Fewer sales making you more money?
That’s one of the rather surprising results of an InsightSquared study of hundreds of software-as-a-service startups. InsightSquared is a business analytics solution for Salesforce, which gives it some very interesting insight into what works — and what doesn’t — for SaaS companies.
[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":1482281,"post_type":"story","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,cloud,entrepreneur,","session":"A"}']SaaS economics, of course, are different from traditional sell-something-once-and-collect-the-cash companies. ARR, or annual recurring revenue, is the key metric, not sales, and that changes everything.
InsightSquared’s data indicates that higher-growth SaaS companies make fewer sales than slower-growing competitors. The reason is that they focus on higher-value deals — 2.8X the size, on average. Those deals take longer to consummate, but they return 170 percent of the effort and resources that goes into them.
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Interestingly, the data also shows that top reps at SaaS companies don’t necessarily have better win rates — they just work more opportunities than average reps.
Here’s all the data, in visual form:
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