Success in the SaaS world isn’t confined to a specific average Annual Contract Value (ACV). Successful SaaS/Cloud companies have been built at almost every ACV. For instance:
- Docusign: ~$1K average deal size
- Hubspot: ~$10K
- ServiceNow: $100K+
- Veeva: $1M+
Selling a tech product at the enterprise level requires patience. You’ll navigate a maze of decision-makers and processes, often encountering unexpected delays and outcomes. But with a well-oiled go-to-market (GTM) org, large deal sizes, and high retention and expansion rates, enterprise deals can underpin a scalable SaaS business.
Conversely, many successful SaaS companies thrive on smaller deals. They often leverage self-serve models, focusing on marketing or product-led growth — models characterized by low customer acquisition friction and high velocity. These companies often overlay a sales-led approach for their largest customers.
Larger B2B SaaS companies often have a mix of many customer sizes and GTM motions.
But what does this mean for early-stage SaaS founders? Can you overlook deal sizes if initial customers like your product and the addressable market seems large enough?
Not quite.
The key is figuring out a GTM motion where the effort of completing a sale (“sales friction”) and ACV deal sizes are proportionate to each other.
▶ Smaller deals can work with low sales friction
▶ Large deals can be viable even with high sales friction
The no-go zone is where you have the sales friction of an enterprise deal but the deal sizes of an SMB sale. Such models quickly hit a scalability wall even if they show initial promise.
Outbound sales-led motions typically have high sales friction. For complex and innovative tech products, it’s often hard to scale a pure outbound motion with ACVs under ~$20K, and could be challenging even with $20–50K ACVs, depending on the product and buying complexities. Outbound sales for smaller deals may be feasible for simpler products, usually in established categories with clear and simple buying processes.
If you find yourself in the low ACV, high sales friction quadrant, consider these options:
✅ Iterate to a low-friction GTM approach, e.g. with inbound marketing, product-led growth, and (later) channel partnerships. Integrate direct sales selectively, perhaps with the sales team in a lower-cost geography
✅ Move upmarket. Targeting enterprise customers instead of mid-market ones could 10X your ACV, while only increasing sales friction by 2–5X. This approach isn’t universal but can be the key to scaling in many cases
✅ Refine the messaging, positioning, and sales process to get to lower sales friction with your outbound model
✅ If your small deals are to larger customers, focus early on pathways to rapid expansion. Where the initial sale is to a team in an enterprise, build the motion for expanding to other teams/departments. For consumption-based models, focus on the playbook for helping expand consumption quickly at each customer.
Aligning GTM motion and deal size early is critical to hitting true PMF.
Product and GTM need to be designed and iterated simultaneously in the early days of a startup, rather than sequentially. Otherwise, one risks building a product for which there is no optimal GTM motion for.
What are your experiences with this?