Adding direct sales to self-serve SaaS
Startup people often get snooty about sales. After all, why would they hire 'sales-bros' when they can predictably engineer growth?
Which is a horrifically privileged way to make a fair point.
I think partly the distaste that a lot of people in SaaS have for direct sales is purely down to the fact that the image of a heavily frat driven culture just doesn't resound with their idea of what a startup can be.
And sales definitely used to be like that. Bells rung for new customers. Wolf of Wall Street style culture. Ugly stuff.
But a lot has changed.
Personally, I see the Hubspot sales machine as a turning point for startup sales. The point where 'suddenly' there was an organisation to point to who had been good enough at engineering the sales process to create predictable revenue in a way that only engineers and content marketers could before.
Why would you add sales when you could just invest in more marketing?
Ultimately, a lot of founders will object to adding sales hires/time into their organisations on the basis that they already have a functioning marketing/growth team.
A marketing team should be able to look at the keyword projections for their articles, make a pretty close estimate of how many customers they'll gain from those keywords and then be able to factor that into the cashflow accordingly.
And great if you have that, but don't let your vision be limited because you've already got a working model.
Adding direct sales (whether with a team or a found led drive in the early days) will be beneficial because:
- It increases the deal size at the top end of the balance sheet
- Decreases CAC by increasing legitimacy, adding visibility and
- Often creates the early stages of a referral model by itself
- Creates competitive advantage by gaining larger markets early on in the business versus competitors who don't have a direct sales model.
A self-serve (“easy-in”) entry motion, that’s later combined with a strong direct sales motion, can make for explosive revenue growth as shown by IPO’d exemplars Zoom, Slack, Datadog, and private market dynamos like Airtable, Figma, and others. The combination of bottom-up self-serve plus direct sales can simultaneously lower CACs and power larger contract values (with expansion into enterprise contracts). This would never be possible in a pure self-serve model.
Is self-serve even the right model?
Pete offers several questions to ask to work out whether self-serve is even the right first model for your product.
My take is that self-serve should probably not be the first model for customer acquisition in your company. As I've written elsewhere, running early sales directly will:
- Gain you valuable customer insights for product development
- Ensure that your marketing team (whether you have one or not) will have the 'right language' to use in their work
- Get you a keen understanding of the kind of business you're in – how long it's going to take you to sell something directly or indirectly; who buys what and why; who uses what and why
- Give you quick wins when your company needs it most – if you're bootstrapped, you need the cashflow. If you're VC-backed, you're going to want some customer to show investors.
But here's Pete's take too:
- Is the product simple enough for self-serve? – (Me: Almost certainly not. Users are rarely as competent as you need them to be (no disrespect intended))
- Is this truly new and differentiated? – "Personal business cloud app search has never existed before, and thus there’s no reason for a given user in an organization to not download and give Command E a try."
- Can this co-exist with a (less good) incumbent in a given company’s stack? – this is a golden question that I almost never hear marketers, sales people or founders ask and I have no idea why. "an 'end to end' offering like a Human Resource Information System (e.g. Workday) or email sending platforms (e.g. Iterable) are not something you have 'two of' in an organization."
- Will you focus on small organizations? – "for a 10 person sales organization that wants to systemize the creation of quotes and sending proposals, the idea of solving that problem in less than 5 minutes (rather than 3 months, like a standard Salesforce CPQ deployment) is really attractive. Which is why self-serve works for RevOps, specifically targeting this down-market segment."
This post is absolutely rammed full with useful information, great insights and ways to think about adding direct sales to your company.
Including, this age old question which I've been collecting answers to for years. When should I hire a sales person?
This is how you’ll start to see if you get inbound requests asking for help with “commercial conversion.” Like “Hey, finance would like us to put this on an invoicing relationship” or “What’s your SOC 2 situation?” or “We have a couple of different teams that we need to consolidate into one billing relationship.” As you start seeing more of these come in, maybe one or two a week, now’s probably the time to dedicate someone to handling those – a salesperson!
(Heads up: find that passage in the post for more context around the 1-2 per week number)
Enjoyed reading this?
You can get these delivered to your inbox by adding your email to the box below.