The 10 Key Revenue Mistakes I Made Getting to $100 Million ARR
*Editors Note: Live updates from the Sales Hacker Conference San Francisco are brought to you by PipelineDeals. PipelineDeals is sales and CRM software trusted by thousands of companies to increase sales. Follow us @pipelinedeals.
This session is titled The 10 Key Revenue Mistakes I Made Getting to $100 Million ARR, by Jason Lemkin of SaaStr, Echosign, and Storm Ventures.
As you scale your SaaS companies, if you avoid these mistakes you will be much more successful.
Mistake #1: Not Hiring 2 Sales Reps
You will easily learn what you are looking for in your top sales rep if you have someone that’s number 2. 1 rep performing is repeatable, and 2+ Reps Performing is repeating.
You have to sell it yourself first, and then hire 2 reps. Be sure to hire a marketing manager before a sales manager.
Mistake #2: Hiring Early Reps I Wouldn’t Buy From
You will need many types of reps eventually, but in the early days leads are precious. You won’t feel comfortable handing your leads off to someone you don’t trust. If you wouldn’t buy from them personally, don’t hire them. Another good rule to follow when hiring your first sales reps, make sure they have at least 2 years of experience in SaaS.
Mistake #3: Not Seeing the Pattern Early Enough
The pattern is set early, and there is often a natural pattern between customers. You’ll realize that you have an “organic” type of core customer. Once this is repeating, be confident. Don’t be afraid to double down on what seems to be working. While deal sizes, etc will go up, the pattern that has established itself will stay the same. Keep at it, it will keep working.
Mistake #4: Not (intentionally) Going upmarket faster
Nothing is an anomaly. If you can get one enterprise customer, you can get 10. Realize that the outliers aren’t anomalies, they are the future. If you can go up-market, go up-market faster.
Corollary: Go upmarket as soon as you can. You will get more money for the same work.
Mistake #5: Not Seeing the Power of a Mini-brand
Brands are highly defensible. When people in your core industry are starting to notice you, your brand becomes incredibly powerful. It tends to happen when your brand becomes repeatable. Invest in your mini brand, even if you don’t see direct ROI. Do as much as you can to build trust of your product. You also must have some competitive advantage in the marketplace, focus on it and build it up.
Mistake #6: Ever Allowing Revenue per Lead to Drop
Revenue per lead should never drop. There is something wrong here and you have got to fix it. This may be a time to focus on PR, marketing, upgrading the team or more customer success. Competition should not be a factor here. It is everyone’s fault if you are losing revenue on leads.
How did Brendon double sales in 90 days?
Immediately upgraded the team to proven closers
Got the most out of the team he inherited-and got rid of the ones that weren’t working
He did not attempt to do it alone
He ended pipeline as a metric
Mistake #7: Too much time on prospects v. Existing
Sales is just the start of a 5-7 year journey. Visit all of your top customers, not just prospects. Pay attention to upsells and upgrades, and try and get more out of existing relationships. If you develop a good relationship with them, they will take you with them wherever they go. We never lost a customer we visited. Get on a plane and visit all your best customers, and all your top 20% customers. ALL of them. Even happy customers will churn if you don’t visit them, and on the flip side, unhappy customers will still stay if you visit them. In typical enterprise relationships, you typically lose a customer in year 3. Year one it is in the budget, year 2 already has the deal legacy built in from a budgeting perspective, year 3 is when they start making changes.
Mistake #8: Not Firing a Bad VPS in 1 Sales Cycle
70% of businesses hire the wrong VPS at first. You should know subjectively in just a few months, just 50% of the way through your average sales cycle if you have hired the wrong person. Numbers should increase in one sales cycle, with keen focus on revenue per lead. This increase does not even need to be significant, but with the stuff in the system, there should be at least SOME improvement in sales. The first few hires your VPS makes should be clear upgrades and made quickly and seemingly effortlessly. If you hire the wrong VPS, they will hire subpar people below them. This can be fatal.
Mistake #9: It gets SO much better at Initial Scale
No matter how bad you are at X, or inexperienced at Y, you will learn in SaaS. Training gets better, script gets better, as well as the process and journey. While it may not get easier, it does get better, and you get better. Find a way to get to $10 million. $1m to $10m tends to be the toughest slog.
Mistake #10: Not Doubling the Plan
Once the team was finally great, we exceed the plan. Every quarter, every year, always. I wish I would have challenged us to do better than 120% of the plan. Imagine a world where capital doesn’t matter, where you can hire whomever you want, and were ROI can be measured in 36 months. The great will never propose something stupid in this scenario. Find out what it would take to get to your goal, then go find a way to make it happen.