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SaaS CAC Payback Periods Hit Troubling Highs
Kyle Poyar spotlights new data showing just how inefficient SaaS go-to-market teams have become. He shares numbers from Jamin Ball’s Clouded Judgement, indicating that sales and marketing costs now take years to recover, even for top performers.
Q1 2024 Average: Gross margin-adjusted CAC payback hit 57 months. That means even strong public SaaS companies need nearly five years to break even on new customer acquisition costs.
Best vs. Worst Performers: Zero public companies had CAC payback under 12 months. Only five were under 24 months, while 24 firms reported payback above 100 months or negative net-new ARR.
12-Quarter Trend: The average CAC payback over the past 12 quarters sits at 41 months, showing this is a persistent problem not explained away by one bad quarter or macro factors.
✈️ KEY TAKEAWAYS
Public SaaS companies face severe GTM inefficiency, with CAC payback periods stretching multiple years. This may force a reckoning as companies can’t rely on legacy customer subsidies forever.
Is AI Really Taking Startup Jobs?
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