Sales is hard. And not only is it hard, but you shouldn’t be closing every deal you are in. Why? Well, if you’re closing every deal you are in, you’re not being invited to the deals where your product has competition.  Where it has gaps. You aren’t being invited to where you’ll want to be to grow, if you magically close every deal you are in.

And closing every deal you are in is also generally a sign you the company itself isn’t doing enough marketing.

Still, the best sales reps close so much more than mediocre ones. And what you hear a lot from the mediocre ones are … excuses. And these excuses generally are true, so it can be confusing to hear them. But it’s part of the job of sales to try to push past them, to position your app as a real solution to their problem, even if not a perfect solution. So I thought I’d put together a list of the common ones. Hear them a bit from a rep, that’s fair.

So in the early days of SaaS, we looked mostly at ARR growth. Then, we realized NRR was just about as important.  NRR is the mathematical key to keeping growth going and going.

But now fast forward to today, and we have a large swath of public SaaS and Cloud leaders. And one thing that’s become clear is that not only does high NRR keep scaling well past $1B in ARR … so can net new customers. Yes, you will exhaust your core ICP and buyer at some point.

But you have to keep growing that circle, that sweet spot of customers. So you can keep growing new customers ideally at least +20% a year, even at $100m+ ARR. And yes even at $1B+ ARR.

This edition of the SaaStr Weekly is sponsored in part by Stripe

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So we’ve covered Klaviyo several times at SaaStr, and we’re super excited CEO Andrew Bialecki is coming to 2024 SaaStr Annual Sep 10-12 in SF Bay to share his learnings!!  (We also have a great deep dive we did a little ways back with Andrew below).

Klaviyo is not only a rocketship, but it’s the only SaaS IPO since Dec 2021.  The only one. 1. That’s. One SaaS IPO in 2.25+ years.

And to IPO in that loooong stretch of … no IPOs … it really had to be a good one.  Which it is.  At $800m it has the full package.  39% (!) annual revenue growth, 16% free cash margins, and 117%.  It doesn’t get too much better, folks.

Let me list some of the ones I see most often going from say $1m to $10m in ARR:

#1 Chasing the Shiny Penny.

One of the biggest mistakes I see after $1m in trying to enter new market segments, new verticals, where you have zero traction. It’s one thing to invest in an area where only 5% of your business is today.

But 0%? Leave the pipedreams for $100m in ARR.  Or at least, maybe $10m-$20m ARR. Then, you’ll have enough folks and experience to put a small team on a new initiative / segment / market.

#2 The “I Give Up” VP Hire.

Hiring is >hard<. And at some point, you definitely have to compromise in some ways. But not on quality. Hiring a VP you don’t really believe in, to get the hire done after X months … never works. They will spend all your money, fail, and derail your growth.

#3 Bad operational model / misunderstanding the burn rate.

Often, you can sort of intuit the business model up to $1m or $2m or so in ARR. After that, it all starts to change. It’s a ton of reps, higher absolute marketing spend, more CSMs, etc. If you don’t model it properly (and often for the first time) — your burn can creep up on you, no matter how carefully you think you are managing expenses.

#4 Getting too comfortable with yourself because of your High Win Rates.

As you scale, your win rate — the % of deals you close vs. the competition — should go down. Because as you start to develop a mini-brand, you should start being considered for deals you never would have even been part of the selection process before. If your win rates stay extremely high, that means your are doing a pretty terrible job of getting into more and new deals. More on that here: Beware of the Confidence of High Win Rates

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I’m not that great at sales myself (not really), but I am a student of it.

A few things I’ve observed about human behavior, negotiation, and good and bad sales processes in SaaS:

Customers that expect a discount really expect a discount. It’s easier to mark up the pricing a bit. The amount of energy it takes to stick to a “no discounts” policy once you pass transactional pricing is … high. Once you are in “Contact Me” land, just assume you have to provide some sort of discount. So increase your prices accordingly so you land where you need to end up.

Context is critical. It saves a lot of time if a prospect knows that pricing is fair. Transparent pricing on your website has pros and cons for bigger deals, but it does save a lot of time. So consider making as much pricing transparent as possible if you do smaller deals as well as larger ones, and/or if you want the fastest sales cycles. Simple, clear calculations of pricing also help a lot. No one wants to be ripped off. And having context helps a prospect figure out what is fair, much faster.

Urgency is a critical part of a salesperson’s toolkit. And this is a tough one to master. One of the top ways to drive up sales is to increase the % of deals that close. And one of the top ways to do that is to close deals faster. That takes risk out of deals. But in reality, there’s little urgency for most buyers. The world won’t end if I wait a quarter to buy your SaaS product. But the best sales leaders still find a way to create that urgency, through adding value, getting trials going, discounts, offers, services, etc. 

If a prospect inbounds and already knows a lot — it’s your deal to lose. So, be cool. If a prospect comes in, already knows your product and has smart questions on how to deploy it — don’t blow it. That deal has a very high chance of closing. Don’t play games. Don’t send break-up emails if the deal doesn’t close in a week. Mediocre sales reps bring the wrong tools into deals. Very high-quality leads should be nurtured especially thoughtfully. They will close. If not this week, then at some point. And if you blow it — they will go to your competitor. Don’t blow it.

As the kickoff to our first fully digital SaaStr AI Day, Jennifer Tejada, the CEO of PagerDuty, chatted with Jason Lemkin, SaaStr CEO and Founder, about navigating the shift to Generative AI and what Artificial Intelligence in SaaS might look like in the next 6 months, as well as years to come.

Jennifer has been at PagerDuty since 2016, a disruptive company that took automation to the next level before AI was hot in 2024. Before diving into all things AI, Jason asked Jennifer, “How do you keep going long in this industry when so many CEOs have left?” 

• SaaStr 734: The Latest in Series A Rounds, AI Growth Rates and More with SaaStr CEO and Founder Jason Lemkin

• SaaStr 733: Advice Every SaaS Founder Needs to Know in 2024 with Sam Blond and Jason Lemkin

• SaaStr 732: What It’s Like Running a Profitable $400M Public SaaS Company with Vimeo CEO Adam Gross and SaaStr CEO and Founder Jason Lemkin

Listen on Apple Podcast, Spotify or Google Podcasts

When you push the best, they step up

When you push the rest, they quit

Worth it either way in the end

If left to their own, the average sales rep will: 

Mainly chase hot inbound leads

Won't call back leads that look "meh"

Will be slow to respond to less exciting deals

Won't do much outbound

Will overdiscount to close a deal

So it's hard to "macro-manage" a sales team

A lot doesn't get done

Product-market fit, definition:

When you have more leads than you know why

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