Inc - Does Outbound Still Work?

Does outbound still work?  It’s one of the questions so many sales leaders are asking out loud these days. The outbound playbook from the past 5-10 years in SaaS clearly … isn’t. Hiring 10, 20, 50 SDRs straight out of school to send the exact same email sequences to try to get meetings for an AE with more experience that them isn’t performing for 90%+ of us anymore.

And yet … almost every CEO, almost every buyer, still opens and reads the best emails they get.

Every single day.

I remember when I joined Adobe for a bit, I wondered if the very top execs really read their email.  How could they? How could they process so much email?  So I did a little “study”. I watched, asked, and sort of … snooped. It turned out, they were on email all the time. The bigger the team, the more folks you had to forward emails to. But every senior exec even at one of the largest tech companies was on email all the time.

Fast forward to today, two of my fastest growing investments sell to SMBs. 1-2 call closes, low ACVs. You have to be relentlessly efficient here.

One has mostly abandoned outbound and done just fine. Doesn’t move the needle and was a big distraction. The other has doubled down here and seen it grow to 30%+ of new customers. Different industries, different teams.

But most importantly, perhaps, different CROs. Different DNA.

So we’re almost there!! 

2024 SaaStrEuropa.com is June 4-5 in London!

Join us for 2+ fun-filled days, great parties, 100s of braindates and workshops, 1000s of connections, and so much more!  And meet everyone from Harry Stebbings to the CEO of Gong!

Be in the front row for these top 5 sessions:

1. Lessons Learned from Scaling to Billions with Gong’s Co-Founder & CEO

2. Lessons Learned from Scaling GTM Teams and Ops at Notion, Asana, and Dropbox with Notion’s GM

3. Mastering the Customer Lifecycle: Strategies for Hiring, Retention, and Growth with Retool, OpenAI, and 20VC

4. How to Implement a Customer-First Strategy and Structure with Dashlane’s CPO

5. From 0-50,000 Customers: How to Build a GenAI Company for the Enterprise with Synthesia’s CEO 

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Everyone loves Ask Me Anything sessions with SaaStr founder and CEO Jason Lemkin, and for good reason. As a SaaS veteran who built and sold a software company for nine figures, invested in startups since 2013, 10x-ing his fund, and continues to build a powerhouse community of SaaStr fans, he offers some hot takes on the communities’ burning questions.

Let’s jump right into this set of community questions focused on SaaS metrics, growth, and efficiency.

At SaaStr AI Day, Siqi Chen, founder, and CEO of Runway, discussed his belief of why every role will become a prompt engineering role, along with some no-code AI tips showing how to build products without knowing how to code.

Runway is a next-generation finance platform. They’ve built four AI tools, three without writing code, and have developed an AI-first culture at Runway where everyone can develop and utilize these AI tools without a formal engineering background.'

AI is a force multiplier for human capital. “I consider AI the greatest invention since fire,” Siqi shares. It allows you to turn one person’s ability to get output into 2, 3, 10, or 100 people’s abilities without actually needing that many people.

This edition of the SaaStr Daily is sponsored in part by Sage

Join 2,000+ peer SaaS finance leaders, such as Jeff Epstein from Bessemer Venture Partners and The SaaS CFO, for this exclusive virtual event on June 5, 2024.

This full-day summit has three different tracks (CFO, Controller, and RevOps) to help you build the processes and teams within fast growth SaaS, AI, and high-tech companies needed to drive efficient growth.

Want to partner with SaaStr? Click here to Sponsor our events, podcasts, newsletters and more.

So Datadog remains one of the most iconic Cloud and SaaS leaders of this generation. Growth is still epic at almost $2.5 Billion — it’s still growing 27% a year (!). But like Snowflake, it’s a bit less of a mind-bending rocketship that it used to be, and has focused on efficiency as well.

Today its non-GAAP operating margins are 27%, and it’s generating almost $800m of free cash flow a year!

From the hyper-growth of the past, to very efficient growth at $2.5 Billion.  It’s a sign of the times.

First — you don’t want a true net discount at all.

What I mean what you want is a pricing structure that anticipates discounts so the net effect is revenue positive. Later, when you implement a CPQ and other more sophisticated systems to manage pricing for a large sales team, these processes and systems will be designed to help you do just that, at least in part.

Before then, think instead about marking up the prices of non-annual contracts to account for churn. You’ll likely want non-annual contracts to be priced 20%-30% higher to account for the effect of churn, but the exact % can vary.

So raise prices ~25% on non-annual contracts so you can price in a 20% “discount” for annual contracts and not have a true discount to targeted pricing at all.

Second — note your views on this will change based on how much you value cash, especially multi-year pre-paid contracts.

Any additional multi-year discounts (e.g., 40% off Year 3 for paying all 3 years up front) in the end will “harm” your ARR unless your churn is high. Because if churn is low and you’d renew that customer anyway for Year 3, you’re giving up a bunch of future revenue tomorrow for more cash today. But the cash up front in the early years may be totally worth it in the first few years.

Later, if your net retention is high, multi-year discounts may hurt your long term top line. So instead, vendors often move to guaranteed pricing for 3 years in exchange for a 3 year contract (i.e., no price increases) instead of a discount. This doesn’t work well until you have the #1 brand in the space, but then it can work pretty well. Big enterprise customers are very receptive to this, once you have a dominant brand.

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