spend $1.50  Acquire $1 of new ACV  CAC/ACV Ratio = 18 months  Sales Efficiency = 0.66  Multi-year contracts  Lowest churn  Highest upsell Note: Spend $90k to acquire $60k in ACV. CAC/ACV = 18 months. Sales efficiency = 0.66. 5 year contract means LTV = 3X CAC  Consumer dating  Spend $0.50  Acquire $1 of new ACV  CAC/ACV Ratio = 6 months  Sales Efficiency = 2.0  Month-to-month  Higher churn  Lower upsell Sample: Spend $60 to acquire $180. CAC/ACV = 6 months. Sales Efficiency = 2. 2 year contract means LTV = 6X CAC
  • 30. Top performers are fanatical about farming and have a higher % of new ACV from upsells. 4. Love the Ones You’re With… Players with >$40m in revenue generate 37% of new ACV from upsells.
  • 31.  Spend $0.28  Acquire $1.00 of up-sell  Median CAC/ACV = 3 months  Sales Efficiency = 3.5 Up-Sales Cost 24% of New Sales Renewals Cost 11% of New Sales  Spend $0.13  Acquire $1.00 of renewals  Median CAC/ACV = 1 month  Sales Efficiency = 7.6
  • 32. So, it's all about the hugs! And that's why SaaS marketers treat every day like Valentines.
  • 33. Now back to the data!
  • 37. Insight 2015 median growth is up from 37% reported in 2013 and 42% reported in 2014.
  • 38. Insight Since many of the fastest growers are among the smallest companies. Eliminating them brings median growth rates down 10% points.
  • 39. Insight Companies in the $5-$7.5 M range are among the fastest growers – with the median much greater than the median of companies half their size.
  • 40. Insight Highlighted range represents the 33% to 67% percentile of data. Companies >$2.5m and < $10m are fastest growers.
  • 41. Insight There appears to be no relationship between median contract size and growth other than a bump-up for the $100K- $250K group which could be skewed by sparse data.
  • 42. Insight Compared to last year, inside sales is becoming more popular as primary distribution model.. Median growth among field sales dominated companies slightly lagged inside sales dominated companies by 6% points, but led internet sales by 8% points. Channel sales dominated companies grew significantly faster, though the data is sparse. Mixed also performed well.
  • 43. Insight Companies with mixed/balanced target customer strategies are growing the fastest. Otherwise, at least for companies >$2.5MM in revenues, there aren’t significant differences.
  • 44. Insight Field sales remains the most popular way to sell, with 41% of participants employing it as their primary mode of distribution. NOTE: this is a surprise to David Skok, because most of his companies employ inside sales.
  • 45. Insight In this year’s results, we see noticeably more companies using inside sales. Analyzed by contract value, field sales dominates for companies with median deals over $50K ACV and more or less disappears when median deal sizes are below $15K ACV. There’s meaningful bifurcation among the $15K-$25K and $25K-$50K groups.
  • 46. Insight The median sales efficiency metric of $1.18 is notably higher than previous surveys. $1.07 and $0.92 were reported in the 2014 and 2013, respectively. Note: CAC in this case is measured as the cost to acquire a dollar of ACV. Alternatively you can measure “months to recover CAC” – i.e. if it costs you a dollar to acquire a dollar of ACV, then it will take you 12 months to recover that CAC. For the median of $1.18 to acquire a dollar of ACV, that means it will take 12 x 1.18 = 14.16 (or 14 months to recover.) 14 months to recover
  • 47. Insight It’s is a MUCH cheaper to mine revenue from existing customers via upsells and renewals. The median CAC per $1 of AVC upsells is $0.28, or about 24% of CAC to acquire $1 of ACV from a new customer. The median CAC per $1 of ACV renewals is $0.13, or 11% of the CAC to acquire $1 of AVC from a new customer.
  • 48. Insight As expected, field sales has the most expensive CAC at $1.14, followed by inside sales at $0.90. Channel and online distribution have significantly lower CACs at $0.66 and $0.42, respectively. Compared to previous years, all modes have shown increases except Internet, which is down from $0.54 to $0.42.
  • 49. Insight Overall, the median SaaS company devotes 31% of their CAC to Marketing expenses, with the remaining 69% allocated to Sales expense. However, Inside Sales- and Internet Sales-driven companies have a much greater reliance on Marketing, with 38% and 65% of their CAC budgets devoted to Marketing, respectively.
  • 50. Insight Field Sales-dominated companies have 20% longer CAC payback periods than those primarily using Inside Sales, which in turn have approximately 20% longer CAC payback periods than those relying primarily on Internet Sales.
  • 51. Insight The median respondent gets 16% of new ACV sales from upsells; larger companies rely more heavily on upsells. This is largely consistent with prior years’ results.
  • 52. Insight Almost across the board, the fastest growers tended to have noticeably more reliance on upsells.
  • 53. Insight Professional services play a minor role for most, with the median SaaS company booking proserv revenues on new deals equivalent to 18% of first year subscription contract value. Median P.S. margins are approx. 20%.
  • 54. Insight Compared with previous surveys, attach rates ticked up significantly across the board (2014 survey: Enterprise 18%, SMB 8%, VSB 6%, Mixed 9%). As expected, companies which are focused mainly on enterprise sales have higher levels of professional services.
  • 55. Insight Median subscription gross margins are 78% (nearly identical when removing the smallest companies from the group). These numbers are virtually unchanged from the 2014, 2013 and 2012 results.
  • 56. Insight Approximately 30% of companies derive some amount of new ACV from “freemium” strategies, though virtually no one drives their business on it.. “Try Before You Buy” is much more commonly used: 60% derive revenues through this strategy, and 30% derive the majority of their new ACV through “Try Before You Buy”. These results are very consistent with previous years.
  • 57. Insight The median reported sales commission rate is 9% of ACV – which is consistent overall with prior year results.
  • 58. Insight The survey results indicate that median sales commission rates are only slightly higher for Field Sales versus Inside Sales.
  • 59. Insight In 2014, “Elephant hunters” (>$250k median ACV) had materially lower commission rates (7%). We note that the 2015 results are consistent with results from two years ago. There was a high degree of consistency in commission rates across contract sizes.
  • 60. Insight The most significant changes this year include: 1) Upsells: this year just 45% paid full commission rates on upsells, vs. 58% in last year’s group; 2) This year just 32% paid no additional commission on longer term contracts vs. 42% in last year’s group. Not surprisingly, commissions on renewals are typically deeply discounted, with a median rate of 2%. Upsells command a median rate of 8%, and nearly half of the companies pay full commissions on upsells.
  • 61. Insight One natural question to ask is whether companies which pay higher commissions on renewals experience lower churn. The following chart suggests that there is little correlation between commissions on renewals and gross churn.
  • 62. Insight Companies offering 7% or greater commissions on renewals have experienced the highest growth rate.