Craft Ventures
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Craft Ventures

Cheat Codes: 5 SaaS Sales Challenges & How to Solve Them

Takeaways from the Craft GTM Roundtable

Goal of the Craft Keiretsu: increase the velocity at which earned secrets can be shared.

Craft hosted a GTM Roundtable discussion last week with sales leaders & founders from eight SaaS companies in our portfolio.

Every company in attendance is in a slightly difference stage of maturity, with differing value props, selling to differing buyer personas. We called this dynamic “go to market physics” — as in, the laws of nature are fundamentally different within each company.

While there is no ‘one size fits all’ go to market advice that will apply to every company equally, we identified five challenges sales orgs are facing today, and the “cheat codes” leaders in the group have developed to solve them. The challenges center around: hiring, onboarding, closing, figuring out PLG (product led growth, aka bottom up,) and inbound/outbound dynamics.

Understanding your org’s physics

If you work within a startup GTM org, consider the following questions:

  1. How do you generate leads?
  2. Who is the ideal user & buyer of your product?
  3. How much political capital and budget does this user type have to buy?
  4. How big is your population of potential users?
  5. How do you structure your contracts?
  6. How do your contracts evolve (ie, grow, churn, renew, etc.) over time?
  7. Who are your closest competitors and how often do they tank deals that you’re working?
  8. What stage are you in? (ie- do you have less than $1M in ARR, less than $10M, less than $100M, etc.) What challenges are you facing in your current stage that weren’t true of your previous stage? What’s “starting to break?”
  9. Which orgs within your company are strong, and which orgs within your company are weak?
  10. How big is your average contract?

Every company will answer these questions in a slightly different way, because each is a different organism, with different strengths, different weaknesses, and different circumstances. As these companies fight for survival every day, pressure naturally unearths gems in the form of earned secrets… cheat codes!

One of the goals of the Craft community is to increase the velocity at which these earned secrets can be shared. We want to help each other see around corners more effectively, and grow faster by avoiding the pitfalls that slow us down.

Five Challenges Surfaced & Cheat Codes to Solve

#1: Hiring is harder than ever

Across the board, everyone is having a harder time hiring (and ramping) skilled sellers.

In order to hit ambitious growth targets, SaaS companies MUST hire sellers — you simply cannot grow fast enough with self serve. Recently, venture backed SaaS companies have raised a ton of money, have become increasingly cost insensitive and everyone is bidding on skilled AEs at the exact same time. As a result, compensation for GTM roles has gone way up. Strong sellers have a ton of options, there’s no shortage of exciting sales jobs.

🎮 Cheat Codes:

  • Create infrastructure to solicit referrals from all your people, on a regular basis. Your employees understand your culture, understand your hiring bar, and good people attract good people. Referral bonuses are more than worth it given skyrocketing recruiting costs, and because headcount growth is usually the rate limiting factor on revenue growth.
  • Recruiting is evolving to become an all hands on deck motion, with a heavy emphasis on back channeling to avoid mis-hires. “The team you build is the company you build.”
  • In David Sacks’ “Simple Math to Set Up A Sales Team,” he writes that the standard commission rate for SaaS products is 10%. If a seller has a $1M quota, they’d make $100k base, $100k variable, with a 10% commission rate ($100 variable divided by $1M quota = 10%). The roundtable agreed with this math, and noted that higher OTEs are okay as long as quota goes up in lockstep.

#2: Onboarding and training is more difficult in a competitive environment

When you hire new sellers, they have to learn your company’s unique go to market physics: they must master a brand new product and buyer personas, and carefully manage ramp to ensure there is no “failure to launch.” (When new AEs fail to ramp successfully, it’s extremely costly.) Sales orgs must assume the responsibility of ramping and training their new hires.

This onboarding is so critical because you want to retain those new hires you worked so hard to recruit — and best way to do that is to help them be successful ASAP.

One interesting nugget: some orgs give a higher share of inbound and high fit leads to their new sellers in order to give them a confidence boost and eliminate the temptation of employee churn.

As a best practice, managers should devote higher than average time working high fit leads with new sellers to bridge product knowledge gaps and identify skill gaps. This can create a nice apprenticeship and early coaching dynamic too.

🎮 Cheat Codes:

  • Proactively scheduling weekly training sessions, and designing/enforcing an onboarding program, are essential. It’s up to you as a sales leader to build infrastructure that makes your sellers successful.
  • Develop you buyer persona in an organized and well-documented way. You should share a clean, concise battle card with your sellers on day one: who buys your product, what this buyer persona cares about, how your product helps them, and relevant customer stories your sellers can cite as they start to sell.
  • The group shouted out Winning By Design, who we worked with when I was at Clearbit. Engaging a firm like Winning By Design can help you map your go to market formula, train sellers, and build playbooks that scale, and are easily teachable to new sellers.

#3: Buyers are facing increased scrutiny around their SaaS budgets

Sales orgs are noticing higher degrees of scrutiny from customers even for [relatively] low amounts of spend. Maybe it’s due to fears about a recession or general economic uncertainty, but watching tech stocks skyrocket during the pandemic created a rosier software purchasing picture than actually exists in Q1 2022.

Sellers must create more cross functional, multi-threaded buy in within their deals, and build better illustrations of ROI in order to convince buyers to complete a purchase.

Once you figure out how to speed up your sales cycle, it’s important to document that information and proactively teach your sellers. Don’t assume best practice knowledge will trickle down, you must systematize it.

🎮 Cheat Codes:

  • Mutual action plan software (like Accord) can drive consensus and buying outcomes in a more organized way. Also, sellers should communicate desired close dates as early as possible to get prospect buy-in, and should do discovery around what would need to happen internally for this desired close date to be achievable.
  • Teaching your sellers to understand, calculate and communicate your ROI can be the difference between a win and a loss, between a big discount or a light discount. For GTM SaaS companies specifically, try to think in terms of # of new deals your product can help your customer close.
  • Frequently, ROI can be boiled into a function of: [customer] avg. deal size X new deals closed because of your product. The equation you use with customers should ideally be more specific than that, but this is a good framework to use as a starting point.

#4: Bottom up doesn’t work equally for everyone

There are differing degrees of bottom up (aka PLG, or product led growth.) Ultimately, “bottom up” is just a lead gen strategy- you can generate leads for free when people sign up for your product, as opposed to paying huge premiums for paid lead acquisition. While this is much more efficient, it doesn’t work for everyone. Consider the following scenarios:

Company A: any employee with a laptop can use this product

Company B: all sellers with a Salesforce license can use this product

Company C: only sales ops professionals can use this product

Companies A & B can build a “free forever” tier because there is a large population of people who can use their product. Company C might be better served offering a free trial, so that they can hand hold the evaluator throughout the process and proactively increase the odds of a purchase, given the relatively smaller population of potential buyers.

The other major vector for “PLG readiness” is time to value. Products that require customization and heavier duty setup are less equipped for true bottom up motions where a user can sign up for free, and find value immediately.

If you have a massive TAM (total addressable market,) and fast time to value, that’s a great fit to build a “free forever” tier. If you have a medium sized TAM (like sellers) with a politically powerful top-level decision maker (like sales leadership) a free forever tier can also work if it’s easy to get started on the product without heavy deployment resources.

If you have a smaller TAM, with a more specific user or decision maker, a free trial tier might make sense. If your product is impossible to use without human intervention, and takes some degree of heavy lifting to see value from it, PLG might be more of a challenge to figure out.

🎮 Cheat Codes:

  • Don’t try to force a free forever tier if the “physics” of your company don’t allow. Bottom up is a lead gen strategy, so as long as you successfully reduce friction to attract your ICP (ideal customer profile- both company and buyer) and get them to sign up for something, you’re probably still in better shape than relying entirely on inbound form fills.
  • Each company’s sales playbook must be different based on the product you sell, and the audience you sell to; you must build sales playbooks from first principles. Copy/pasting a sales playbook from last company to current company, is dangerous as a sales leader, especially if your PLG physics are different.

#5: Inbound lead “wealth” never lasts forever

No matter how successful a company is, or how many signups they generate, or how many inbound leads they attract, outbound isn’t going anywhere.

Outbound is endlessly scalable (the more sellers you hire, the more ground you can cover in a high quality way) and the bigger your org gets, the more necessary it becomes.

Even the companies that are blessed with inbound leads and product qualified leads (ie, qualified free sign ups) need to go outbound because inbound doesn’t scale forever. As your sales team grows, some form of outbound is required. Even if it’s “warm outbound” to your existing sign ups, or reachout to other types of warm leads that have demonstrated some form of buying intent, outbound is essential to figure out.

Important to note: when done correctly, (cold or warm) outbound is not the same as email marketing- it’s not a mass blast campaign. In its purest form, outbound works because a human being is synthesizing why you, the prospect are a strong fit, and why now — given what they know about your company. This is not research a mass blast marketer can do. Good outbound is the seller doing the buyer a favor with a relevant, specific, compelling message.

🎮 Cheat Codes:

  • No matter how buried you are in inbound leads… it won’t last as you grow your sales team headcount. Going outbound is inevitable because it’s the only way to control your own destiny and scale as your sales headcount scales. This is true of even the most PLG-friendly companies, so prepare accordingly and start building the outbound muscle before you need it.
  • Marketing rarely helps develop outbound messaging that appears in emails, but this feels like a missed opportunity for collaboration. Sellers need help with “value statements” — ie “{{Hero of the story- customer or company}} decided to {{action taken}} and was able to drive {{impact}}.” Marketing should equip sellers with the evidence buyers want to see.
  • For pure bottom up companies with a ton of product qualified leads, products like Endgame and Pocus have emerged as the infrastructure to turn usage data into sales opportunities for sellers.
  • Products like ServiceBell are creating a new category of outbound- calling people who are live on your website, along with [IP] Reveal data from Clearbit to identify and qualify live web visitors.

Final Thoughts

The pressure of surviving in the wild creates gems in the form of earned secrets, or as I call them here — “cheat codes.” Harnessing these secrets can help you grow faster, tune into key strategic moves, and avoid common stumbling blocks.

Roundtables like this one are an example of what we call the Craft Keiretsu. Building a startup can be a lonely, mentally taxing, difficult journey. Sharing what we see in the wild will improve everyone’s ability to sell. We need each other!

There’s an extra benefit for Craft here: understanding the challenges our portfolio companies face gives us a clearer sense for where we should invest, both in terms of capital allocation & resources to support the teams we’re backing. 🙏

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Craft Ventures is an early-stage fund dedicated to the craft of building great companies.

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Mike Marg

Mike Marg

Former GTM at: @dropbox, @slackhq, @clearbit, now helping teams GTM at @craft_ventures. Fan of Cleveland sports, iced coffee & hibachis. 📍San Francisco

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