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B2B SaaS Customer Acquisition Cost Benchmarks

by 

Lauren O'Bryan

Last updated: August 30th, 2024

As one of the key metrics for B2B SaaS, optimizing customer acquisition cost is crucial for sustainable growth. This requires not only understanding your CAC but also comparing it to industry benchmarks.

In this article, we’ll start by covering what the cost of customer acquisition (CAC) is and how to calculate it. Then, we’ll delve into specific B2B SaaS CAC benchmarks, giving you concrete targets to aim for based on industry data. We’ll also give you some best practices on how to optimize and lower your CAC to drive sustainable revenue growth, so let’s get started.

CAC: A Little Background

Customer acquisition cost (CAC) measures how much you’re spending in total to acquire one customer, which includes both marketing and sales costs.

Calculating your CAC is very simple – just combine the total sales and marketing expenses and divide that by the total number of new customers.

Interaction Between CAC and LTV

When making marketing budget decisions, CAC is used together with customer lifetime value (LTV), which measures the total value an individual customer brings over the duration of your relationship.

Customer acquisition is always more expensive than retaining existing customers. A good LTV to CAC ratio should be 3:1 or more to ensure your business is financially viable and doesn’t overinvest in marketing. Then, there’s the payback period to consider, which takes into account customer retention.

The payback period is the time it takes to recover the costs of acquiring new customers, and it’s very important. A company may have a good CAC:LTV ratio, but if the payback period is too long, it may not be able to hold out long enough to recoup costs. Larger SaaS companies that have raised significant funding and have longer payback periods can afford to spend more in the early days. Smaller, bootstrapped SaaS companies don’t have this luxury and should aim for shorter payback periods.

Factors Affecting CAC

Here are the biggest factors that influence B2B SaaS customer acquisition costs.

• Sales and marketing channels: Organic marketing channels, like SEO, social media, and content marketing, build up long-term, sustainable traffic that results in a lower average CAC. In contrast, paid channels, like PPC and display ads, yield quicker results but at a higher cost.
• Target market: Acquiring small and medium-sized businesses (SMBs) typically involves a high volume of transactions with shorter sales cycles, whereas targeting enterprise-level clients requires a more personalized, consultative approach with longer sales cycles and higher acquisition costs.
• Industry type: Some niches are more competitive than others. Highly competitive markets will force CAC up because they require more aggressive and innovative marketing strategies to stand out.

Knowing the factors that impact CAC, what benchmarks are realistic for a B2B SaaS business to set?

B2B SaaS CAC Benchmarks

Quick disclaimer – CAC varies greatly across industries and business sizes. If you need help understanding your marketing CAC, reach out to us for a Free Marketing Plan.

This variation between industries is because of differences in market competition, product type, the length of the sales cycle, and the marketing channel used. In general, it will cost more to acquire enterprise customers than SMBs. Low-cost customer acquisition tactics are usually successful for SMBs, whereas enterprise customers have multiple decision makers leading to longer sales cycles and a higher CAC.

The data from First Page Sage shows the variation in the average CAC across a range of industries and business sizes:

• Agtech: CAC of $612 for SMBs, $1,823 for Middle Market, and $6,948 to acquire Enterprise customers.
• Building management & IoT: CAC of $574 for SMBs, $2,109 for Middle Market, and $7,305 for Enterprise customers.
• Fintech: CAC of $1,450 for SMBs, $4,903 for Middle Market, and $14,772 for Enterprise customers.
• Legaltech: CAC of $299 for SMBs, $2,630 for Middle Market, and $6,441 for Enterprise customers.
• Staffing & HR: CAC of $410 for SMBs, $1,912 for Middle Market, and $6,754 for Enterprise customers.
• Telecommunications: CAC of $694 for SMBs, $5,266 for Middle Market, and $10,980 for Enterprise customers.

First Page Sage also demonstrates how it costs less to acquire customers using organic marketing methods compared to inorganic, paid channels. CAC using organic channels is consistently lower than paid channels. This is because organic marketing is more sustainable and cost-effective, as it continues to generate revenue over time, while paid channels require ongoing investment to maintain returns.

How to Optimize and Lower Acquisition Costs

CAC is a key metric for optimizing business processes and developing marketing funnel forecasts. Here are some best practices that work.

Develop Accurate Funnel Forecasts

Develop an end-to-end marketing funnel forecast to identify inefficiencies within your customer journey. This will help you implement measures to optimize your marketing funnel and allocate budget more efficiently.

Key components for accurate forecasting include:

• Sales metrics (e.g., conversion rates, average deal size)
• Marketing metrics (e.g., click-through rates, engagement rates)
• Revenue metrics (e.g., customer lifetime value, churn rate)

By analyzing these metrics across the entire customer journey, you’re able to pinpoint specific stages that need adjustment and improvement.

Boost Organic Marketing

There are some fundamentals to content marketing that consistently prove effective.

Firstly, optimize your audience targeting based on your ICP and create content that resonates with their motivations and pain points. In SaaS, it’s critical to empathize with the customer and truly understand their problems and the implications of not solving those problems. Many companies make the mistake of focusing on product features in their copy when they should be highlighting the benefits to the customer.

Additionally, it’s important to regularly review and update your SEO strategy to select the most effective keywords, headings, and meta descriptions, ultimately improving your search engine results page (SERP) ranking.

Effective organic marketing doesn’t end once content is published. Content needs to be routinely audited, updated, or even removed if it’s no longer relevant. By improving organic marketing tactics, you will drive more high-quality traffic that has a greater chance of converting.

Optimize Paid Ads

Are you getting lots of clicks that aren’t converting? Or perhaps your ads aren’t being shown to the right audience?

Effective PPC campaigns require a lot of testing and monitoring to ensure they remain productive. Start by reviewing the data to identify areas of improvement and adjust your campaigns. Refining your audience targeting is another technique to improve your paid ad performance. Define your buyer personas and segment your audience to hyper-personalize communication. This makes your marketing efforts more effective and reduces wasted ad spend.

We highly recommend adopting ABM techniques to prioritize high-value accounts. As for the type of paid ads to invest in – thought leadership ads and non-skippable videos are proven to be very effective. Thought leadership ads provide the authenticity that is quickly being replaced by AI-produced content, and video content is booming in popularity. Continual tracking and monitoring will ensure your ad campaigns remain viable and perform well.

Invest in Conversion Rate Optimization Tools

Tools such as A/B testing platforms, heatmaps, user session recordings, and form analysis tools provide invaluable insights into user behavior and website performance. For example, heatmaps and session recording tools, such as Hotjar and Crazy Egg, display user interactions on a website. You’ll see where users click, scroll, or drop off the most and address issues that may discourage users from converting.

Take Advantage of Marketing Automation

Marketing automation can significantly improve your team’s efficiency and effectiveness. By automating repetitive tasks, you’ll be able to manage team workload better, nurture leads more efficiently, personalize communication, and reduce human error. This will allow you to focus on more strategic activities, improve customer experiences, and ultimately drive better results for your business.

Improve Customer Onboarding

Customer onboarding is a critical phase in the customer journey and significantly impacts churn rates and customer lifetime value (LTV). Effective onboarding ensures customers quickly understand and derive value from your product, leading to higher satisfaction and retention.

The best way to improve your customer onboarding is by personalizing the onboarding experience, providing interactive tutorials, setting scheduled check-ins, offering regular webinar sessions, and even implementing incentivized milestones.

By prioritizing the customer onboarding experience, businesses can reduce churn rates. Lower churn rates lead to better customer retention, reducing the need for constant customer acquisition. This is particularly beneficial as retaining customers is generally more cost-effective than acquiring new ones. Satisfied customers are more likely to stay longer, use more features, and refer your product to others, ultimately increasing their overall lifetime value.

Careful Audience Segmentation

Segmenting your customer base allows businesses to tailor their marketing and sales efforts to specific groups, leading to more efficient and effective customer acquisition. Not only is tailored messaging more appealing, but certain segments of your audience may be better reached through specific marketing channels.

When your marketing resonates with the audience, they are more likely to progress through the sales funnel faster and with less friction. This approach prevents wasted spending on broad, unspecified campaigns, and can also reduce the Customer Acquisition Cost (CAC).

Incorporate Demand Generation For the Best Results

Demand generation focuses on creating awareness and driving interest in a product by targeting each point of the customer journey. It allows you to accurately attribute revenue to marketing efforts, which, in turn, encourages revenue growth.

Demand generation includes a range of marketing strategies, like content marketing, social media campaigns, email marketing, PPC advertising, and webinars. Keep in mind that a successful strategy involves careful curation of buyer personas, multi-channel targeting, and lead scoring. This marketing approach works because you gather an in-depth understanding of your audience and how best to win them over.

Wrapping Up

As you can see, understanding, tracking, and optimizing CAC and other related metrics offer numerous advantages for B2B SaaS companies. The B2B SaaS CAC benchmarks we’ve discussed provide a solid foundation for evaluating your performance and guiding your efforts to reduce customer acquisition costs.

That said, having a clear starting point is essential before even thinking about scaling your business. Our SaaS scalability score self-assessment will tell you how scalable your business is in its current state. Taking into account how effectively you attract, engage, and convert customers, it will highlight the strengths and weaknesses in your current business model so you can address the areas that need improvement.