Benchmarking: How Do You Compare to Competitors?

Your conversion rate is 2.5%.

Is that good?

You don’t know. You’ve never benchmarked against anyone else.

Benchmarking is the practice of comparing your metrics to your competitors and industry averages.

It answers the question: “Am I winning or losing?”

Why Benchmarking Matters

Without benchmarking, you have no context.

You could have a 2.5% conversion rate and think you’re doing great (if the average is 1%), or you could think you’re failing (if the average is 4%).

Benchmarking also forces you to think about where your competitive advantage is.

If everyone in your industry has a 2% churn rate, and you have 5% churn, you need to fix it.

If everyone has 40% CAC payback period and you have 30%, you have a competitive advantage. Don’t copy what everyone else is doing; do what you’re doing.

Where to Get Benchmarks

Industry reports (paid and free):

SaaS-specific reports (G2, Gartner, Insight.com publish annual benchmarks)
E-commerce reports (Shopify publishes industry benchmarks)
Vertical-specific reports (healthcare, fintech, etc. have their own benchmarks)

These are usually published annually and cover metrics like:

CAC
LTV
Churn rate
Conversion rate by funnel stage
MRR growth rate

Public company financials (for larger companies):

If your competitors are public, you can read their quarterly earnings reports
They disclose metrics like customer growth, churn, CAC payback period
This is free information

Surveys and aggregators:

Anonymous surveys ask founders what their metrics are
Aggregators pool that data and publish benchmarks
These are less reliable than industry reports but free

Conferences and communities:

Other founders share their metrics at conferences or in private communities
Not scientifically rigorous but often honest and recent

Investor decks and blog posts:

Founders publishing pitch decks sometimes include metrics
It’s a small sample but gives you real data

Reading a Benchmark Report

A typical benchmark report looks like this:

SaaS CAC Benchmark by Company Size (2024)

Company Size	Median CAC	25th Percentile	75th Percentile
Early stage (<$1M ARR)	$8,000	$4,000	$15,000
Growth stage ($1M-$10M ARR)	$5,000	$2,500	$10,000
Scale stage ($10M-$50M ARR)	$3,000	$1,500	$6,000

Interpretation:

The median is the middle value (50% are above, 50% below)
25th percentile means 75% of companies have a higher CAC (you’re in the best 25%)
75th percentile means 75% of companies have a lower CAC (you’re in the bottom 25%)

If your company is in the “Early stage” category and your CAC is $3,000, you’re better than the median ($8,000). You’re in the top quartile.

But if your CAC is $20,000, you’re worse than the 75th percentile. You’re in the bottom quartile. Something is wrong.

The Nuance: Benchmarks by Vertical and Model

Benchmarks vary wildly by business model and vertical.

Example 1: SaaS benchmarks vary by vertical

Enterprise SaaS (B2B, high-value deals):

CAC: $20,000-$50,000 (expensive sales process)
LTV: $200,000-$1,000,000 (big contracts)
LTV:CAC ratio: 5-10x

Mid-market SaaS (B2B, smaller deals):

CAC: $5,000-$15,000
LTV: $30,000-$150,000
LTV:CAC ratio: 3-5x

SMB SaaS (B2C or small B2B):

CAC: $500-$2,000
LTV: $1,000-$10,000
LTV:CAC ratio: 2-3x

If you’re selling enterprise software and comparing yourself to SMB SaaS benchmarks, you’ll think you’re doing terribly. But you’re not; you’re operating in a different model entirely.

Example 2: Benchmarks vary by acquisition channel

Organic acquisition (search, word-of-mouth):

CAC: $100-$500 (very cheap)
Sales cycles: 2-4 weeks

Paid social (Facebook, TikTok):

CAC: $2,000-$5,000 (expensive)
Sales cycles: 1-2 weeks

Enterprise sales (direct sales):

CAC: $50,000+ (very expensive)
Sales cycles: 3-6 months

You can’t benchmark your organic CAC against industry paid social averages. They’re different animals.

Using Benchmarking to Make Decisions

Scenario 1: You’re worse than the median

Benchmark says CAC should be $5,000. Yours is $8,000.

Options:

Accept it: Maybe your market is more expensive. Your LTV is also higher. Your LTV:CAC ratio is still healthy. Don’t optimize.
Investigate: Talk to competitors. What are they doing differently? Can you replicate?
Change strategy: Maybe paid acquisition isn’t your channel. Shift to organic or partnerships.

Scenario 2: You’re better than the 75th percentile

Benchmark says CAC should be $5,000. Yours is $1,500.

You’re winning. Options:

Scale: You have a competitive advantage. Spend more on acquisition. You can afford to acquire customers others can’t.
Keep the advantage: Don’t copy what everyone else is doing. Understand why your CAC is low. Protect it.
Use for fundraising: VCs want to see metrics better than benchmarks. This is a selling point.

Scenario 3: You’re at the median

You’re doing fine. You’re not winning, but you’re not losing. Options:

Focus on retention: If CAC is the same as competitors, win on retention and LTV.
Optimize for profitability: If you can’t win on growth, win on margin.
Find a niche: You’re competing directly with everyone. Move to a niche where you have advantages.

The Danger of Benchmarking

Benchmarking is useful but dangerous. Here’s why:

Danger 1: Comparing incomparable things

You benchmark your SMB SaaS CAC against Enterprise SaaS CAC and panic that you’re 10x higher. But they’re operating in different models entirely.

Always benchmark within your category (vertical, model, channel, company size).

Danger 2: Gaming the benchmark

Once you know “the benchmark is $5,000 CAC,” you might optimize your CAC metric while hurting other things.

You acquire customers for $4,000 (better than benchmark!) but they churn in 3 months (worse retention). Your LTV is lower. You’ve “won” the CAC benchmark but lost the business.

Danger 3: Benchmarks are historic

Industry benchmarks are published 6-12 months after the data is collected. By the time you read them, they’re old.

If a competitor just raised funding and is spending aggressively on acquisition, the benchmark won’t reflect that.

Danger 4: Survivorship bias

Benchmarks typically report on companies that survived and succeeded. They don’t include failed companies.

If 100 companies tried your model and only 10 succeeded, the benchmark shows the 10 that worked. It hides the 90 that failed.

Building Your Own Internal Benchmarks

Beyond external benchmarks, we recommend tracking your own performance over time.

Instead of just “our CAC is $5,000,” track:

Our CAC this quarter: $5,000
Our CAC last quarter: $5,200 (improving)
Our CAC 1 year ago: $6,000 (significantly better over time)

This is your own benchmark: You vs. yourself.

For most businesses, trending your own metrics over time is more useful than comparing to external benchmarks. You know if you’re improving or degrading.

When to Ignore Benchmarks

Sometimes the benchmark doesn’t apply to you.

You’re in a new vertical that doesn’t have benchmarks yet.

You’re trying a new model that competitors aren’t using.

You’re selling to a different geography with different economics.

In these cases, don’t force a benchmark comparison. Instead, focus on your own targets:

“We want to achieve 30% month-over-month growth”
“We want CAC payback in 12 months”
“We want 5x LTV:CAC ratio”

These targets should be based on your profitability targets and cash runway, not external benchmarks.

The Takeaway

Benchmarking tells you if you’re winning. But it doesn’t tell you how to win.

Use benchmarks to understand your competitive position. Then use that understanding to make strategic decisions about where to focus.

If you’re winning on CAC but losing on retention, don’t optimize CAC further. Optimize retention.

If you’re losing on CAC but winning on LTV, don’t cut acquisition spend. Scale it.

We help you benchmark against your industry and track your own performance over time so you know whether you’re actually improving.