Customer acquisition cost, or CAC, is a ubiquitous SaaS metric. It’s a core sales and marketing efficiency metric. CAC measures the amount of expense to acquire a new customer and the associated revenue from that customer. However, CAC as a standalone measure does not tell us much. We need context. This context comes in the […]
CAC
How to Assess Your CAC Profile
When I was a CFO at a private equity (PE) backed company, I was always a little envious of the PE folks. They got so many investment looks at different SaaS companies. And they built their SaaS muscle through the management of their SaaS portfolio companies. That’s changed now that I’m a fractional SaaS CFO. […]
SaaS CAC Ratio | How to Calculate and Why It Matters
The cost of customer acquisition is one of the most analyzed SaaS metrics. But it doesn’t have to be complex or hard to calculate. Enter the SaaS CAC Ratio. Slightly different than CAC (customer acquisition costs), the CAC ratio studies the relationship between new and expansion bookings and sales and marketing expense. It’s different than […]
Two Key SaaS Metrics that Predict Your Company’s Potential Size
Two Key SaaS Metrics that Predict Your Company’s Potential Size I remember as a kid when doctors would try to predict your full-grown height based on a few measurements. Well, what if I told you I can do the same thing for your SaaS company but with more accuracy? Give me three numbers, and I […]
How I Calculate the CAC Payback Period
The CAC Payback Period and Debt Debt takes on many forms within a company. It could be a bond or a traditional long-term bank loan. Typically, there is a principal balance that you repay over time along with some type of interest component. In this post, I detail how I calculate the CAC Payback Period […]
The Forgotten Sales Efficiency Metric
Sales Efficiency Metrics – Cents on the Dollar Recently, I was reading a Tom Tunguz article on how to compensate sales teams. In his article, he cites sales efficiency metrics and customer acquisition costs on a dollar basis from the recent Pacific Crest Securities SaaS survey. It is an interesting way to look at CAC. […]
How to Calculate Customer Lifetime Value (CLTV)
What is Customer Lifetime Value (CLTV) Customer Lifetime Value (CLTV) is the revenue or margin that you receive from one customer over the lifetime of that customer. The term “Customer Lifetime Value” is known by many words. It’s also known as Lifetime Value (LTV) or CLTV. In this post, I explain how to calculate Customer […]
Customer Acquisition Costs (CAC) – A Key SaaS Metric
How I Calculate Customer Acquisition Costs (CAC) As a CFO of a subscription-based software company, unit economics are very important to understand in this role. At the top of my SaaS metrics lists is Customer Acquisition Costs (CAC). With CAC and otther SaaS metrics, I can assess the true health of the business and the […]