SaaS Firms Face Headwinds as Economic Uncertainty Slows Growth, Making Existing Customers Key
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Macroeconomic uncertainty and volatility over the past year have created major headwinds for SaaS companies.
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New customer acquisition has become much harder due to slower sales cycles, delayed deals, increased budget scrutiny, and other frictions.
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Expansion revenue from existing customers is a more durable growth driver during recessionary periods compared to new customer acquisition.
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CAC payback periods have lengthened significantly, with the average now 30 months compared to 12-24 months previously.
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Companies can leverage levers like pricing optimization, customer success, and new product adoption to drive expansion revenue growth.