Hi TST community,
I am currently reading the book Revenue Architecture by Jacco Van der Kooij (=Founder, Winning by Design) who states that the golden area of SaaS was from 2011-2021.
He gives a lot of good reasons, but the main one is probably the growth at all costs attitude, supported by low interest rates and insane valuation multiples reached it’s peak in late 2021.
When I look around, I feel like very few Sellers in the big SaaS companies are able to hit their number, and that is not an excuse, it is more that the circumstances are not there to win. By that I mean really take the target, break it down by taking the average deal size, see how many deals on average a salesperson needs to get, and then look at how much qualified pipeline (3x-4x) is needed to hit those numbers. In a lot of these companies there is no realistic Best Case Scenario where a Seller can hit the target.
Many SaaS companies have not built revenue engines that are built to last. In order for that engine to work, it has to be cost effective.
There are 1000 different reasons for different companies why I think they are not built to last:
- The average deal size is too small for an expensive enterprise sales team, and they don’t have enough inbound leads to fuel the transactional engine.
- The Customer Success team is not able to provide the necessary services, they are often understaffed > exponential growth is only possible with retention!
- BDR teams are expensive but their opportunities do not convert, they are incentivized by the wrong metrics
- Too many AEs are hired, but the market demand is disproportionate, I have never seen that just hiring more people directly leads to the proportional amount of growth, often it is less cost effective than the status quo. Before hiring X% more salespeople, I would first look at how to make the current sales force more efficient and cost effective.
Regarding the golden age, I also think that with the rise of no-/low-code software, it is getting harder and harder to stand out as a salesperson.
However, the margins in SaaS are still incredibly high, and with a lot of mediocre sellers who were hired during the golden age of SaaS and were more or less well paid order takers, I think now is the time for each individual to be the ultimate differentiator.
What are your thoughts on that?