The document summarizes key metrics and strategies for measuring marketing success at Sonatype, a SaaS company. It discusses using metrics like CAC, ACV, LTV, and churn to measure the cost and lifetime value of acquiring and retaining "friends" (customers). It recommends focusing on "friends with benefits" that have high LTV. It also notes that top SaaS companies spend over 40% of revenue on marketing and acquire a high percentage of new business from upsells and renewals from existing customers.

1. Sonatype Coffee Talk
Follow me @matthewjhoward
Keeping Score & Measuring Success
for Marketing at Sonatype
May, 2016

2. I know that half my
marketing works, I just
don’t know which half.
John Wanamaker
Henry Ford
I know that none of my
marketing is working,
and it’s your job to fix
it, and prove it with
data, and if you don’t,
you’re fired!
Wayne speaking to new hire named Matt

3. 1. Context Setting (Elephant in the Room)
2. Story Time (Because we’re marketers)
3. Data, Data, Data (How do you stack up?)
3 Things

4. Software eats the world.
Data dominates all.
Transparency rules.
Nothing is immune.

5. Software + data
leads to
automation,
transparency, and
disruption in all
things including…
The other elephant in the room!
B2B marketing.

6. DIFFERENT NAMES…
#SMARKETING
#GROWTHHACKING
#REVOPS
SAME GAME.
FEED ME!

7. • Funnel Foods
Tofu
Mofu
Bofu
• Funnel Utensils
• Funnel Results ?

8. “For the fourth year in a row, we
surveyed 305 companies to
gather benchmark data with
regard to growing a successful
SaaS business.”
-- David Skok, Matrix Partners

9. Demographics of 305 Companies
• Median revenue = $4M (82% < $25M)
• Median employees = 47 (range of 2 to 1,200)
• Median customer count = 300 (72% < 1,000)
• Median ACV = $21k (21% < $5K and 17% > $100K)
• Sales Model = 41% primarily direct, 21% primarily inside
• Headquarters = 70% in U.S.

10. CAC ACV LTV DRR ETC
Data, Data, Data
Ratios, Acronyms, and Lingo…

11. short story.
To simplify SaaS unit economics
I created a

12. Three reasons why every day is valentine’s
for the Sonatype marketing team…
 Spend $ to acquire new friends
 Spend $ to keep the friends they have
 Seek hugs ($ ACV) in return

13. Hugs (ACV)
from friends
is the universal
metric for
measuring SaaS
marketing.

14. Of course,
not all
friends are
equal.

15. Therefore…
We must carefully
measure spend to
acquire new friends.
CAC = Cost of Acquiring
Customers

16. And measure hugs per
friend, per year.
ACV = Annual Contract Value

17. And hugs received over
lifetime.
LTV = Life Time Value

18. And measure efficiency…
CAC/ACV (lower is better)
$1 CAC generates $2 ACV = 0.5 / 6 month payback
ACV/CAC (higher is better)
Generate $1,000,000 ACV from $500,000 CAC investment = 2.0 sales efficiency

19. $@!t happens.
So we also need to measure
breakups...
Churn

20. …and total annual hugs
minus breakups.
DRR = Dollar Retention Rate

21. Ultimately, Sonatype has
3 types of friends:
• Friends with Benefits
• Friends with Costs
• Friends with Biggest Benefits

22. Friends with benefits
stick around and give
many hugs over time.
LTV > 3X CAC

23. Friends with costs
give few hugs and
leave early.
LTV < 3X CAC

24. Friends with biggest benefits
not only stick around...
but they give more hugs the
longer they stay.
LTV > 10 X CAC

25. So, it's all about the hugs!
And that's why every day is
Valentines for Sonatype
marketing.

26. Being a good
valentine is
expensive.
Top performers grow
>35% and spend
>40% of revenue on
dates.
Note: top performers have
solid payback and abundant
access to capital. Others
spend less.
Note: Public players with >$100m spend
44% on revenue on dating.

27. Top performers are
fanatical about farming
and have a higher % of
new ACV from upsells.
Love the Ones
You’re With…
Players with >$40m in revenue generate 37%
of new ACV from upsells.

28.  Spend $0.28
 Acquire $1.00 of up-sell
 Median CAC/ACV = 3 months
 Sales Efficiency = 3.5
Up-Sales Cost
24% of New Sales
Renewals Cost 11%
of New Sales
 Spend $0.13
 Acquire $1.00 of renewals
 Median CAC/ACV = 1 month
 Sales Efficiency = 7.6

29. Thank you!