This post is by Jason Lemkin from SaaStr
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When you go to hire a VP of Sales or even your first sales rep, one of the top qualifying questions I always recommend asking is if they have experience at your deal size, at your ACV (Annual Contact Value). There are very different cadences, and different skills, in closing $100 vs $1,000 vs $10,000 vs $100,000 vs $1,000,000 deals. Very different. There’s obviously a spectrum here, and closing a $100k deal and a $1m deal are more similar than deal sizes another stage away. And sales professionals certainly can learn skills and go up (and perhaps even down) a deal size in sales. But moving up or down more than one deal size “bracket” is tough. Let’s break down for example what SMB sales at low price points typically is, and indeed needs to be, to scale:
- SMB SaaS companies are overloaded with “leads”. They often so many that they cannot follow up with all of them. In fact, at the lowest end, reps often have to call 50 customers back a day. It’s the old 50 cold calls, inverted. AEs have to talk to 50 customers a day to hit their quota. That’s nothing like enterprise sales ? Most SMB SaaS companies I’m working with, after $2m-$3m in ARR, leads aren’t the issue. SQLs may be, but really it becomes an efficiency, capacity, and closing ratio game. The key is closing as many leads as possible, as quickly as possible. At EchoSign, we gave 150 qualifed leads a month to our SMB reps ($99/month product). We could have given them more. We had thousands of qualified SMB leads a month, even by just a few million in ARR.
- SMB sales reps have to be hyper-efficient. Again, to do 50 customer calls a day requires an efficiency you just don’t need with a 1 or 2 Demos a Day AE selling $50k deals, or a 1-2 demos a week cadence for a field AE trying to close a $500k-$1m deal.
- SMB sales reps often get no more than 2 touches to close a deal, 3 max. There just isn’t enough time otherwise.
- SMB reps will drop any deal that is remotely hard to close. You sort of have to.
- SMB reps don’t need to learn to sell to power, map out who the stakeholders in a purchase are, or learn other solution sale skills. You just sell to whomever picks up the phone, gets on Intercom, or sends in the SMS or email.