# Top 10 in Tech - What to know for Week ending December 13, 2024

Published: 12 December 2024
Canonical: https://www.top10in.tech/posts/week-ending-december-13-2024

## 1. ARR GROWTH

The [2024 SaaS Performance Metrics Benchmark report](https://www.highalpha.com/2024-saas-benchmarks-report) indicates a decline in revenue growth efficiency, with metrics like Blended CAC Ratio and Net Revenue Retention showing downward trends. Read more here.

Link: https://www.highalpha.com/2024-saas-benchmarks-report

## 2. SPEND

Capital Efficiency is [back in Vogue](https://techcrunch.com/2023/04/27/capital-efficiency-is-the-new-vc-filter-for-startups/)! According to Bessemer Venture Partners, [here are the benchmarks](https://www.bvp.com/assets/uploads/2022/01/atlas-scaling-to-100-million-gtm-9-min.jpg)for B2B SaaS to measure your payback against (full report [here](https://www.bvp.com/atlas/scaling-to-100-million-ramping-your-cloud-gtm-engine#Lesson-10-Let-CLTV-CAC-and-CAC-payback-be-your-guides)). Across all companies, [Engineering is consistently the largest department](https://www.dropbox.com/s/3z3v1arez18mqaa/10%20-%20Employees.png?dl=0), Customer Success and Product at about 10% and Marketing at only 7%. This slide also has median headcount by stage - which is a great metric to track.

Link: https://techcrunch.com/2023/04/27/capital-efficiency-is-the-new-vc-filter-for-startups/

## 3. GES

[Growth Endurance Score](https://www.mostlymetrics.com/p/a-guide-to-growth-endurance-score)**is** a metric that assesses a company's ability to sustain growth over time. GES measures this efficiency by factoring in both net retention and customer acquisition efficiency. A high GES correlates with long-term business health and resilience. Bessemer has [plotted ARR growth lost YoY](https://www.bvp.com/atlas/scaling-to-100-million#Growth-Endurance), and found that the decay is fairly predictable with a Benchmark at 30%. In other words, you should expect next year's growth rate to be 70% of the current year as the stakes get higher.

Link: https://www.mostlymetrics.com/p/a-guide-to-growth-endurance-score

## 4. EXPANSION

Acquiring customers is not enough for a SaaS company's sustained long-term success, and expansion strategies are pragmatic and capital-efficient growth practices that any good SaaS company needs but are [getting harder to come by](https://openviewpartners.com/wp-content/uploads/2023/10/Chart-8.png). Top quartile companies have been hit hard, seeing NRR drop from 119% to 107%. But at scale, [more growth is coming from expansion vs. new](https://www.dropbox.com/scl/fi/bnsnwy3xjtx91tsa0haeh/Retention-vs-New.png?rlkey=uknwcn5glomd7mwaxho56jhsm&dl=0). The proportion of ARR gained from expansion has increased from 28.8% in 2020 to 32.3%. In comparison, the proportion of ARR gained from the new business has fallen from 62.0% to 57.9%. NRR is [the new normal for B2B SaaS](https://chartmogul.com/reports/saas-retention-the-new-normal/).

Link: https://openviewpartners.com/wp-content/uploads/2023/10/Chart-8.png

## 5. CHURN

[40% of SaaS businesses with ARR in the $15-30m range](https://chartmogul.com/assets/img/reports/saas-benchmarks-report/38_negative-churn-chart.svg) have negative churn, and, on average, [startups with ARPA over $1k have negative churn](https://chartmogul.com/assets/img/reports/saas-benchmarks-report/39_MRR-churn-chart-2.svg). The higher the ARPA, the [lower the monthly net MRR churn rate](https://chartmogul.com/assets/img/reports/saas-benchmarks-report/40_negative-churn-chart-2.svg). This is because of lower gross churn and higher expansion revenue at higher ARPAs. [This article](https://kenmoo.me/b2b-saas-churn-rate-benchmark/#:~:text=On%20average%2C%20B2B%20SaaS%20companies,derive%20ongoing%20value%20from%20them.) notes that a monthly churn rate below 5% is healthy, while under 3% is best-in-class

Link: https://chartmogul.com/assets/img/reports/saas-benchmarks-report/38_negative-churn-chart.svg

## 6. RETENTION

To complement #4 and #5 above, retention is [deeply related](https://www.profitwell.com/blog/lessons-from-10342-blog-posts-on-growth) to churn (obviously) but also to expansion. Chartmogul, in their [SaaS Growth Trends report,](https://chartmogul.com/reports/saas-retention-the-new-normal/)notes that retention strategies are now being viewed as growth strategies. And last year, Companies with best-in-class retention grew at least 1.8x faster than their peers. Check out [this other great ChartMogul article that outlines how to calculate, benchmark, and track retention](https://chartmogul.com/blog/customer-retention-guide-2023).

Link: https://www.profitwell.com/blog/lessons-from-10342-blog-posts-on-growth

## 7. PRICING

Last year, the [median impact on NDR from changing pricing was a +14% increase](https://openviewpartners.com/wp-content/uploads/2022/11/OpenView-2022-SaaS-Benchmarks_Imapct-of-Pricing.png) among expansion-stage software companies. Message heard! [78% of respondents changed pricing and/or packaging](https://openviewpartners.com/wp-content/uploads/2023/10/Chart-9.png). If international expansion is your thing, look at [regional friction points](https://openviewpartners.com/wp-content/uploads/2023/10/Chart-10.png): local payment methods ([invoices, credit cards, PayPal, and region-specific methods](https://openviewpartners.com/wp-content/uploads/2023/10/Chart-11.png)), billing, and tax compliance.

Link: https://openviewpartners.com/wp-content/uploads/2022/11/OpenView-2022-SaaS-Benchmarks_Imapct-of-Pricing.png

## 8. SPEND

Capital Efficiency is [back in Vogue](https://techcrunch.com/2023/04/27/capital-efficiency-is-the-new-vc-filter-for-startups/)! According to Bessemer Venture Partners, [here are the benchmarks](https://www.bvp.com/assets/uploads/2022/01/atlas-scaling-to-100-million-gtm-9-min.jpg)for B2B SaaS to measure your payback against (full report [here](https://www.bvp.com/atlas/scaling-to-100-million-ramping-your-cloud-gtm-engine#Lesson-10-Let-CLTV-CAC-and-CAC-payback-be-your-guides)). Across all companies, [Engineering is consistently the largest department](https://www.dropbox.com/s/3z3v1arez18mqaa/10%20-%20Employees.png?dl=0), Customer Success and Product at about 10% and Marketing at only 7%. This slide also has median headcount by stage - which is a great metric to track.

Link: https://techcrunch.com/2023/04/27/capital-efficiency-is-the-new-vc-filter-for-startups/

## 9. ARR per FTE

Pulling this from [Openview's SaaS Benchmarks Report](https://www.highalpha.com/2024-saas-benchmarks-report)again; it's the newly popular efficiency metric! For many companies, Annual Recurring Revenue (ARR) per Full-Time Employee (FTE) has emerged as a [primary performance indicator](https://www.dropbox.com/scl/fi/bm62ezacswfzk0fry4efh/Rev-per-FTE.png?rlkey=b9zbe1k1cyugp537gpcyivwo9&dl=0), signifying team productivity and doing more with less. There have been [significant yearly increases in ARR per FTE](https://www.dropbox.com/scl/fi/hhhkh2x3agvfx1h7aoxkv/ARR-per-FTE.png?rlkey=84ptlgewvrlm0p675sidahs7o&dl=0) across all bands of startups surveyed, and this metric ranges significantly based on stage/revenue ($42k to 250k median based on ARR).

Link: https://www.highalpha.com/2024-saas-benchmarks-report

## 10. BENCHMARKS

And finally, a motherlode of bookmarkable benchmarks with the [2024 BenchmarkIT Report](https://www.benchmarkit.ai/2024benchmarks) (all B2B SaaS), and it's pretty interactive (or [snag the PDF here](https://www.dropbox.com/scl/fi/15zytzdsm1bsf7rvqd5nv/2a084b_af435e0a374d426a82210f3ca0a0e95e.pdf?rlkey=895wkhzk65qggdtz7hpyf8buv&dl=0)). Median growth for SaaS companies is 30%, and Net Revenue Retention (NRR) is at 105%. Median Customer Acquisition Cost (CAC) payback is 16 MONTHS! and here is one of my favorites - an average of $.69 per $1 of expansion revenue generated.

Link: https://www.benchmarkit.ai/2024benchmarks

## POD OF THE WEEK

This is actually [a whole Podcast for you to follow called SaaS Talk](https://podcasts.apple.com/nz/podcast/saas-talk-with-the-metrics-brothers-strategies/id1687214133) by Dave "CAC" Kellogg and Ray "Growth" Rike.

Link: https://podcasts.apple.com/nz/podcast/saas-talk-with-the-metrics-brothers-strategies/id1687214133