New Capchase Survey Exposes Trends in SaaS Sales: Decreasing Average Contract Value and Lengthening Sales Cycles
Capchase, the revenue acceleration platform for Software-as-a-Service (SaaS) companies, today revealed the findings from its new report, B2B SaaS Sales Cycles in 2023: New Insights and Data. The report combines data from a OnePoll survey of 500 U.S. SaaS leaders commissioned by Capchase with data from more than 1,200 SaaS companies from the company’s underwriting process. The findings indicate the industry has shifted to longer sales cycles, more scrutiny in the buyer process, and a decline in average contract value.
The current macroeconomic climate has resulted in more SaaS companies tightening budgets and, as a result, decision-makers are taking more time to review contracts, secure approval, and close deals. On the other hand, SaaS vendors have been forced to discount contracts in order to present buyers with enticing terms and expedite closures.
Top takeaways from the B2B SaaS Sales Cycles in 2023: New Insights and Data report include:
- Lengthening of Sales Cycles
○ 66% of respondents said sales cycles have lengthened compared to January-June of 2022
- 42% of respondents reported cycles are 2-3 weeks longer.
- 35% of respondents reported cycles are 4-5 weeks longer.
- The average CAC payback period has increased by 150%.
- Decline in Average Contract Value Growth
- 23.2% of respondents reported that their ACV has stagnated.
- 8.2% of respondents reported a decline in ACV.
- 81.6% of respondents currently offer discounts to encourage prospects to sign up for annual contracts, with the average discount offered being 18.4%.
- 42% of companies saw a decline in ARPU.
- Need for Flexible Payment Terms
- 85% of survey respondents believe offering existing customers more flexible payment options could reduce churn.
- 47% of respondents believe that not being able to offer customers more flexible payment options prevents deals from closing.
- Companies with flexible payment options can generate up to $100,000 in MRR per $1M in CAC spend compared to companies with rigid payment options.
Capchase recently launched Capchase Pay, a buy now, pay later sales enablement solution for SaaS vendors to address this growing trend.
Capchase Pay allows SaaS companies to collect the full contract value for their solutions while providing their customers with flexible terms like monthly or quarterly payments. Early customers have experienced a 300% increase in sales velocity, an 80% increase in lifetime value, and a 20% annual contract value increase.
“These survey results reflect the growing sentiment we’ve been hearing from our customers. SaaS sales teams are facing friction when closing deals and inflexible payment terms are hurting conversions, ” said Miguel Fernandez, co-founder and CEO of Capchase. “A powerful remedy to overcome hesitancy is to offer a buy now, pay later option to help buyers easily plan for ongoing costs.”
“Pay has become an instrumental part of our sales cycle: we can close deals faster without having to provide discounts,” said Sachin Dev Duggal, CEO at Builder.ai. “Our sales team’s happy because they can hit their numbers, finance is happy because they don’t need to deal with long collection cycles, and, most importantly, our customers are happy because they can pay on their terms.”
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In addition to its Capchase Pay product, Capchase also offers Capchase Grow, a non-dilutive financing solution to help SaaS founders build without losing stake in the company. Since launching in 2020, Capchase has raised nearly $1 billion in venture and debt financing, and has announced partnerships with AWS, Xero and Stripe.
