Elena Verna

Conventional wisdom suggests Expansion ARR should be around 30% of total New/Growth ARR - is that true today and at what stage of growth?
 
 The answer is it depends - especially on your stage of growth as measured by company revenue...
 
 New Go-to-Market motions (PLG) and pricing models (Usage-Based Pricing) are purpose-built to decrease initial customer acquisition friction which in turn "should" increase expansion ARR as a % of total New/Growth ARR
 
 Based on company size - below are the latest benchmarks on the % of total new growth revenue (ARR) delivered by existing customer expansion:
 
 < $5M = 25% (median)
 $5M - $20M = 34% (median)
 $20M - $50M = 42% (median)
 $50M - $100M = 45% (median)
 Total Population = 33% at median (N = 516)
 
 Some very interesting findings include:
 
 🤯 Sales-Led Growth models had a higher % of Expansion than PLG models
 - note this did not factor in Usage-Based Pricing as a variable
 
 🔎 ACV was an important factor in the benchmark findings
 
 📏 Measuring "WHEN" new ARR ends and expansion ARR begins is a critical variable in calculating several associated metrics beyond expansion ARR %:
 - CAC Ratio
 - CAC Payback Period
 - Net Dollar Retention (Net Revenue Retention)
 
 🎙 Expansion ARR as a percentage of total new/growth revenue was the topic of the first episode of SaaS Talk which is a great listen for anyone considering how to increase expansion ARR and how to measure its financial impact...including revenue growth efficiency
 
 💻 If you want to see how Expansion ARR % is impact by company variables similar to yours - saasbenchmarks (with an .ai extension) has the info...
 
 #b2bsaas #benchmarks #metrics