I can judge the experience level of a startup founder or investor by how they use SaaS benchmarks.

Newbies learn the general metrics and averages; experienced founders go much deeper and find their own way.

The great thing about the SaaS business model is that there are useful metrics for all the important factors in the business. MRR, ACV, CAC, LTV, NRR, churn, demo conversion, CAC efficiency, growth, profitability, expense % of revenue.

There are standard benchmarks in SaaS for all those, which is a good starting point.

SaaS metric benchmarks are averages of how other companies have done it in the past. Your mileage will vary a little or a lot.

• New startups are very different than mature businesses.
• Selling to an SMB is very different from selling to an enterprise.
• Overfunded businesses are very different than bootstrapped.
• SaaS businesses started 10 years ago are different than new companies.
• A business based in London or Kansas City is very different than one in New York or Silicon Valley.
• Most vertical SaaS companies have industry-specific metrics that don’t apply to other industries.

1) Beginner founders take the general benchmark metrics at face value, which may not be very useful for their situation or their specific businesses.

“What’s a good churn rate?” is a common question I hear from founders.

Well, it depends. How big is your company? What’s your ACV? Who’s your typical customer? What’s your CAC? How fast do you want to grow? Horizontal or vertical focus?

Each one of those answers will skew a “good” churn rate for your current company one way or the other.

And many new SaaS investors don’t always get the context they need to be savvy about why metrics can be different for a specific companies.

2) Experienced founders know that the benchmarks are useful generalizations and adapt their target SaaS metrics for their specific case.

Then they go deeper with combined metrics that show them what’s really going on in their business.

Like CAC by channel, revenue retention by customer segment, conversion by sales rep, and CAC payback period with gross margin.

These aren’t complicated, but they are more useful once you’re out of the startup stage.

3) The savviest SaaS founders know their metrics and go beyond to break the rules in focused ways.

If you have an efficient organic funnel and a product-led motion with a free trial, you can have higher logo churn versus a broad average benchmark, for example.

Learn the rules like a pro so you can break them like an artist, as Pablo Picasso said.

There is some leeway in all standard SaaS benchmarks to adjust them for your business.

Active SaaS buyers pay higher multiples of revenue for companies with higher-than-typical metrics for their specific situation.