INSUBCONTINENT EXCLUSIVE:
How and why sales efficiency could help tech startups unlock growthRyan Floyd is a founding managing director of Storm Ventures, investing
in early-stage enterprise SaaS companies, and the host of Ask a VC YouTube channel. Sales efficiency is the best way to understand the
To me, it answers the question as to whether a business can ever scale
like CAC (customer acquisition cost) or LTV (lifetime value)
In a SaaS organization, sometimes it can be hard to allocate those costs to what that new CAC is, as opposed to upsell or cross-sell within
Salespeople are almost always trying to pursue two goals:
Trying to acquire new customersSelling within an existing customer (more seats
within an established department, or expanding to a new division)These activities generate different CAC; trying to strip out only the new
Sales efficiency, on the other hand, looks at all net new ARR (annual recurring revenue), which includes new customer ARR as well as
expansion ARR.LTV tries to measure the value of a customer over time, assuming both repeat purchases and eventual churn; this gives you a
good sense of the ultimate value of that customer to your business over time
there are few SaaS businesses that have enough customers to really make these numbers reliable.Enterprise businesses should focus on unit
