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The Difficulty Ratio - by David Sacks and Brian Murray

sacks.substack.com · 930 words · saved by 1 readers

There are many ways to win in SaaS. Some software companies target enterprise customers, while others focus on SMBs. Some concentrate on industry verticals, whereas others focus on horizontal needs across industries. However, all successful SaaS companies share a trait in common: the size of their deals is commensurate with the time required to close them. We call this the Difficulty Ratio (deal size/cycle time). Larger deals can take longer to close; smaller deals must close quickly. This chart illustrates the concept: There are four quadrants: Bottom right: Sales cycles are long, but they are rewarded with high annual contract values (ACVs). This is the classic Enterprise sales model, which typically involves proactive identification of high-value accounts. Common lead generation strategies include account-based marketing (ABM) and outbound sales. Top left: ACV is low, but velocity is high, so lots of small deals add up to a big number. This is the SMB model, or sometimes selling to

The Difficulty Ratio A fundamental principle in SaaS sales is that the size of a deal must be large enough to justify the effort required to close it. David Sacks and Brian Murray Apr 01, 2023 557 26 28 Share There are many ways to win in SaaS. Some software companies target enterprise customers, while others focus on SMBs. Some concentrate on industry verticals, whereas others focus on horizontal needs across industries. However, all successful SaaS companies share a trait in common: the size of their deals is commensurate with the time required to close them. We call this the Difficulty Rati

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