SaaS Benchmarks: 2023 Report
SaaS companies possess a lot of data and are typically under the scrutiny of investors, giving rise to a unique set of metrics that measure their success. Our extensive work with SaaS companies puts us in the position of knowing which metrics investors and founders alike care about in 2023, and the benchmarks they’re expected to hit.
The below table contains 14 key metrics that SaaS companies use and their corresponding benchmarks. These metrics and benchmarks are organized into 3 categories:
- High Level: Metrics that provide a broad overview of your company’s health and direction.
- Marketing-Focused: Metrics used to track & improve the performance of your marketing program.
- Sales-Focused: Metrics that reflect the ability of your sales team to turn leads into sales and revenue.
We then provide a brief discussion of each metric.
Key SaaS Benchmarks for 2023
|Annual Recurring Revenue (ARR) Growth||68% (Under $1 million revenue)
45% (Over 1 million revenue)
|Burn Multiple||Under 1.5||Source|
|CAC Payback||6 months||Source|
|Marketing Campaign ROI||PPC: 31%
|Cost Per Lead||Paid: $280
|Organic Traffic||10% growth month-over-month||Source|
|Visitor to Lead Conversion Rate||1.9%||Source|
|Lead to MQL Conversion Rate||39%||Source|
|Customer Acquisition Cost||$728||Source|
|LTV to CAC Ratio||6:1||Source|
|Pipeline Velocity||$500/day to $5000/day – varies highly based on company type||Internal Data|
|Lead to Win Rate||5.2%||Internal Data|
|Upsell/Cross-Sell Rate||23%||Internal Data|
|Annual Churn||5.2%||Internal Data|
High Level Metrics & Benchmarks
High level metrics & benchmarks are those which reflect on the overall operational health of an SaaS company. These rarely provide guidance on what needs to change, but are the strongest indicators of either success, or that an important problem hampers your company’s continued growth.
- ARR Growth: Annual recurring revenue is total revenue a SaaS company expects to receive from its subscribers in a single year. ARR growth is, as it sounds, a measure of how much that revenue increases each year. ARR growth is one of the most important measures of a SaaS company’s overall success.
- Burn Multiple: The burn multiple is a measure of how much a business must spend in order to generate a single new dollar of ARR. Burn multiple is most important in startups, when costs (i.e. “burn”) are expected to exceed revenue for several years.
- CAC Payback: CAC payback measures how quickly your company earns back what it spent acquiring a new customer. Keeping CAC payback low allows your company to scale more quickly while maintaining profitability.
SaaS Marketing Benchmarks
SaaS marketing benchmarks refer to metrics your content team can use to analyze and improve your campaign’s performance. Unlike the high level benchmarks and the sales benchmarks, these metrics are more within the control of the marketing team, lending themselves to having easier solutions and roads for improvement.
- Marketing Campaign ROI: Campaign ROI is the ultimate measure of whether your marketing investments are successful. Because ROI is a more difficult metric to measure in companies with more siloed departments, many marketing teams instead focus on their cost per lead.
- Cost Per Lead: Cost Per Lead (CPL) is a general measure of how effective your marketing efforts are at lead generation. Unlike ROI, CPL doesn’t account for how much revenue those leads actually represent, making it a less accurate measure of success.
- Organic Traffic: Organic traffic—that is, traffic that originates from unpaid searches—is an excellent leading indicator of future leads when combined with your conversion rates. It is also a key part of sustainable lead generation, as paid channels result in lower average ROI.
- Visitor to Lead Conversion Rate: Your Visitor to Lead Conversion speaks to the effectiveness of your website at capturing visitor attention and encouraging them to convert. In a SaaS context, these conversions often consist of demo downloads in addition to the standard contact form fill.
- Lead to MQL Conversion Rate: Just as important as Visitor to Lead conversion rate is your Lead to MQL Conversion Rate. A high Lead to MQL Conversion Rate demonstrates that your marketing is reaching the right audience of prospective customers.
SaaS Sales Benchmarks
Sales benchmarks refer to metrics that speak to the later stages of your sales funnel. These metrics focus on actual closed sales, rather than the lead generation of the marketing metrics above.
- Customer Acquisition Cost: Your Customer Acquisition Cost (CAC) is a measure of how much your company spends to acquire a single new customer. Keeping CAC low is essential to scale sustainably.
- LTV to CAC Ratio: CAC is an important metric, but it doesn’t tell the whole story—often higher value customers will take longer to close, and therefore, require more resources from your sales team. Comparing your average customer lifetime value (LTV) to your CAC ensures that your sales marketing and sales spend is proportional to their actual return.
- Pipeline Velocity: Pipeline Velocity measures how quickly leads move through your sales funnel. A fast pipeline indicates two things: your lead nurturing content effectively prepares leads before they reach your sales team, and your sales process is operating efficiently.
- Lead to Win Rate: Win Rate is one of the most important measures of your sales team’s success, but high win rates begin in marketing with audience selection. Poor targeting will lead to low win rates as surely as unskilled sales teams.
- Upsell/Cross-Sell Rate: Increasing customer LTVs is just as important as acquiring new customers, and your upsell and cross-sell rates speak to both how satisfied your customers are with your software, and how relevant your other offerings are to your existing customers.
- Annual Churn: Churn is the inverse of customer retention, referring to how many current customers you lose in a given time period. Maintaining a low churn rate is essential for long-term success—once lost, customers rarely return to try your software. In smaller markets, a high churn rate will cause your business to rapidly exhaust your potential customer base.
Exceeding Industry Benchmarks
Behind these clean numbers is a tremendous amount of hard work and experience. The benchmarks above reflect a high-performing SaaS company actively investing in growth. If you’re seeking experience, it can make sense to partner with firms that specialize in each critical area of business until you can build that expertise in-house.
This advice is particularly true when it comes to marketing. Our agency specializes in SaaS marketing, combining thought leadership and SEO to help software companies of all sizes improve their lead generation and lower their CAC. Feel free to contact us if you’d like to explore a partnership.
Evan Bailyn is a bestselling author and award-winning speaker on the subjects of SEO and thought leadership. Contact Evan here.