Recently, I’ve had a few conversations with people regarding my version of the Customer Acquisition Cost (CAC) ratio. As a reminder, my version of the CAC ratio is: [($Total Sales + $Total Marketing)/$First Year Contract Value]. The objective is to make the CAC ratio less than 1 which implies a customer acquisition payback of a year or less. This is the ratio I recommend companies use to measure their sales/marketing effectiveness. I discussed this a year or so ago in this blog in a post titled “The Capital Needed to Create a SaaS Company”.
Minimizing the Customer Acquisition Cost (CAC) Ratio
November 22nd, 2009 § 3 Comments
Forecasting the Winners in the Cloud Computing/SaaS Market
August 24th, 2009 § 2 Comments
Trying to determine which companies will emerge to be the future leaders in the cloud computing market is still fairly difficult. A poll taken by Saugatech last year revealed that 51% of the respondents “didn’t know or weren’t sure which company would be the next ‘master brand’”.
While at the application level, it’s easy to view Salesforce.com as the star of that sector, it gets a little murky as you move to other functional areas of the front and back office as well as down the overall cloud ‘stack’. As with most nascent markets, the market is highly fragmented: CoLo/Managed Services (e.g. Rackspace, OpSource, many others), Infrastructure/Platform (e.g. Amazon, Salesforce.com, VMWare, many others), Tools (e.g. Salesforce.com, Corent, Serena, SAP/Coghead, many others), and some a mixture of 2 or more areas (e.g. Salesforce.com). » Read the rest of this entry «
Creating Global Market Leadership
February 15th, 2008 § 0 Comments
The Power of Brand in the Technology Markets
I have listened to hundreds of presentations from entrepreneurs looking for funding since I joined InterWest Partners. They all have one thing in common: the majority of the presentation is spent on the product they are building and the market they are targeting.
Similarly, when a venture firm does its due diligence, it spends a significant amount of time and effort speaking with current or prospective customers and analysts to gauge their level of interest, the importance to the business, ROI, usage rates, etc.
This is all very laudable.
However, if you were to perform autopsies of technology start-ups that have failed, I think you would find that most were able to build the products they said they would—and that the customers who purchased them received more than marginal utility from them.