2024 Customer Acquisition Benchmarks

After sharing a list of my favorite SaaS benchmark resources in last week's article, Benchmarkit has now released its latest report for 2024. Let#s take a closer look!

The focus will be on customer acquisition metrics, as many founders I speak to have complained about the increasing difficulty of acquiring customers / revenue in the current market environment.

New Customer CAC Ratio

Despite the transition of many SaaS companies to greater efficiency, the broader market has apparently not cut back on sales & marketing expenses.

If we look at the CAC Ratio for new customers (S&M expenses incurred to acquire $1 of ARR from new paying clients), we can see that the median has remained the same compared to last year.

This makes it only ~11% higher than in 2021 ($1.78 vs. $1.58).

Zooming out, it can be seen that this value has risen historically, but has been relatively stable in recent years - even during Covid.

If you are currently spending significantly more - say >$2.50 - and you are not running an Enterprise SaaS selling large tickets (ACV >$50k) where it’s expected, you should maybe work on refining your GTM strategy.

Customer Expansion CAC Ratio

This metric measures how much S&M expense, including Customer Success is incurred to expand ARR from existing customers by $1.

It’s said that getting more revenue from existing customers is much cheaper than from new ones. However, this year’s benchmark shows a dramatic 45% increase yoy ($1 vs. $0.69).

Still cheaper than acquiring new ones ($1 vs. $1.76), but it doesn't seem to be that easy anymore.

The historical year-on-year comparison from CloudRatings shows the sharp rise from 2022 to 2023 even more clearly.

If you are shifting more resources to account expansion, you should keep an eye on the numbers and see how they relate to other metrics such as CLTV and CAC Payback Period.

Blended CAC Ratio

The change in the metrics shown above is reflected in the Blended CAC ratio, which combines both: S&M expenses to grow your ARR by $1 through new AND existing customers.

The median deteriorated by 22% yoy ($1.61 vs. $1.32) due to the significantly higher acquisition costs for expansion revenue. What is particularly worrying here is the large gap between the top and bottom quartile.

Anyone who does not yet track CAC Ratios properly should do so as soon as possible. From my experience, there should be a few.

If you target SMBs with corresponding churn/retention dynamics and see a Blended CAC Ratio ~$3 or worse, you should better try to bring it down.

The full report with many other benchmarks can be accessed here.