# Top 10 in Tech - What to know for Week ending January 12, 2024

Published: 11 January 2024
Canonical: https://www.top10in.tech/posts/week-ending-january-12-2023

Happy New Year, and welcome to the Benchmark Holiday special! This is a compilation of helpful benchmark data reported from across the web last year for you to put to good use.

## 1. ARR per FTE

Pulling this from Openview's 2023 SaaS Benchmarks Report, 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 in 2023](https://www.dropbox.com/scl/fi/bm62ezacswfzk0fry4efh/Rev-per-FTE.png?rlkey=b9zbe1k1cyugp537gpcyivwo9&dl=0), signifying team productivity and doing more with less. Significant[yearly increases in ARR per FTE](https://www.dropbox.com/scl/fi/hhhkh2x3agvfx1h7aoxkv/ARR-per-FTE.png?rlkey=84ptlgewvrlm0p675sidahs7o&dl=0) have occurred from 2022 to 2023 across all bands of startups surveyed. This metric ranges significantly based on stage/revenue ($42k to 250k median based on ARR).

Link: https://www.dropbox.com/scl/fi/bm62ezacswfzk0fry4efh/Rev-per-FTE.png?rlkey=b9zbe1k1cyugp537gpcyivwo9&dl=0

## 2. 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 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%.

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

## 3. 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.

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

## 4. RETENTION

To complement #2 and #3 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 in 2023](https://chartmogul.com/blog/saas-growth-trends-in-2023) report, 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

## 5. PRODUT LED GROWTH

As mentioned in #3 above (and from me from time to time in this newsletter), [Product Led Growth](https://openviewpartners.com/product-led-growth-maturity-grader)(PLG) businesses lead the pack when it comes to Expansion. PLG companies also deserve their own benchmark reports - so I got you covered [with this one](https://366266.fs1.hubspotusercontent-na1.net/hubfs/366266/2023%20Product%20Benchmarks/OpenView%202023%20Product%20Benchmarks%20Report.pdf) where you can benchmark 1000+ PLG companies (it was only 450 companies a year ago). A few factoids: Organic leads are still leading the pack but have [decreased Year on Year from 2022 (39% of all traffic) to 2023 (32% of all traffic)](https://www.dropbox.com/scl/fi/lou6yjrlnibji162kfm9b/2024-01-11_16-08-25.png?rlkey=c8z1efr2oyh12oklmbr8m70mo&dl=0) - most of that shift has been absorbed by old fashioned Sales, Paid Marketing, and Partners. When it comes to trials, [Expansion is harder to come by](https://www.dropbox.com/s/pjal9c28e8jxmyt/2024-01-11_16-13-13.png?dl=0), and NDR is falling

Link: https://openviewpartners.com/product-led-growth-maturity-grader

## 6. CAC PAYBACK

The 'payback' period is the nuance of why we measure CAC. How long until we break even? Benchmark-wise, the negative trough is way longer than you think, so take a seat! New B2B customers, on ***average***, [take 2 years and 2 months](https://www.dropbox.com/s/z3tedek2i7ejen8/7%20%20-%20CAC%20PAYBACK.png?dl=0) to become profitable. This highlights a deepening dependency on access to capital to fund a SaaS company's growth through these [SaaS Cash Flow Troughs](https://www.forentrepreneurs.com/saas-economics-1/).

Link: https://www.dropbox.com/s/z3tedek2i7ejen8/7%20%20-%20CAC%20PAYBACK.png?dl=0

## 7. GROWTH

Good news - growth is [not deteriorating](https://chartmogul.com/assets/img/reports/saas-growth-report/1_SaaS_Growth_Trends.svg). The bad news is that it's not improving, especially at the [early stages.](https://chartmogul.com/assets/img/reports/saas-growth-report/3_SaaS_Growth_Trends_1M_ARR.svg) There are signs of future positivity as best-in-class startup [growth is accelerating](https://chartmogul.com/assets/img/reports/saas-growth-report/2_SaaS_Growth_Trends_Top_Decile.svg) and new business activity is [picking up](https://chartmogul.com/assets/img/reports/saas-growth-report/4_SaaS_New_Business_Growth_Trends.svg).

Link: https://chartmogul.com/assets/img/reports/saas-growth-report/1_SaaS_Growth_Trends.svg

## 8. MARKETING AND SALES

Last year KeyBanc noted marketing spend [dropped 31%](https://www.dropbox.com/s/mivd1ak1ygwxvko/4%20-%20SM%20spend-vs-growth.png?dl=0). This year, SaaS Capital benchmarks the median percent of annual recurring revenue spent on marketing, which [remains unchanged at 10%](https://www.saas-capital.com/wp-content/uploads/2023/10/Spending-Benchmarks-for-Private-B2B-SaaS-Companies-2023-W1.pdf). The median percent of annual recurring revenue spent on selling costs is 15%, down 6% from last year.

Link: https://www.dropbox.com/s/mivd1ak1ygwxvko/4%20-%20SM%20spend-vs-growth.png?dl=0

## 9. 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! As this year's survey showed, [78% of respondents changed pricing and/or packaging](https://openviewpartners.com/wp-content/uploads/2023/10/Chart-9.png) (but you must put your time in). 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

## 10. 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 - a great metric to track.

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

## POD OF THE WEEK

From SaaS Talk, [OpenView Partners 2023 SaaS Benchmark Report Analysis](https://podcasts.apple.com/nz/podcast/saas-talk-with-the-metrics-brothers-strategies/id1687214133).

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