Skip to main content
GTM, Sales

ARR Growth. Where does it come from?

Jacco van der Kooij

Written by Jacco van der Kooij

Founder, Winning by Design

4 MINUTE READ

This article is for sales professionals that work with rapid growth.  In this post I try to visualize where hyper-growth comes from, and provide insights why the changes in the worldwide economy can be used to your advantage. In particular as you switch from a conventional product driven (sales) organization to a modern product-as-a-service (sales) organization.

Forces that Impact Sales

Over the past years we have seen numerous companies go into hyper-growth.  Where does this growth come from as it relates to sales?

#1 A Shorter Sales Cycle

With the as-a-Service model we experience shorter sales cycles. Or rather shorter time to value-for-a-customer cycles.  In particular with services that install as easy as with a chrome plug-in and offer a freemium service. But also Platform services such as a CRM, Marketing Automation System, or Customer Success Platform all have experienced radical shorter sales cycles.

These as-a-service sales cycles enable you to win customers at a higher pace. We are talking 3-5x faster. By taking 90 days to win a client vs. 9 months you win 3x more clients.

We measure sales cycles in days. This has to impact the way we look at data. Data will be playing a crucial role in sales moving forward and we will see the rise of data centric sales leaders.

Recommendation: Measure the sales cycle not as an overall number, but per rep, per source, per region, per ACV bracket, etc.

#2 Access to a Growing TAM – Quicker

For the past 10 years we have been in a global market place. We now find ourselves in a global B2B market place for SaaS services.  And this is growing faster than ever before.

We can not only grow faster due to a shorter sales cycle, we can grow for a longer time because the Total Available Market for SaaS services continues to grow.  Mind you that government regulations such as PII may hinder related businesses.

Recommendation: Diversify your revenue into new regions, as a US Company you need to launch an EU presence (London, Dublin, Amsterdam, Berlin), and as a EU company you need to launch a US presence (San Francisco, New York/Boston).

#3 Overall dollars spend on SaaS are Increasing

The amount of dollars spend on SaaS services is growing. And not just the amount – the ability to digest SaaS services with a higher ACV continues to grow.  For many clients the ACV of their contracts is measured in tens of thousands if not hundreds of thousands of dollars.

 

This means that you need to adjust your thinking about pricing structure based on the value you offer.  This is a common bottleneck for SaaS companies as their key to success often is to come in at a (too) low price to gain market share.

Recommendation: Re-assess your pricing to match the value you offer to a client.  This means that you have to get intimately involved with your clients to learn about the value obtained from your service.

So where does rapid growth come from?

Rapid growth does NOT come from a sales organization’s ability to create a new demand.  Rapid growth comes from a market with a pent-up demand for a new solution, a new way of doing things. A solution delivered as a service, available immediately, providing value immediately.

It is the task of a modern “sales” organization to fulfill such a rapid growing demand.

 

Conventional sales organizations are unable to scale to meet the pent-up demand.  They often need 3-5 years as they are based on conventional – sales skills, tools, methodologies, sales centric processes, commission plans, recruiting techniques, metrics, etcetera.  Many of these do not apply anymore.  Worse! Some have an adverse impact.  A few examples:

  • Process: Sales centric process, where we herd customers as if they are cattle through stages: Lead > Opportunity > Negotiation > Close
  • Tools: Phone and Conventional Email use for en-masse cold outbound
  • Content: Sales Presentations, and one hour long webinars where insights are few and far between with a very low RoI for the client, and a high RoI for sales (no investment, lots of email addresses)
  • Skills: Sales Pitching, Closing and Negotiation
  • Organization: Hire closers, in-region, offer bonuses on head hunting
  • Data: Measure only close ratio, average sales price, and deals closed

Many more are deeply engrained into a conventional culture that is driving customers crazy and is resulting in a slowing down of a company’s ability to meet market demand.

Death of Sales? NO!

So does this mean that clients are going online for a DIY experience?  NO! Over the past years I have seen more and more companies relocate their entire business to tap into more “sales people” to meet the demand of clients to work with a professional online. Locate to Austin, Boulder, Phoenix, Miami, etcetera.

Rise of a Modern Force

So where is the disconnect?  Sales is evolving. The generation of “internet door-to-door sales” is starting to become less effective.  But we also see the rise of a new more modern “Sales” force.

Key Elements of a Modern Online Sales Force

  • A buyer centric process, assisting clients with education through insights!
  • Tools that act as a force multiplier, giving clients access to insights 24/7, and a WOW experience when working with your company.
  • Content that provides valuable insights without email gates that are followed by enterprise grade harassment and stalking
  • Skills focused on diagnosing a problem, asking relevant questions to understand, and able to have an online (asynchronous) conversation
  • Organization designed around agile teams that can scale in a matter of days/weeks to meet growing demands
  • Data driven decision process, where gut feelings are used to identify an issue, data affirms it, followed by A/B testing to address it

Workshop Design of a Scalable Sales Organization

This week at Storm Ventures we will start a first of its kind workshop for CEOs/VPs how to design a modern high velocity sales force.  I realize we probably do not have all the answers yet, but feel that it is needed to start with whatever we have that we do know, and find the rest out on the way.

A copy of the curriculum can be found here: <<How to Design and Build a Scalable Sales Organization>>.  The next class will be held in March 2015.

 

Want to learn more?

Detailed insights on how to design and build a scalable SaaS organization can be found in the book Blueprints for a SaaS Sales Organization,” available on Amazon.

 

X