How to Construct a SaaS Sales Machine

Sales OrgEvery company needs to face this question multiple times in their life cycle: What is the best way to maximize our growth and how should we build a sales department to capitalize on our market potential? The answer is never simple. The answer will likely change from quarter to quarter, year to year. There is no perfect playbook that will fit every single company. For the past 8+ years I’ve worked at high growth SaaS industry pioneers, SucessFactors and Box. Over that time I’ve seen several iterations and permutations of go to market strategy. I’ll share some of what I’ve seen below.

The first step in figuring out your org structure and strategy is to is take inventory of your current company. Look at all the relevant metrics today and compare those against your long term aspirations. Then you can begin to make choices that will send you on a path today. My advice is also to try and build your strategy/team in a way that offers the most flexibility as you grow and mature. Inevitably you’ll need to tweak periodically as your market dynamics change and you need to invest more heavily in one area vs another. My neighbor and mentor Jim Herbold, ex SVP Sales @Box, spoke a lot about some of these concepts in his post here. Key things to constantly evaluate and consider include, lead flow, average contract value, the number of days from opportunity creation to contract signature, complexity of sales cycle, win rates in specific segments and micro segments of industries, geography, technical acumen required to move through a sales cycle, implementation timeline to get customers on board and ramp time required to get new employees productive.

A key question in any go to market sales strategy is to determine whether you want to build an inside sales team or a field/outside sales team. (For purposes of simplification, I won’t cover other concepts like Channel vs Direct or Self Service vs Direct. This post assumes you’ve determined your market and product will be sold by a direct sales force.) Each has pros and cons (discussed at the bottom of this post). Over time I’ve become a believer and fan of both. (In my younger days I was more of a vehement proponent of inside sales). Its not a one size fits all endeavor so make sure you go into each strategy and choice with eyes wide open. Carefully consider what your near term goals are vs your long term goals. For many organizations it makes sense to have both inside sales and outside sales functioning over time to maximize your opportunity. If constructed well, one can compliment the other nicely. Especially if your market opportunity smells a lot like Box, Hubspot or Zendesk, where you start with an SMB centric go to market that begins to generate value upstream. Tomasz Tungusz nails down great metrics on what that looks like here. You can also be very creative, if your product and opportunity allows it, like Atlassian has done to come up with new concepts like Tomassz Tunguz discusses here.

Sales Org

The chart I embeded in the post above is a general view of a model of how to think about the various ways you could create your sales team and customer acquisition strategy. The triangle represents general customer segments, based on relative opportunity complexity and dollar value as well as the overall quantity of potential customers/opportunities in each market segment. I’ve also added vertical bars alongside the Customer Triangle to represent various support functions that SaaS companies employ to buffer around sales functions and better enable your customer success. Each bar is set against the triangle to roughly align with the typical customer segment each function generally is designed to cover. For example, Field Sales & Field Marketing are typically separate teams that are geared to acquire up-market sized opportunities and companies. Whereas channel teams and inside sales teams tend to cover companies and opportunities of all sizes. Sales engineering resources tend to be most necessary in larger more complex deals where you are selling to large companies but depending on how complex your solution is they can also stretch down into the top sections of an SMB customer segment. The idea here is as you start to build a company you will likely only focus your efforts in some areas of the chart. An early SMB focused company like Box used to look like this whereas an early Enterprise focused company like SuccessFactors looked a lot like this. *Interestingly after a decade in business, each began to converge and look a lot like the more complex chart, fully loaded with all of theses types of teams and segments as shown above*

I believe there are many ways to attack a market and even if you start with one model, it doesn’t mean that’s where you will be in 12 months from now! Take a look at your business today weigh the pros and cons below then get cranking on a plan and see where it takes you!

Inside Sales Model

Pros: Less expensive, more activity output per person, more nimble, generally more coachable (tend to be more junior and less set in their ways), reps tend to ramp faster, communication is easier, generally higher energy environment, culture is way easier to maintain, evaluating your team is way simpler because you see them daily and hear their interactions live, product feedback tends to come back to you in real time as well. Inside teams tend to work more collaboratively with their teammates since they mostly sit all in one place and can hear one another on the phones.

Cons: Training tends to be very important as most inside sales teams are comprised of junior people that haven’t been through a lot of sales cycles. Clear career progression is also important as folks that are new in their careers tend to want to progress up the ranks and see where their hard work is taking them. With an inside team you tend to be capped on the size of deals you’ll be able to close. You can definitely close $1MM deals with an inside team but its not the norm. If you are looking to close hundreds or thousands of $100K+ deals, an exclusively inside team probably won’t get you there. Generally companies up market are used to seeing people face to face and they want to get to know their partners before they start cutting large checks

Outside Sales Model

Pros: If you hire right, maturity is the key word. The best field AEs close multi-million dollar deals. They can be very self motivated and persistent. They have seen a lot and tend to not sweat the small stuff. They are very good at ignoring noise. Generally very experienced folks that know what to do and how to do it. They can come with deep networks and can accelerate deals with relationships (although beware this pro, I’ve seen lots of enterprise folks with great connections still fail). They can get in front of prospects and customers live where they live, getting a better lay of the land in complex deals. In the best scenarios some of these AE are trusted like employees of the company they are selling to. If you have a channel model or a platform with lots of integrations, Field AEs can give you an advantage because they generally know the other reps in their territories and can cross check contacts and get customer intel more quickly.

Cons: Extremely expensive. Field AEs are used to being paid extremely well. They also tend to thrive in a more structured environment where they have a lot of company resources. If you think you can just drop a few field reps into your model without a fairly baked product and the right resources around them you’ll struggle. If you take the step to go field, realize you will need to have field marketing, inside sales overlays, larger expense account allocations, a team of sales engineers, field sales management and company executives willing to go arm and arm with them into deals. Field AEs are harder to evaluate as well. Since deals take longer, you have to give them longer to close revenue and ramp times tend to take quarters/years vs weeks/months. Because of this its not as easy to know 6-9 months in whether or not someone is a a bad fit. Also communication is stressed in a field model since so many folks are literally working out on their own on an island. The way you communicate to the field is not as easy as weekly in person team meetings and all hands. 

* You can learn more about me on Linkedin or on Twitter *

* If you see an acronym or word anywhere on the site that you haven’t seen before, I might have posted an explanation here If not tell me and I’ll add it!*

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