Why you don’t need a bigger sales team to grow your SaaS business

Editor’s note: This post is adapted from a chapter from “How to Get to $10 Million in ARR and Beyond” by Winning by Design.

 

Historically, most companies’ growth has been tied to the size of their sales team. To double revenue, a company usually had to hire twice as many sales people. For today’s SaaS companies, however, it’s a different story. Their sales teams can increase revenue without growing in size. The reason for this is that in addition to onboarding new customers, they can also increase revenue by getting existing customers to renew and expand their contracts. 

Unfortunately, many business leaders are not fully realizing this potential for revenue growth, something that can be problematic as they try to scale their companies. To help, in this post, we’ll look at the three main ways in which SaaS companies can accelerate their growth that don’t involve hiring a bigger sales team.

1. Find your product market fit

Product market fit is when a product has achieved sufficient maturity to satisfy a market that has plenty of growth potential. Achieving product market fit can be quite difficult, particularly in markets where innovative new solutions are constantly arriving on the scene and things are always changing. 

One of the keys for SaaS companies to grow is identifying product market fit using a variety of sales and marketing channels or go-to-market (GTM) strategies. Unfortunately, however, that’s precisely where so many organizations slip up. They often look at the overall result rather than use metrics to measure the effectiveness and efficiency of their strategies. Remember, even if you have a great product, if you don’t have the optimal go-to-market strategy, you won’t reach your audience.

While exploring your product market fit, ask yourself the following questions:

  • What’s the right value proposition for your solution?
  • Who’s your real target audience (i.e., people with a real problem who are willing to take action)?
  • What’s the most efficient and effective way of reaching that audience?

If you don’t measure how effective you are at reaching your market, you can run into trouble. Without measurement, growth can slow or stagnate and your company might wind up achieving a lower valuation than it should. Meanwhile sales leadership might turnover, and new leaders could be left trying to figure out if the issue is due to poor product market fit or poor sales team performance.

2. Hit your launch window

One mistake that startups often make after achieving their product market fit is waiting too long to scale to fully realize their market potential. As a result, they end up missing their ideal launch window. Companies like this ultimately wind up becoming, say, fourth or fifth on the list of recommended solutions, and only manage to eek out a small sliver of market share. 

While the typical launch window used to be 18 to 36 months, these days it’s a mere 9 to 18 months after finding product market fit. So how will you know when you’re in the launch window? There are three clear signs:

  • Price increases: Instead of closing $10,000 ARR deals, you start closing $15,000 or $20,000 deals. Increases like this are a clear indication that you’re offering real value and that your customers are starting to understand the impact of that value on their organization.
  • Win rate increases: Win rate is measured by the number of sales qualified leads (SQLs) needed to win a deal. Imagine that instead of winning one out of six deals, you’re now winning one in five. When that happens, it indicates you’re in a stronger market position.
  • Sales cycle decreases: The sales cycle is measured as the time between an SQL being created and a deal being won. For example, if your average sales cycle is now 71 days instead of 84 days, your customers are prioritizing your solution. Plus, it suggests that they’re having an easier time making a purchase decision.

What do these signs all have in common? They’re data driven. They’re factors you can measure, and when interpreted correctly, can be used to make a data-driven decision.

3. Execute your GTM strategy

To achieve your maximum growth potential, you need a solid go-to-market plan. Companies will often secure a new round of funding to execute their new GTM strategy. Typically, this includes paying to recruit sales people, increasing expenditure on marketing campaigns, attending events, or building your first custom booth at a conference. Not surprisingly, most organizations use the world’s most common scaling plan: They triple whatever it was that they did to get to this point. Yet even when a sales team triples in size, scaling to meet your potential can remain a challenge.

This is often the experience of companies that primarily depend on an outbound approach. Such companies find out the hard way that tripling their sales team and their activities doesn’t always triple the result. Instead, you need to adopt a modern GTM model. Start thinking of your revenue as being composed of layers. For example:

  • Regionalize teams to increase coverage and decrease dependency on your local market
  • Add new products and services to increase the price and create upsell and cross-sell opportunities
  • Pursue new accounts such as moving from small business to mid-market, or pursuing new verticals
  • Add a strategic partnership that opens up an entirely new segment

Going after bigger deals doesn’t mean simply taking your best salespeople and giving them a list of larger target buyers. Instead, you need to segment your market and develop a new GTM plan specifically for it. In the process, take care to recognize that the needs for startups or smaller businesses may be different from a mid-market or enterprise company.

Scaling successfully 

Growing and scaling successfully isn’t just about giving your salespeople bigger targets or increasing your sales team. You need to implement a solid GTM strategy that uses data-driven evidence to prove that your product is fit for market, launch-ready, and that you know how to reach any sales-ready customers quickly and efficiently. Following these three key steps will ensure you grow robustly and sustainably into the future.

To learn more, check out “How to Get to $10 Million in ARR and Beyond” by Winning by Design.