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. Or Cost of ARR as I call it. Slightly different than CAC (customer acquisition costs), the SaaS CAC Ratio studies the relationship between new and expansion […]
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
CAC Payback Period is a top operator and investor metric. It’s part of my Five Pillar SaaS Metrics Framework. It’s core to GTM efficiency calculations. There are many flavors of CAC Payback Period now. I’ll cover the traditional metric that you must master in your SaaS business. However, you should consider the Dollar-based CAC Payback […]
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)
Customer lifetime value is a ubiquitous SaaS metrics. As a standalone metric, it doesn’t mean much. We must compare it our unit cost CAC to provide context on sales and marketing efficiency., In this post, I’ll explain how I calculate LTV. There are lovers and haters of this metric, but let’s at least put in […]
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 […]