7 Red Flags to Watch for When Scaling B2B SaaS Sales
The growth journey of a B2B SaaS company has distinct phases, the most critical of which is go-to-market. It’s also the phase where most unfortunately fail.
The challenges you face when going to market are radically different than those that emerge in the early days of your startup. When preparing to enter the market, companies are understandably eager to grow. This can lead to premature scaling and a weak go-to-market strategy. Additionally, missteps in marketing and sales approaches that go undetected risk your product-market fit, and, ultimately, your success.
As a result, Chief Commercial Officers (CCO), Sales Officers (CSO), and Marketing Officers (CMO) who are advising company founders on GTM strategy should always remain vigilant and look for certain red flags when scaling sales.
Warning signs when scaling sales (and tips to right the ship)
1. Your funding runway is too short
Your sales program should be funded for at least 12-18 months from the start. However, many companies attempting to scale their sales during the go-to-market growth phase simply run out of money because they haven’t raised enough capital to sustain a GTM stage of 12-18 months. And, when they do, they have to stop their efforts before they’ve gained any momentum.
Tip: Before going to market, understand how much funding you need for sustainable growth. Using sales cycles, deal sizes, and win/loss ratio data, reverse engineer how many business opportunities must be created and closed at what Average Revenue Per Account (ARPA) to meet your revenue growth targets. Once you identify these, determine how many people you need on your sales team and confirm you have enough funding to cover your costs while the company scales.
2. You aren’t planning for measured growth
When a company attempts to scale too quickly, it will trip all over itself. Many B2B SaaS companies miscalculate how long it will take to gain customer traction in the market and lean too heavily on the promise of product-led growth too early. They assume they have the right Product/Market fit (PMF) and ideal customer profile (ICP) right out of the gate and don’t factor in the time it takes to prove these hypotheses in the market. Consequently, they overspend in the wrong areas and fail to develop core sales leadership and process competencies.
Tip: Remember that great product-led growth stories like those of Slack and Dropbox are the exception to the B2B SaaS sales models. Far more companies that prioritize product-led growth over strategic sales-led growth fail than succeed. Instead, plan to invest more in supporting robust sales processes and people in the early months of the go-to-market growth phase. Doing so allows you to ramp sales activities to prove true PMF and ICP to systematize your sales process.
3. Your sales narrative isn’t resonating
If your sales reps are talking to a high volume of prospects but none of them are buying, there’s a problem with your sales narrative. The value propositions in your pitches are missing the mark, or you’re targeting the wrong ideal customer profile.
Tip: As you prove your ICP hypothesis through ramped sales activity, continually refine your sales narratives. Email and call scripts should reflect the value propositions that most resonate with your prospects. Continuous sales training and role-playing with your reps will build their storytelling skills.
4. Sales execution is breaking down
When the flow of new sales opportunities into your sales funnel is not consistent, this is another warning sign. Perhaps there are too many stops and starts, with reps scheduling conversations one week but not focusing on prospecting the next. Or maybe your reps are booking meetings and closing deals in spurts, but each phase happens in isolation rather than concurrently, which hinders steady growth.
Tip: This is an indicator that it is time to consider specializing sales roles within your organization. Generalist sales people tend to focus on one thing at a time. But during this time you need new business development efforts to happen in parallel with closing efforts. For example, your new business development reps should effectively handle a minimum of 300-500 prospects on a monthly basis, and your account executives should comfortably manage 60-100 opportunities in parallel depending on the complexity of the sales process. These rates of continuous sales activities ensure consistent revenue growth. If you don’t have the in-house resources to specialize your sales team, consider bringing in outside help from a company focused on scaling sales in the go-to-market stage.
5. The sales pipeline is inflated
Is your sales pipeline bloated? If your reps are bringing in the wrong-fit customers and failing to disqualify them when they stall, too much time is being spent on the wrong deals.
Tip: Say “no” to leads that aren’t ready, and say it fast. Steer your team away from a scarcity mindset. Increase top-of-funnel sales work to ensure your reps aren’t tempted to hold on to poor opportunities as means to keep their pipeline full.
6. Lack of reliable sales data
The first months of the go-to-market stage require a high input of sales data to inform an evolving sales process and strategy. When this data isn’t accessible or reliable, your teams suffer from lack of transparency and trust. If you are entering sales activity data in disparate places or have no centralized platform by which to track customers, deals, and revenue, you are setting yourself and your team up for failure.
Tip: You cannot manage what you cannot measure. A well-structured CRM that tracks as much sales data as possible is critical to your ability to scale your sales through the go-to-market phase of growth and beyond.
7. No meaningful sales metrics
Are you tracking too many sales KPIs? Are you tracking too few? If you are not tracking meaningful metrics, you fail to determine the market truth for your company. Many B2B SaaS companies first entering the market try to copy the KPI measurements of more established companies — but this is a mistake. These metrics will only confuse and conflate your ability to analyze your sales process appropriate to your growth stage.
Tip: When first launching, remember that you know very little about which KPIs or metrics will most inform your sales process. This is the time to focus on top-of-funnel sales activities and consistent data collection. By measuring sales activities and performance, you optimize your sales process and strategy. For example, if the conversion rate from meetings booked to won deals is higher than expected, you’ll need fewer monthly meetings to hit your sales goals. Focus on optimizing performance, once you’ve mastered enough volume of sales opportunities.
Set yourself up for success when scaling a B2B SaaS business
Growth without strategy and structure creates friction. Internal conflict, customer dissatisfaction, and quality control issues in your sales process are all symptoms of larger issues when scaling.
Scaling strategically takes time, effort and intention, and is not for the faint of heart. You are bound to make some mistakes and missteps as you learn and grow.
As part of your company’s leadership team, remain vigilant to catch early warning signs that things might be veering off track. When you identify the problems quickly and take appropriate measures to address any holes in your strategy, you significantly increase your chances of success.