How much does it cost to add $1 of expansion ARR from a current customer?

If you want to double your expansion ARR over the next 12 months - how much investment will be needed???? Expansion CAC Ratio formula below 👇

How much does it cost to add $1 of expansion ARR from a current customer?

If you want to double your expansion ARR over the next 12 months - how much investment will be needed????

TL:DR below or on LinkedIn Expansion CAC Ratio is my FAVORITE revenue growth metric in 2023...yet less than 20% of B2B SaaS companies are using it 😢

Expansion CAC Ratio formula below 👇

(Sales + Marketing + CS expenses allocated to expansion ARR / Expansion ARR)

Ben Murray @TheSaaSCFO and I were discussing the SaaS Metrics Standards Board definition of CARR and ARR on this week’s Monday Night Metrics…

A healthy discussion occurred on how to treat the revenue associated with “Usage-Based Pricing” 👇 Below are some of the key points from the discussion on “IF” UBP revenue is ARR and/or CARR

Do not include as part of ARR points:

1. If UBP revenue is not contractually committed it’s not guaranteed to be recurring thus not part of ARR

Focusing on existing customer expansion ARR is a trending discussion topic in executive and board meetings around the globe

Below are some ideas and best practices to ensure "expansion ARR" is receiving the priority and focus required to convert talk into expansion ARR??? 👇 Some best practices from my conversations across the industry:

1️⃣ Establish customer expansion ARR (up-sells, cross-sells) as a line item quota component in compensation plans
- Total quota needs to be split into 2 quota elements: 1) New Customer ARR; 2) Existing Customer ARR

Pipeline is the #1 challenge to making the revenue number in 2023 - so how to measure pipeline trends to stay on top of job #1? 👇 for TL:DR ideas: 💡 Pipeline momentum dashboard (daily, weekly and monthly)

Starts with current qualified pipeline (down to per rep level)
+ increased pipeline from new opportunities
+ increase pipeline from existing opportunities
+ increased pipeline pulled in from future periods

What are the top SaaS performance metrics to measure the efficiency of revenue growth?
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How do those metrics evolve as a company grows from $1M to $10M to $25M and greater? 👇 Below are the "𝙍𝙚𝙫𝙚𝙣𝙪𝙚 𝙋𝙚𝙧𝙛𝙤𝙧𝙢𝙖𝙣𝙘𝙚 𝙈𝙚𝙩𝙧𝙞𝙘𝙨" we recommend as priorities at each stage of growth using the following simple categorization 👇