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Why LTV/CAC is a Misleading SaaS Metric and Should be Replaced with Customer NPV

By Scott Stouffer on Oct 8, 2020 2:58:31 PM

How the quest for simplification drove ignorance (not dissimilar to politics)

Lifetime Value / Customer Acquisition Costs (LTV/CAC) has long been a foundational metric to indicate the quality and health of a SaaS company’s business model. It is intended as a simple proxy for unit economics of a customer, or how valuable each customer is to a given company.

Unfortunately, inconsistencies in the way companies measure LTV/CAC and its oversimplification in considering the time value of money and cost of capital render it essentially useless in real-life practice.

Topics: SaaS Metrics CAC
13 min read

How to Manage Sales & Marketing Spend Like an Investment Portfolio

By Scott Stouffer on Sep 2, 2020 11:42:10 AM

Most early and growth stage SaaS companies squander precious time and expensive capital thrashing through sales and marketing approaches that constantly change without any reliable data to inform their decision-making.

According to venture capitalists, at least 50 percent of sales and marketing spend by growth stage SaaS companies is nonproductive, resulting in skyrocketing customer acquisition costs (CAC), shortened capital runways, depressed growth, and ultimately lower valuations.

This article isn’t about blaming sales and marketing people, because it’s (usually) not their fault.

This is about reframing the way SaaS CEOs and revenue leadership teams manage their investments in new customer acquisition.

Topics: Fight Waste CAC
8 min read

5 Examples of SaaS Sales & Marketing Waste That Kills Growth

By Dan Quirk on Jul 28, 2020 12:10:00 PM

Over the last decade, we’ve observed a number of major sales and marketing pitfalls that hinder software-as-a-service (SaaS) companies from reaching their growth potential.

Topics: Fight Waste CAC