B2B SaaS sales best practices
Bridge Group is a sales consulting organization focusing on B2B SaaS exclusively. We hold them in very high regard and consider Bridge to be the source for all things enterprise sales. They do strategic assessments, write playbooks, and can also do management training and coaching. We did a Q&A with Kyle Smith at Bridge (ksmith@bridgegroupinc.com) about the current state of enterprise sales to learn more about the craft.
1. What are the generally trends in enterprise SaaS sales that you’re seeing? We are seeing a drastic difference in the hiring market. It used to be a candidate favorable market and now it’s an employer favorable market. Voluntary attrition is down. The number of candidates applying for a job is up, so candidate-company fit has really improved. Companies no longer have to settle for a particular hire, rather they can hire the best-fit candidate and don’t have to bring on iffy clients. If you’re hiring, now is the time when you can get pickier.
2. If the sales cycle blows out, what can be done? When sales cycles blow out, you have to really focus on the ideal customer profile. Focusing on the ICP becomes critical. When the market is buoyant and everyone is buying product, you can get loose on the ICP but in this environment, you need to optimize for ICP so your sales efforts yield bookings. It may not exactly reduce the sales cycle, but worst case it should improve churn, increase close rates, keep average contract values where they should be, and yield all the other benefits of hitting the ICP.
3. What is the return on an AE? The metric to look at is bookings/on-target earnings of the rep. Historically the target was 5x. In other words, if you have an account executive that is making $200k all-in (set up as 50/50 salary/commission), that AE needs to achieve $1mm in bookings. While you don’t want the ratio to fall to 4x or 3x, what really matters is looking at each AE relative to their peer group. All AE’s should be benchmarked to each other and if possible, other AE’s in the industry that are not at your organization. So, if your current reps are doing 4x generally keeps those that are doing 4x, however if you have someone fall to 3x, they need to improve or else be replaced. There is no need to settle for an account executive that is underperforming their peers.
4. When is the right time to start an outbound SDR program? Assuming an average deal size greater than $15k annually, Bridge recommends starting an SDR program as soon as you hire your first account executive. That may sound aggressive, but good AE’s don’t join organizations unless there is an SDR program sourcing opportunities for them, so SDR’s are important not only to generate pipeline but also to attract talented AE;s. Your SDR program is also hopefully a farm system which provides you future AE’s. Finally, your goal is not just hiring AE’s, rather you’re building a sales organization.
5. When is the right time to hire a VP of Sales? It depends on the profile of the CEO or person currently managing the sales team, but usually once you’re at $5mm+ ARR and spending $1.5mm+ on sales annually, then that’s the time to bring on a VP of Sales. The size of the budget and the number of AE’s and SDR’s managed will warrant a dedicated sales leader. In regards to number of employees managed, once a CEO has 8 direct reports related to sales reporting to them, you really need to bring in a VP.
6. How do you not hire the wrong VP of Sales? The person that takes you from $5mm to $20mm of ARR isn’t the same person that takes you from $20mm to $50mm ARR. And those two individuals aren’t interchangeable. In other words you cannot hire a CRO that is used to managing a large Fortune 1000 sales team to take you from $5mm to $20mm ARR. They’ll fail. You truly need to find VP’s that have consistently run sales organizations at your stage and need.
7. When is the right time to hire the next AE? You don’t bring on a new AE unless your current AE’s are at capacity. Make sure your existing team is at full productivity, and that if you hired another AE, you know exactly what you’re going to get from them. Bridge does like to hire in pairs as you’ll get more data quickly not only on the reps but also on your sales process.
8. Where should the upsell motion live? It really depends on the company. There is no right answer here and it really depends on the size/complexity of the accounts, length of sales cycle, number of decision makers, etc. For instance, if a sales cycle is complex and 18 months long, it doesn’t make sense to bring in an account manager after the account executive who closed the deal has spent so much time developing and winning that client. That AE has real client-level knowledge that took 18 months to replicate and likely cant be transferred easily. However, if you’ve won an account and there are other distinct divisions within the account that can be sold, it makes a lot of sense to have an account manager take over the cross and upsell.
Bridge Group is a fantastic resource for sales data (visit their website at bridgegroupinc.com) and if you need help building or re-structuring your sales org, reach out to Kyle.
Thanks for reading. Visit blossomstreetventures.com for more SaaS data and blogs.
