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Top SaaS Benchmark Reports in 2024
“Benchmark overload and saturation is real”
Over the past few years the number of benchmark reports published and benchmark centric posts on LinkedIn has increased dramatically. Investment firms, B2B SaaS companies and thought leaders alike are in a “content creation era” that results in a wide variance of the quality and value of the majority of benchmark reports.
There are several “cautions” that should be considered when reading and then using the majority of benchmark reports including the two most important: 1) The lack of company profile attribute context and; 2) small sample size leading to questionable statistical significance and integrity.
Over the past four years, I have been building a company that focuses on one primary thing - SaaS metrics and the associated benchmarks. This requires me to invest the majority of my time, collecting, analyzing, and discussing industry benchmarks and reports. To support this journey, I created the SaaS Talk with the Metrics Brothers podcast in partnership with Dave “CAC” Kellogg to join forces with an industry expert who shares my passion for SaaS metrics and to discuss the latest industry metrics trends and benchmark reports.
Today’s edition of the SaaS Barometer is dedicated to the top benchmark reports, articles and websites for SaaS benchmarks.
𝗣𝘂𝗯𝗹𝗶𝗰 𝗖𝗼𝗺𝗽𝗮𝗻𝘆 𝗕𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝘀:
1️⃣ Meritech Capital
Meritech began publishing benchmarks in April, 2020 with the goal to be the leading, most comprehensive and free source of non financial SaaS metrics for public companies. The benchmarks are organized into multiple categories including: 1) Valuation metrics; 2) Financial metrics; 3) Operating metrics; 4) Trading Data and; 5) Regression Analysis
Below is an example of a chart from the Meritech Capital Benchmarking site showing the correlation of EV:NTM Multiples to the Rule of 40 with a R2 of .29:
They also began publishing the Software Pulse newsletter in September 2023 which builds upon the data contained in their benchmark website and also covers industry news such as S-1 filings and the latest public company valuation trends.
2️⃣ Clouded Judgement by Jamin Ball
Jamin Ball, Partner at Altimeter Capital is the primary author of Clouded Judgement, a weekly newsletter that started in June, 2020. Each week Jamin includes key financial performance metrics for a basket of ~ 80 public cloud companies. Below is a chart on Enterprise Value to Next Twelve Month Revenue Multiples including the low growth, medium growth and high growth medians since 2015:
Clouded Judgement also includes Jamin’s perspective on trending industry topics such as quarterly earnings, AI trends and economic trends impacting public cloud company valuations.
3️⃣ Benchsights by David Spitz - creator of the KeyBanc Benchmark Report
Since leaving KeyBanc in 2021, David has been working on his proprietary benchmarking technology at BenchSights.
David has partnered with Winning by Design to benchmark their customer GTM metrics according to the Bow Tie GTM mode. They have also worked with Gainsight to create CS benchmarks for their customers. and recently began using public Saas company to calculate and post about recent trends.
You can see the public company benchmarking charts for the GTM Efficiency below:
𝗣𝗿𝗶𝘃𝗮𝘁𝗲 𝗖𝗼𝗺𝗽𝗮𝗻𝘆 𝗕𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝘀:
I have a strong opinion on how private SaaS companies' benchmarks should be published and used by operators. As a long time recurring revenue software executive, I have used benchmarks to inform my decisions on strategy, operational process design, organizational structure and performance measurements.
Over the last 20+ years, I had to accept the limitations of the available benchmarks. Then 4 years ago, I began the journey to create the SaaS industry’s largest (18,000 companies), broadest (20+ categories) and most contextualized benchmarking index. During that journey, I have become a student of every benchmark report and methodology I could find. Below are some of the top benchmark reports I read, analyze and leverage as inspiration for the benchmarks we are building at Benchmarkit.
1️⃣ Benchmarkit - Annual SaaS Performance Metrics Benchmark Report
Research conducted in partnership with leading SaaS companies including Sage, Maxio, Mosaic, Baker Tilly, Paddle, The SaaS CFO and many more partners. The benchmarking research is segmented and published into the five pillars of enterprise value creation including: 1) Capital efficiency; 2) Operational Efficiency; 3) Customer Acquisition Efficacy; 4) Customer Retention Efficacy and; 5) Customer Expansion Efficacy.
A critical aspect to the Benchmarkit benchmarks is that each benchmark is “segmented” by company profile attributes including:1) Company Revenue Size; 2) Average Annual Contract Value; 3) Target Customer Segments; 4) GTM Motion; 5) Pricing Model: 6) Solution Category and; 7)Region of the World.
You can see an example of the Sales and Marketing expense to revenue benchmark filtered by company size from the 2024 report below:
2️⃣ Battery Ventures - State of the OpenCloud Report
Though this report was last published in November, 2023 and includes an amazing combination of benchmarks, operational insights and the potential impact of AI all in one!
One of the most interesting aspects to this report is the inclusion of performance metrics and the related benchmarks for R&D in SaaS companies - chart below:
One other thought provoking metric centric topic included in is the potential impact of Generative AI on Sales and Marketing staffing levels which you can see below:
3️⃣ Bridge Group - B2B SaaS 2024 SaaS AE Metrics and Compensation Benchmarks Report
Trish Bertuzzi, Matt Bertuzzi and Sally Duby have been collecting and publishing some of the best B2B Sales metrics and compensation benchmarks since 2007. The report is full of insights into how the productivity of SaaS AEs have changed over time, especially over the last two years.
If you are interested in the latest benchmarks on B2B SaaS AE Quota, Quota attainment, Compensation (On-Target-Earnings and VC structure) this report is for you. One interesting benchmark chart is below:
4️⃣ ICONIQ - The State of GTM Benchmarks 2024 Report
A "go-to" reports on Go-to-Market benchmarks. They cover a wide range of SaaS Performance metrics beginning with Year over Year growth rates segmented by company size. The report includes a wide array of GTM metrics and benchmarks including Net Revenue Retention, LTV:CAC Ratio and Net New ARR per Sales & Marketing FTE.
One of the “cautions” when reading the ICONIQ report is that they often show the benchmarks for the top quartile (75 percentile and above). Sometimes they will switch a chart's orientation to the “average” and sometimes not label or footnote how a metric used for benchmarks were calculated. The ICONIQ report primarily includes data from their portfolio companies which can represent a level of selection bias based upon the pedigree of companies within the ICONIQ portfolio.
One of my favorite benchmark charts is the below table highlighting the latest GTM funnel conversion rates for companies below $100M ARR and above $100M ARR:
5️⃣ Bessemer Venture Partners - State of the Cloud 2024 Report
This report has been one of my favorite "State of SaaS" Benchmarks reports since Byron Deeter first published it in 2015! This report is the father of many great SaaS Metrics including the Cash Conversion Score, Rule of X and the 6 C's of Cloud Finance.
This year’s report appears to mark a transition from a benchmark report primarily based upon the performance metrics of the B2B SaaS industry to the emergence of AI as the next big thing. The report introduces “The AI Cloud” and the five trends defining the AI Cloud in 2024. Another interesting insight from this year’s report is that the majority of AI investments by VCs are focused primarily on those companies building the foundational Large Language Models (LLM) and not on the application companies that are leveraging 3rd party LLM models such as OpenAI and Anthropic.
You can see the distribution of VC investments into each AI category below:
6️⃣ Cloud Ratings - Longitudinal Benchmark Report (2010 - 2024)
Matt Harney, founder of Cloud Ratings and author of the SaaSletter published an article that included the KeyBanc (formerly Pacific Crest) benchmark data from 2010 - 2021. He then combined that data with benchmark data from Benchmarkit from 2022 - 2023 and provided his analysis of the SaaS industry performance metrics trends over the past 15 years!
One of the interesting aspects to this report was the chart that highlighted the key metrics performance changes between 2010-2021 and then extended that to include 2022 - 2023. The chart is below:
7️⃣ Ebsta and Pavilion - 1H-2024 B2B Sales Benchmarks Report
Based upon “system of record” data from 566 companies representing over $57B of revenue this benchmark report includes some of the highest quality and statistically significant data on sales process and Account Executive productivity that I have seen.
The benchmarks cover a wide array of sales specific performance metrics including: 1) Win Rate; 2) Sales Cycle Time; 3) Loss rate by stage; 4) Loss rate by ICP fit and many, many more. One of the more interesting “benchmarks” from this report is the difference in performance between HIGH PERFORMING AEs and the other AEs in the below chart:
8️⃣ Pavilion - B2B Compensation Benchmarks
Pavilion published this report based upon a population of ~ 2,000 participants in the spring of 2024. The benchmarks are also available in an interactive environment (powered by Benchmarkit) where users can filter the compensation benchmarks by function, seniority, company size and geographic location.
Since first publishing the benchmarks they continue to capture and have nearly doubled the number of datapoints used to calculate the benchmarks including the 25th percentile, median and 75th percentile for a wide ranging set of compensation elements including: 1) On-Target Earnings; 2) Base Salary:Variable Compensation mix; 3) Stock Options & Terms; 4) Severance.
Below is an example of one benchmark which can easily be downloaded and shared:
9️⃣ Insight Partners - Marketing Periodic Table Benchmarks
This report is unique in two different aspects as it includes B2B Marketing performance metrics centric which are hard to find and the interactive “periodic table” presentation format which allows the user to drill down into each metric based upon company size and how it was calculated.
The report includes a wide ranging group of performance metrics for B2B Marketers including: 1) Marketing Spend vs Net New ARR; 2) People and Program spend as a % of total Marketing spend; 3) Sales to Marketing FTE Ratio and; 4) Marketing Spend as a % of New Logo ARR. Image of the interactive periodic table below:
Moving on from the Past:
😢 KeyBanc Capital Markets SaaS Survey and Report (2023)
The industry standard benchmark report first published by Pacific Crest in 2010 has not been the same since David Spitz and Adam Noily left the firm. The 2023 report was done in partnership with Sapphire Ventures and includes a wide range of benchmarks that were included in the previous year’s reports and added a few new GTM benchmarks to the traditional SaaS Financial and Operating metrics. The report only included data from 106 participants.
The 2023 report did include some interesting GTM benchmarks including: 1) Funnel Conversion Rates; 2) GTM Organizational Structure and Ratios; 3) Sales & Marketing expenses measured against Growth Rates which you can see below:
The 2024 report is not out yet. For both nostalgia reasons and a sense of optimism, I am looking forward the 2024 report.
😭 OpenView Benchmark Report
Kyle Poyar and team were the gold standard for Product-Led Growth and Usage-Based Pricing Benchmarks. They also produced a high quality SaaS Financial Benchmark Report starting in 2017.
With the announcement in December, 2023 that OpenView will cease to make any new investments, it is a reality that the benchmark reports that Kyle and the OpenView team published will be history. Recently it was announced that High Alpha in partnership with Paddle and Kyle Poyar will launch a SaaS benchmark survey. I am hopeful this report will share the qualitative aspects of the original OpenView Benchmark Reports.
Benchmark Report Use Best Practices and Cautions
⚠ If a report does not include company profile specific filter attributes - like company size, ACV and customer segments they are less valuable
💡 SaaS benchmark’s primary purpose is for directional guidance and insights on the target ranges for an individual performance metric in “CONTEXT” of a company’s profile and attributes including: 1) company stage; 2) company size -revenue; 3), annual contract value; 4) pricing model and: 5) Go-to-Market motion.
⚠ If the population "N" is less than 200 - 250 the resultant benchmarks will have a higher error of margin and reduced statistical significance - even more important when looking at on a "cohort" or "segment" basis
💡 A primary reason that the majority of benchmark reports do not segment benchmarks by company profile attribute is that the population size is not large enough for more granular cohorting. As an example, if a benchmark report focused on sales process efficacy, such as sales cycle length and win rate does not segment the benchmarks by annual contract value - the report is much less instructive and valuable
⚠ VC generated reports that only include their portfolio companies will typically be of high quality, use common metrics formulas - - BUT can exhibit "selection bias" based upon the composition of VC firms portfolio - the initial "A16z" benchmarks are a case in point
💡 When using a specific VC firms benchmark report, look for the profile of the companies included in the report and evaluate the benchmarks in context of the VC firm portfolio
⚠ Benchmarks are not absolutes - they are a high level guide to industry averages or 25th percentile, Median and 75th percentile) often without the benefit of context
Summary
Benchmark reports can be highly informative when used based upon the context of your company profile and the composition of the benchmarks themselves. Like any single metric, benchmarks are best used in the construct of a “SaaS Performance Metrics Framework” that highlights the top 3 - 5 performance metrics that are most aligned to the company strategy and priorities.
Focusing on a single performance metric in isolation from other correlated performance measurements is not recommended and even dangerous. As an “edge case” example if “Sales and Marketing spend as a % of revenue” is the primary measurement and priority for the head of Sales and head of Marketing it may come at the cost of the resultant growth rate. Another example is when Net Revenue Retention becomes the single obsession for Customer Success and Sales it can directly correlate to a reduced focus on other critical performance metrics such as new logo ARR and/or Gross Revenue Retention.
Benchmarks also go beyond the “numbers”. Understanding (benchmarking) the process best in class companies use to achieve top quartile and top decile results is next level benchmarking best practice which is where performance is most often found!!!
SaaS Barometer Newsletter is brought to you SaaS Metrics Palooza - the ONLY industry event dedicated to the sharing of best practices of how leading companies and investors use metrics and benchmarks to measure and guide their journey to success.
Click here to see the amazing line-up of speakers, their session title and register for this virtual event on October 8th and 9th
Thanks for including our longitudinal study!
For those interested in LatAm, look no further: stateofsaaslatam.com.