Jacco van der Kooij gives his expert sales advice.

TL;DR: Make sure you design for growth, execute against the design, measure based on detailed metrics, and improve upon it.

Growth What is it and how do you get it?

This article is intended for founders, CEOs and sales leader of early stage companies that want to learn from others who’ve come before them.

Working with many SaaS companies we found there are three key challenges for early stage companies ready to scale their growth:

Challenge #1 Preparing to Scale

The key to this stage is to make sure that you’ve found product market fit and that you have a scalable business model. As you involve clients you will find that your envisioned business model may not work exactly as you had planned AND your “cool service” does not deliver the results as you had expected. You need to adjust both. As the number of client “wins” increases, you’ll find yourself making changes to your product offering, pricing, etc. You’ll be ready to begin thinking about scaling when you end up with 10–100 customers and approx. $500k-$2m ARR.

Challenge #2 Timing When To Scale

As you find yourself in stage 1, you will ask yourself — When is it time to scale? This is an important questions because the world is changing. Five years ago, you had a window of opportunity of about 12–24 months to scale within. Because product market fit cycles take about 9–12 months, that often gave you an opportunity to “miss one” and still become successful.

That has changed. Today markets are scaling soooo fast that the window of opportunity you have is closer to 9–18 months.That is a much smaller window, and once you miss it your chances of success reduce significantly.

So how do you know when to scale? Gut? Practice?? There are few SaaS professionals in the world who truly have the experience (volume of deals + in depth insight) on this topic. All others must rely on data + experience.

Metrics that indicate you are ready to scale:

• Increase in inbound leads (e.g. from 100/month to 350/month)
• Increase in conversion ratio (e.g. from 0.1 to 0.17)
• Decrease in sales cycle (e.g. from 78 days to 46 days)
• Increase in price customers are willing to play for your service (e.g. from $12k to $24k)
• Increase in win ratio (e.g. from 1 in 5 to 1 in 3)

“In God we trust. All others must bring data.” — W. Edwards Deming

What do all of the above have in common? They are metrics measured. And that is the key early on. Measure this so you can listen to your data, and then apply your common sense to make sure you make the right decision. The stakes are too high to just use the gut of a “money motivated” decision; For example a VP of sales sandbagging the quota, or a panicking VC telling you to go faster.

Challenge #3 Execution Of The Scaling

Many start-ups find themselves in this stage when they approach a VC seeking funding to scale their business through Marketing and Sales. The company has found product market fit, the pricing model works, there is a series of new happy customers that benefit from your revised service, and you have a handful of 1st generation customers that stuck with you and can vouch for your efforts.

Three Growth Challenges

Hiring the VP of Sales Asking the newly hired VP of Sales to design your growth in the hands has proven to be very challenging. Even the best VP needs at least 6 to 9 months to get their bearings. In this situation the VP of sales is in charge of winning deals AND designing the growth “on-the-fly”. They will be forced to focus and that focus almost always means they focus on winning deals at the cost of the lack of design. This lack of design is going to cost you later on as you have to redo the design — but now it will take you twice as long and at the worst moment of time.

Jacco’s Recommendation: Work with a growth specialist to design your growth before you scale ($2M in ARR). Use the same level of detail to design your growth as you used during the design of your product. Then recruit a VP of Sales that understands the growth plan and will execute accordingly. Modifications are encouraged.

Scaling The Team: Hiring 2 extra sales people isn’t really scaling. This is because you will likely begin to experience churn of your staff, which means you are likely to lose one to two sales people. Churn of salespeople at this stage can and will slow your growth by months!

Here are a few of the latest data points:

• Tenure of SDR roles are between 6 to 15 months, and
• Tenure of AE roles are between 12 to 24 months.

Jacco’s Recommendation: Build your model based on 9 months of tenure of an SDR and 18 months for an AE. Hire 10–20% extra to overcome early churn.

Execution: With sales execution I’m not referring to quota performance. Quota performance is a trailing indicator. What I do mean is; the way the sales team performs on calls and in their communication with a client. Many SaaS companies decide to go the SDR/AE route instead of hiring experienced enterprise sales professionals. This often saves companies $100k/salesperson, but it also means you have an inexperienced team in direct line with the performance of the company.

The SDR and AE roles are often filled by individuals at the start of their careers. They bring high energy, enthusiasm, and an ability to work with state of the art sales tools that make them great additions.

But you absolutely need to listen to the way they communicate with clients on the phone, sit-in on their conference calls, and read the emails they send. The lack of quality is NOT their fault — They need to be trained. Seasoned sales professionals know when, how and what to say when they reach out to a VP or CxO —it isn’t a fair expectation to have for these young professionals right out the door.

We need to invest in them — I don’t mean buying $500 worth of Nerf Guns, In-N-Out burger lunches, and/or bringing in a f00sball table. I mean that we need to provide them with persistent training, on use-cases, tools and sales skills. And support them with fresh content developed by the enablement team every week.

Jacco’s Recommendation: Build in a cost of $2,500/year in training for an SDR and $5,000/year for an AE. And please do not buy Nerf guns, this is not a playground — instead invest in sales productivity tools (along the design) and sales enablement (content).

Sales execution as your differentiator

Over the past years the execution of SaaS sales teams was not a major differentiator because everyone equally sucked. It should be no surprise that you hear customers say “I bought a solution despite the sales person”.

However the next 24 months will be very different. Under the growing market pressures and increased competition with very similar solutions — growth achievement will become heavily dependent on excellent sales execution.

Having a great Sales experience is now as important as having a simple UI/UX, a smooth working service, and a great product market fit. Guess what all of them have in common?

They were thoughtfully designed!

How can Storm Ventures help you?

At Storm Ventures we are assisting our portfolio companies with an in-house sales mentorship program that helps our portfolio companies succeed. We urge any enterprise SaaS companies that are interested learning more to email Frederik at fgroce@stormventures.com.

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