ZoomInfo Sales Efficiency and LTV/CAC Ratios

ZoomInfo has been talking about its LTV/CAC (Lifetime Value to Customer Acquisition Cost) ratio for a few years and is now boasting about its sales efficiency ratio.  For every dollar the firm invests in Sales and Marketing, it is growing $1.50 to $2.00 in revenue with even better results on the retention business side.  These values are well above the SaaS industry average and indicate that the firm should increase its revenue operations investment.

“On the new business side, we aim for somewhere between one and a half to two X return for every dollar that we spend on a customer. And then on the retention and growth or account management side, we look for a six to eight X return for every dollar that we spend there. It’s a super-efficient go-to-market motion.  Most software businesses, you put a dollar in, you get like 70 cents out in the first year.  We’re putting a dollar in and getting one and a half to two X out.”

ZoomInfo CEO Henry Schuck

Schuck described their go-to-market efficiency as one of their “big strategic levers” when acquiring firms with less mature go-to-market motions.  ”So when we find companies that don’t have a very sophisticated go-to-market motion, that aren’t truly optimized in the way that they get clients, they’re not doing one and a half to two X efficiency or a 15 X LTV to CAC.  Those are great fits for us.” 

ZoomInfo has a track record of improving sales efficiency, helping unlock value in acquired assets where the go-to-market motions are aligned.  “In our big acquisitions – RainKing, ZoomInfo, and, most recently, Chorus.AI — we really felt like we could leverage the go-to-market motion to accelerate growth within those companies. That’s a key piece.”

When DiscoverOrg acquired RainKing, which had a $40 million ARR, he was convinced that DiscoverOrg could treble their EBITDA to $30 million and accelerate their top-line growth within six months.  Within one year of acquiring RainKing, DiscoverOrg’s market valuation grew from roughly $600 million to $2 billion.

One of the inherent advantages of SalesTech is you don’t have to teach sales reps the value and use cases of your product.  This shortens ZoomInfo’s ramp time for new reps from several quarters to four months.  “it makes it way easier for you to be able to sell to your counterpart on the other end of the line.  It’s a big difference for us,” said Schuck. 

ZoomInfo heavily hires sales reps directly out of college or soon after and trains them as SDRs, responding to inbound leads and performing outbound prospecting.  “In nine months, we start promoting them into the account executive role.  So we got value out of them in that ramp time. Then four months after they’ve gone into the account executive role, they’re fully ramped. Thirteen months from when you’ve never sold something until you’re an account executive at one of the fastest-growing technology companies in the country, that’s a really fun promotion to see.”

And because ZoomInfo is hiring sales reps to sell sales and marketing solutions, Schuck does not consider complicated or technical product categories for acquisition.  Instead, he looks for solutions that broadly meet the needs of his 20,000 customers and which are easy to understand.  Chorus.AI, the Conversation Intelligence vendor that ZoomInfo acquired last month, fits the bill: “We use it, all of our sellers use it. It’s really simple to understand, ‘Hey, we’re going to record and transcribe all your calls, and then you can go do instant coaching on the key moments in those calls’,” remarked Schuck.

The Chorus app for Zoom records, transcribes, indexes, and analyzes calls, providing insights to sales reps and sales managers. As reps no longer need to worry about notetaking, they can focus on the topics at hand and be more present during the meetings.

SaaS Sales Efficiency

RBC calculated sales efficiency for 72 public SaaS companies and found the average sales efficiency at .8X, meaning that public SaaS companies returned 80 cents for every dollar spent on sales and marketing in the previous year.

Sales Efficiency is defined as the revenue growth rate over a period divided by sales and marketing expense margin in the previous period:

According to OpenView Partners SaaS benchmarking report, “Sales and marketing spend peaks at 50% of ARR at the expansion stage.  Too many companies underinvest in sales productivity, saddling them with huge costs without the ROI…You should be carefully monitoring your sales efficiency and looking for ways to improve or maintain it year-over-year.  Look out for the ‘leaky bucket’ problem, where you spend significant sums to acquire new customers, but then they churn shortly thereafter (churn bait).“

As a general rule, firms with a sales efficiency less than 0.5 do not have a “sustainable investable growth model,” wrote startup advisor Anna Talerico in SaaSX.  A ratio between 0.5 and 1.0 is “much better;” however, “while this isn’t necessarily capital efficient (which would make it a hard ratio for a bootstrapped company to maintain for any length of time), it does indicate sales & marketing efficiency and many investors view this as acceptable.” Better yet, firms with a ratio above one have a “strong sales efficiency and a capital-efficient growth model.”  However, when the ratio is significantly above one, the firm may be underinvesting in sales and marketing and “leaving growth on the table.”

Bureau van Dijk Orbis Enhancements

Bureau van Dijk announced a series of enhancements to their Orbis company research and financial analysis platform.  New or enhanced features include financial transparency, customization, batch search, improved navigation, expanded searching, and the addition of Moody’s research.

As ever, we’re creating, incorporating and rolling out features and functionality on the new Orbis interface all the time.  Each enhancement is intended to help make sure that you can take full advantage of our rich, structured data in order to carry out your research processes as efficiently and effectively as possible.

  • Bureau van Dijk CMO Louise Green

Bureau van Dijk added custom variables that are available in books (reports), chapters, an searches.  Users may also create custom books and chapters.

BvD Orbis improved-navigation-of-booksUI enhancements include improved book navigation so that users can move between chapters more easily; batch searching of company names by pasting a list of company names into the name search; expanded searching of ownership structures; free-text searching of notes; and enhanced viewing and filtering of corporate directors and advisors.  Directors are now sorted by department and filterable by role, seniority, and data source.

Users can now click on financial values to see the underlying calculations.

New premium content includes research from Moody’s Analytics spanning 9,000 company and 7,500 industry reports.  Both public and private companies and banks are covered.  The reports may be purchased using BvD credits on a pay-per-view basis.  In September, Moody’s rating announcements will be added to the service.  Other company research sources include MarketLine, Morningstar, and GlobalData.  MarketLine also provides industry market research to Bureau van Dijk products.

Finally, Bureau van Dijk added a new tax explorer premium service which flags “entities in low-tax jurisdictions.”

Bureau van Dijk also released a set of enhancements in April including original documents from aRMadillo.


Moody’s is in the midst of acquiring Bureau van Dijk.  The transaction is expected to close this month.  Moody’s CEO Raymond McDaniel said he “looks forward to further extending Moody’s position as a leader in risk data and analytical insight.”  The firm has already received EU Merger Regulation approval from the European Commission.

Moody’s Acquires Bureau van Dijk

Moody’s announced this morning that they are acquiring business intelligence vendor Bureau van Dijk for €3.0 billion (approximately $3.27 billion). Moody’s stated that “the acquisition extends Moody’s position as a leader in risk data and analytical insight.”  The deal is subject to EU approval and is expected to close in Q3.

Bureau van Dijk will be acquired with approximately $1.3 billion in offshore cash and $2 billion in debt.  Bureau van Dijk will be folded into Moody’s Analytics’ Research, Data & Analytics (RD&A).

Last year, Bureau van Dijk earned $281 million (€258 million) and posted and EBITDA of $144 million (€132 million).  Bureau van Dijk has a ten-year Compound Average Growth Rate (CAGR ) of 9.3%.  The firm anticipates $45 million of annual revenue and expense synergies by 2019 and $80 million by 2021.

Source: Moody's Investor Site (May 15 2017)
Source: Moody’s Investor Site (May 15 2017)

Bureau van Dijk offers three major product lines:

  • Orbis – Financial analysis tools spanning 220 million companies.  Information includes firmographics, public and private company financials, original documents, global family trees, shareholdings, news, and M&A research (Zephyr).  Orbis provides the deepest set of global private company financial coverage tied to very strong linkage data including minority shareholdings.  Orbis was redesigned last year with a new user interface and workflows.  The Orbis product line is also available as regional and local products such as Amadeus in Europe, Oriana in AsiaPac, and Fame in the UK.
  • Mint – Sales intelligence product line
  • Catalyst – Set of workflow tools for valuation, transfer pricing, credit analysis, wallet sizing, etc.

All three product lines leverage the Orbis global company file which is collected from 160 information partners.

“Bureau van Dijk is a high growth information aggregator and distributor that positions Moody’s at the center of a unique network of global risk data,” said Raymond McDaniel, President and Chief Executive Officer of Moody’s. “This acquisition provides significant opportunities for Moody’s Analytics to offer complementary products, create new risk solutions and extend its reach to new and evolving market segments.”

The Bureau van Dijk customer base is split fairly evenly across 6,000 financial institutions, professional service firms, government authorities, and corporations.  Key use cases include compliance, KYC/AML, risk decisioning, purchasing, transfer pricing, B2B sales and marketing, financial analysis, and economic research.

Source: Moody's Investor Site (May 15 2017)
Source: Moody’s Investor Site (May 15 2017)

Moody’s listed a three-pronged product strategy post-acquisition:

  • Apply MA analytics to data to generate off-the-shelf financial metrics

  • Package BvD data subscriptions with MA analytical software & models

  • Enrich MIS/MA data sets with BvD’s proprietary identifiers

Moody’s will also be looking to extend Bureau van Dijk’s commercial presence beyond Europe and to non-financial customers.  The acquisition helps Moody’s extend its addressable market beyond credit to provide “Moody’s-branded scores/assessments for tax risk, transfer pricing, compliance, financial crime, [and] supply chain management.”

“Moody’s is a highly regarded, authoritative source of credit ratings and analytical tools, with a strong brand and global reach,” said Mark Schwerzel, Deputy CEO of Bureau van Dijk. “The addition of Bureau van Dijk’s powerful information platform to Moody’s Analytics’ suite of risk management solutions presents a wide range of opportunities for us to better serve our combined customer base.”

Bureau van Dijk has been owned by a series of private equity firms with EQT acquiring the firm from Charterhouse Capital Partners in September 2014.  At the time, the sale price was not disclosed.  Charterhouse acquired Bureau van Dijk in 2011 from BC Partners for €960m.

EQT noted the following areas of investment during its ownership period:

  • Development of the organisational structure to prepare for further growth

  • Investments in the sales organization, including the introduction of a matrix sales structure, implementation of a global CRM system, and expansion of the salesforce

  • Strong focus on the development of new products and continued improvement of existing ones, e.g. the launch of a new user interface

  • Substantial investments in marketing and corporate branding

Bureau van Dijk Orbis Enhancements

Saved Searches is one of the new features added to BvD Orbis.
Bureau van Dijk Orbis Build a List

Bureau van Dijk rolled out the latest set of enhancements to its Orbis company research and financial analysis platform.  Orbis was re-platformed last year and given a modern user interface.  New features include a document ordering module, improved peer reporting, and enhanced customization.  The new document ordering module assists with KYC/AML and company research by delivering original images of business documents, such as certificates of incorporation, shareholders’ details, and annual reports.  The new module was built in partnership with aRMadillo (FKA RM Online) and delivers reports “usually within an hour.”  Users can even order reports for companies not found in the Orbis database.

Customization features include calculated variables which can be shared across the account group, chapters, and classifications.

“The new interface arranges company reports into “books” that are further organised into “chapters”, that contain related information,” said CMO Louise Green.  “This feature lets you create your own customised chapters, which could include: your company logo or other images; widgets from the profile page; worksheets with selected financials; and any of your own fields that you have imported into Orbis.”

Custom classifications allow users to map their own industry and geographic codes to ORBIS data.

Bureau van Dijk recently released a 2:33 demo of seven key workflow improvements that were implemented in last year’s release:

  1. Favorite Search Criteria
  2. Instant Currency Switch
  3. Alert Management and Quick Alerting
  4. Quick View of a Company
  5. Random Sorting and Sampling
  6. Pivot Analysis
  7. Corporate Ownership Explorer

The Orbis database, which is available for Orbis financial analysis, MINT sales intelligence, and Catalyst workflow product lines, now spans 220 million companies across 200 countries.

Bureau van Dijk Orbis Company View
The Bureau van Dijk Orbis Company View is customizable.

BvD: New UI for ORBIS

Bureau van Dijk (BvD) is releasing a new user interface for their ORBIS financial analysis product.  The ORBIS product line provides global company financial analysis tools with very deep financial coverage of European privates.  This platform is also employed for regional products such as Amadeus (Europe), Oriana (AsiaPac), and country specific products within Europe such as Fame (UK), Markus (Germany, Austria, Luxembourg), and Ruslana (Russia, Ukraine, Kazakhstan).

The modernized UI is fast to use and supports tablets.  New features include an icon-based navigation panel along the left edge and improved multi-step searches.  Users can also group their favorite search steps together and adjust list layouts.

The new ORBIS UI provides streamlined searching and list building.
The new ORBIS UI provides streamlined searching and list building.

New report types include a visual profile and “Excel-friendly financial worksheets.”  Users can also quickly share searches, results, and reports with colleagues.

A new Tools Zone provides a set of analytical tools for peer analysis, pivot-table building, ownership research, and Excel plug-ins.

The new ORBIS Toolbox
The new ORBIS Toolbox

Both the old and new UI will be available while users migrate their saved searches and reports to the new ORBIS.

The firm did not indicate whether similar enhancements were planned for the MINT sales product line.

ORBIS is the leading financial analysis tool for European and AsiaPac companies.  They have been rapidly expanding their global company coverage and now span 200 million companies (roughly 3/4 of which are active) with market leading company linkage (ownership) intelligence.  This dataset is available in ORBIS, their regional financial analysis editions, MINT sales intelligence editions, and their line of Catalyst workflow tools (e.g. credit risk analysis, transfer pricing, valuation).