Pavilion-Logo-FullColor
  • Membership
    • Tiers
      • CEO
      • Executive
      • Associate
      • Pavilion for Teams
    • Ideal Functional areas
      • Sales
      • Marketing
      • Customer Success
      • RevOps
    • Resources
      • Pricing
      • Reimbursement Tool
      • On The Bench
      • Referral Program
  • Community
    • The people
      • 50 CROs to Watch in 2025
      • 50 CMOs to Watch in 2025
      • 50 Partnership Executives to Watch in 2025
      • 50 CEOs to Watch in 2025
      • 50 RevOps Leaders to Watch in 2025
      • Pavilion Ambassadors
    • Helpful resources
      • Chapters
      • Sponsorships
      • The Pavilion team
  • Pavilion University
    • Featured Schools
      • CRO School
      • CCO School
      • CMO School
      • RevOps School
      • GTM Leadership Accelerator
    • Upcoming Courses
      • Strategic Brand Building on LinkedIn
      • AI-Augmented GTM Team
      • Inner Compass for Leaders | Executive
      • Inner Compass for Leaders | Associate
      • Revenue Architecture
    • Courses & Faculty
      • Course Catalog
      • Faculty
  • Events
    • In-Person Events
      • CRO Summit 2025
      • Women's Summit 2025
      • GTM2025
      • CEO Summit 2026
      • All In-Person Events
    • Virtual Events
      • Watch On-Demand - ELEVATE: AI in GTM
      • How to Negotiate Executive Compensation
      • Demo Day: Jiminny, Mperativ, Monday.com, Walnut, Luster, ZoomInfo, Dreamdata
      • All Virtual Events
  • Stay informed
    • Resources
      • NEW: GTM Compensation Benchmarks
      • 2025 GTM Benchmarks
      • SaaS Metrics Benchmarks
      • The Future of Revenue Report
      • Pavilion Pulse: Benchmark your 2024 Performance
      • All resources
    • Topline by Pavilion
      • Topline Podcast
      • The Revenue Leadership Podcast
      • Subscribe to the Newsletter
      • Join the Slack Community
  • Join Now
  • Log In
  • Topline Podcast
November 10, 2023

[Topline #30] The Truth about End User Spending

Cullen Denny Cullen Denny

After examining G2's State of Software report in last week’s podcast, which delves into the supply side, we now shift our focus to the demand side as we explore the data provided by Gartner and Vendr. Surprisingly, SaaS dominates the cloud market regarding end-user spending (Gartner).

 

Let's dive into this episode's key topics…

Current Market Conditions

Watch here

  • Last week, we discussed how the G2 quarterly state of software report indicates that the number of software companies has grown from less than 50,000 in Q3 2018 to 125,000 in Q2 2023. This shows a growth rate of about 7% per quarter. Meaning it's harder for companies to break through the noise.
  • Gartner's 2023 report revealed that SaaS spending is projected to grow by 17.9% to $197 billion in 2023. However, Q3 data from Vendr suggested net new purchases were down 37% YoY, ACV was down 17% YoY, and multi-year agreements were down 14% for net new and 28% for renewals.
  • Individual companies seem to be gaining momentum despite market volatility, but the current market condition is causing much confusion among executives regarding growth and investment decisions.

Managing Longer CAC Payback Periods

Watch here

  • There is concern about long CAC payback periods, which can lead to financial uncertainty. 
  • The typical payback period for a SaaS company pre-COVID was between 12 and 24 months. However, in the downturn market of 2023, 30-35 months was more typical, signaling increased cost inefficiency across the SaaS sector.
  • Businesses can improve efficiency in the face of increasing CAC by focusing on team training and better positioning. (April Dunford, author of Obviously Awesome, puts this into perspective with a real-life example of shopping for toilets)
  • When reviewing CAC, we regularly compare it to LTV. However, the concept of lifetime value as a metric has become less prevalent and challenging to define in recent years, possibly due to the uncertainty surrounding what constitutes a "lifetime" in today's rapidly changing world. This observation extends to both fundraising cycles, where it seems less important.
 

What B2B sectors are growing? What's contracting?

Watch here

  • Given the rapid growth in certain sectors like cybersecurity and healthcare tech, the sustainability and normality of such growth rates is questionable.
  • Cybersecurity is the most secure sector and continues to grow exponentially. It’s described as a sector that one must invest in regardless of market or business conditions.
  • The exponential growth of the SaaS sector raises the question, “Would it be beneficial to have some barriers to entry in businesses, especially for cloud companies that handle sensitive data?” Barriers can create a more controlled growth velocity rather than runaway growth that could destabilize the industry.
  • The discussion also touched on the performance of Gong, SalesLoft, and Outreach, noting that these companies experienced a contraction from Q2 to Q3. A question was raised about the viability of Apollo, given the market behaviors shown by Gong, Outreach, and SalesLoft, as Apollo had just raised $100 million.

What bargaining power do B2B buyers have today?

Watch here

  • In the current market, buyers have significant bargaining power, backed by data showing a decrease in multi-year agreements and renewals, with a significant proportion of negotiations.
  • According to the Vendr survey, the primary clause that significantly impacts negotiations is the auto-renewal provision. 
  • So, how can you, as the buyer, ensure you get the best price possible? It’s suggested that you make it clear that there is competition for the deal and that you should be prepared to walk away during negotiations if you aren’t getting the deal you want.


Listen to new episodes of the Topline podcast on Spotify, Apple, or iHeart every Monday.

Topics Covered

  • Topline Podcast

Don't miss out on the latest GTM insights.

Subscribe Here!

Related Posts

Topline Podcast 1 min read
[Topline #66] Sales Tech Mayhem: Gartner Analyst Dan Gottlieb’s Insights on B2B Market Shifts In this episode of Topline, the hosts welcome Dan Gottlieb, Vice President at Gartner, to discuss the evolving landscape of sales technology. The …
Read Article
Topline Podcast 3 min read
[Topline #32] 2024 Market Predictions On this week’s episode of Topline, we cover a range of subjects. We give 2024 market predictions as core CPI is the lowest it has been since March …
Read Article
  • Membership
    • CEO
    • Executive
    • Associate
    • For teams
    • On the bench
  • PavilionU
    • Overview
    • Course Catalog
  • Resources
    • Blog
    • Resources
    • Kind folks finish first
  • Who We Are
    • About Us
    • Why Pavilion
    • Careers
    • People
    • Sponsorships
  • LinkedIn
  • Twitter
©2025 Pavilion. All rights reserved.
|
  • Shop
  • Support
  • Terms of Service
  • Privacy Policy
  • Code of Conduct
  • Copyright Policy