Yet some companies are growing faster through cloud marketplaces and partnerships. Let’s look at the GTM fundamentals we’re dealing with in 2025.

This analysis comes from a top VC/PE investor managing $83.5Bn, ICONIQ Capital's The State of SaaS in 2024 report.

4 Significant changes in GTM performance:

1️⃣ Sales Efficiency Reset

Net Magic Number (measures how efficiently sales & marketing spend generates new revenue) fell below 1.0x for the first time since tracking began in 2017.

Companies now spend more than $1 in Sales & Marketing to get $1 in net new ARR next quarter - a dramatic shift from 2 years ago when top performers delivered ~1.5x.

It "has significantly deteriorated as selling SaaS tools became increasingly difficult."

2️⃣ Customer Acquisition Challenge

New logo contribution to ARR growth dropped from 10-12% to 4% of beginning period ARR. Traditional GTM motions are showing unprecedented friction, as the cost to acquire customers (CAC payback period) stretched to 34 months - the longest in 5 years.

3️⃣ Net Dollar Retention Pressure

Net Dollar Retention (measures how much recurring revenue grows from existing customers) dropped from peak average of 120-130% to 108% in 1H 2024.

Logo churn (complete loss of customers) now represents 59% of all lost revenue (more than downsells). Buyers are becoming more selective in their tech stack decisions.

4️⃣ Shift to Expansion Led Growth

Companies are pivoting hard from new logo focus to generating more revenue from existing customers. In just 8 quarters, expansion revenue grew from 32% to 45% of new ARR.

How are companies adapting?

Here is what we see:

Market leaders shift to Cloud GTM and partnerships

Companies recognize that B2B purchases are shifting to Digital Self-Serve Channels (50%+ of large B2B sales will be there in 2025)

SaaS companies already see 80% larger deal sizes and close a higher percentage of deals (27%) when transact via cloud marketplaces, like Amazon Web Services (AWS)

Dynatrace sees 2X larger deals via marketplace, with 15 of 18 seven-figure deals in Q2 closed through hyperscalers and GSIs

Wiz: 70% of revenue through marketplaces

For Software Leaders in 2025:

• Build systematic expansion motions - it's now fundamental

• Invest in cloud marketplace presence and partner ecosystems

• Align sales compensation to favor efficient channels

How are you adapting your growth strategy for 2025?