If you’re a $1M+ annual recurring revenue SaaS company, you probably had a pretty great idea. You also likely had at least a passable strategy to get to that first milestone of success. And you must have had some semblance of a product. But the odds remain very low that your $1M+ ARR will scale to $10M, $50M, or $100M plus. The reason is that executing against all that is really, really hard. You have to know what to do and then actually do it. And that usually means building, convincing and inspiring your organization to do amazing things — every day. SaaS execution is what separates ideas from successes, and you’re far from alone if you’re struggling with it.
There’s Plenty of What to Do
While there’s no shortage of execution risk, there’s also no shortage of people telling you what to do… increase your gross margin; reduce your churn; increase your usage; lower your customer acquisition cost (CAC); and so on and so forth. Even lower-level directives like hire a VP sales; increase marketing-generated deals; or improve culture; are fraught with high levels of execution risk. There’s a lot that can go wrong in each objective, and when they get combined, the number of ways they can go sideways multiplies.
And Less of How to Do It
In my experience, the shortage of information lies in how to actually execute. I’m not talking about the theory of how to execute. I’m talking about getting from point A to point Z without a major fender bender. I feel like there’s a predisposition to view SaaS execution as the low-level detail that’s far less valuable than high-level strategy. But I continue to see a whole lot of awesome high-level strategy that goes nowhere. You need both. Focusing ON the business instead of IN the business can’t mean spending all of your time on what to do rather than how to do it.
From a management perspective, some of this comes down to design. For example, CAC is not an execution metric. It’s too high level for that. CAC is incredibly important, but it’s the result of lower-level execution metrics that result in CAC changes. As a team, marketing can’t optimize for CAC each week. They have to focus on execution metrics they can change like cost-per-qualified-lead, or conversion rate, or inbound-to-qualified-opp ratio. But someone has to set expectations around each of those execution metrics and ensure that they are exceeded. Those expectations are the hows linked to the what of improving CAC. And the ability to manage to those expectations is executional bliss.
5 Big Areas of SaaS Execution Risk
If 80% of what makes SaaS companies tick is ubiquitous, then it makes sense that SaaS execution risk areas are pretty consistent. From my perspective, these are the most critical executional soft spots that we see over and over again.
Sales SaaS Execution Risk
The first place we see growing SaaS companies falter is in sales hiring and process. Playbook maturity — including methodology, comp structure, measurement, management style, and culture — directly impacts performance and scalability. And all of that tracks back to who gets hired and when they get hired. If that critical sales leadership hire is botched, everything suffers. That means sales execution depends on defining the right candidates for leadership, finding them,