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10 tips to increase your annual contract values

saas sales startups Aug 17, 2021


Part 1


Every founder wants to grow from a pussy cat into a lion, sadly the vast majority fail along the way.

Often it has nothing to do with the product. A common reason is they fail to achieve a fair value exchange of the product or services they have developed. Whilst this is rooted in company strategy, it's the responsibility of the go-to-market org to deliver revenue that fairly reflects the value of the product.

Are you a SaaS founder/CEO wondering how to successfully move up market into the enterprise?

Or are you an Account Executive that believes there is a significant delta between the current average annual contract value (ACV) and the value actually being exchanged for your product or services?

If so read on.

If there's one thing that's been consistent throughout my 23 year career in tech sales, it's this: Wherever I've worked, as an individual contributor (IC) or a leader, the ACV has risen sharply on my watch, here's some examples over the last 20 years to set the scene (*as an IC):

In 2000*: πŸ‡¬πŸ‡§ Action Images (Content as a Service): 1st $100k+ deal

2003*: πŸ‡¬πŸ‡§ Press Association (Content as a Service): 1st $250k deal

2005*: πŸ‡¬πŸ‡§ πŸ‡ͺπŸ‡Ί Hitwise (SaaS): 2x'd the largest deal size, and simultaneously opened up a greenfield territory - gaming.

2007: πŸ‡¬πŸ‡§ πŸ‡ͺπŸ‡Ί Kelkoo (Marketplace): We 2x'd the yield of the travel marketplace by allowing ground and air travel to compete for position in the marketplace.

2010: πŸ‡¬πŸ‡§ πŸ‡ΊπŸ‡Έ πŸ‡ͺπŸ‡Ί Maxymiser (MarTech SaaS) we went from an ACV of $10k to $50k within 12 months, landed first $500k deal within 18 months.

2014: πŸ‡¬πŸ‡§ πŸ‡ͺπŸ‡Ί πŸ‡°πŸ‡· πŸ‡ΊπŸ‡Έ Guidebook (Mobile SaaS) we increased ACV 50% within 6 months.

2021: πŸ‡ΊπŸ‡Έ Wonderschool (EdTech SaaS + Marketplace) ACV rose from $5k to ~$200k within 12 months.


5 tips with 5 more to follow...


But how did we do it? Here are 5 things that helped us increase ACV that I continue to do routinely today, they mix strategy + tactics + culture.


🦹🏻‍♀️ 1. Know your enemy


In his ancient Chinese military text "The Art of War" military strategist Sun Tzu proclaims:

"...we may say that to know yourself and to know your enemy, you will gain victory a hundred times out of a hundred.."

One way to price and position your product is to use your competitors as a marker. I've seen companies undershoot the value they are creating by 20x using this method, because they aligned with companies they were not truly competing with due to a superficial analysis of the competitive landscape.

πŸ’‘ Do a deep dive into your competitive landscape and interview your customer base to get a true understanding of where you sit versus your competitors from both a product and market perception perspective. Know yourself and know your competitors and you've got a shot at increasing your ACV.


🀷🏽‍♂️ 2. "So what?" test every unique selling point (USP)


I drill every sales person on applying the "so what?" test to each bullet point that appears in a deck or each point they intend to make in a live demo, and I rigorously apply the test to each playbook I share with my clients.

In short, if your prospect is ever thinking "so what?" to any of the points you are making, you've lost them. Be committed to the value your product is delivering, don't dilute your message with superfluous junk.

πŸ’‘ Challenge your assumptions about the value of your USPs by putting yourself in the buyers shoes. How differentiated is your USP really and can your prospect easily measure the return of investment of that USP?


πŸ•΅πŸ»‍♂️ 3. Ensure your ideal customer profile (ICP) is accurate


It still shocks me how many founders never iterate on the gut feel ICP they used to found their company. Things move fast, especially in tech, so whoever was your ICP a year or 2 ago probably is not now. Especially if your first customers were friends from you incubator cohort!

After you've done competitor analysis, interviewed customers and mapped your USPs, you're ready to dive into an ICP exercise.

πŸ’‘ Learning to say "no" to new business is one of the most liberating outcomes of any ICP work. It creates focus not just in go-to-market but across the whole org.


⏳ 4. Qualify hard - your time is precious


There's nothing worse than working a lead for weeks or months that was never going to buy in the first place! Whether you use BANT or MEDDIC or your own unique adaptation, an AE must qualify hard before they "Sales Accept an Opportunity" (SAO), regardless of whether the lead has passed MQL and SQL status before getting to them.

Opportunity close rates are a key efficiency factor every SaaS leader worth their salt keeps a close eye on, as it directly influences the cost to acquire the customer (CAC). In enterprise SaaS if you are not closing 1 in 3 SAO's you're impacting the efficiency of the business in a way that will raise red flags.

πŸ’‘In my experience if you've hired well the most common reason sales people get themselves fired is poor time management. The best literally see time as money, because it is!


πŸ™…πŸ½‍♂️ 5. Learn to say "no"


Even if your prospect is qualified, and someone you want to do business with, you'll still need to say "no" (professionally) multiple times on your journey with them:

  • Great pitch, can you send me the deck?

  • I'd like a free trial

  • Can you do some custom dev for us as part of the deal?

Saying "no" is a learned skill that forces an engaging conversation with the prospect. The best never actually say "no", they frame their "no" as an opportunity to learn more about the opportunity:

  • "Could you help me understand what you would do with the deck if I was to send it to you?" ....

  • "If you were using the product, in a free trial or otherwise, how would you go about quantifying value?" ....

  • "Could you give me a better understanding of what you are trying to achieve with such custom dev that you don't get with our out-of-the-box solution?" ....

πŸ’‘If you have the strength to say no, it implies you are willing to engage into healthy debate that drives to the heart of the challenges and opportunities the prospect has. This is your pathway to gaining trusted advisor status.

to be continued... ..but thanks for getting this far! 5 more tips to follow..