Who is this field guide for?

As an early-stage SaaS founder, you’re likely wearing many hats — from coding to closing deals and everything in between. All your hard work pays off when you start seeing promising signs of life — initial PMF validations, the moving of the revenue needle, and hearing praises from early adopters. But, you know these micro wins aren’t enough. You know you need to build and scale your revenue engine to achieve sustainable growth. You want your startup to enter the major leagues. So if you are a SaaS founder, leading the sales function, excited by the early signs of PMF and believe you have built an amazing product which your users love, please read on.

It is now as important to set up a sales function as it is to build and maintain a high quality product. As one of our mentors said, “Just as one would never ship a bad product, one should never ship a bad GTM as well.”

This doesn’t mean you’ll have to go all in and hire an entire sales team in one go. It doesn’t have to happen overnight. You can gradually scale your sales team as you grow and unlock new revenue milestones.

We know this can be a bit overwhelming. It doesn’t have to be. This field guide will give you a clear roadmap to when and how to set up your sales function. Let’s dive in.

Sales teams in high-growth SaaS companies vs. early-stage startups

In a mature SaaS company that is doing $10M+ ARR, you can typically see extensive sales organizations, often headed by senior sales leaders, very often SVP(s) and sometimes CRO(s). The contrast between what you have and what these scaled up companies have might even be overwhelming.

We have also added a simple glossary describing the various functions in brief, you might anyway know about most of them:

• Sales Development Representatives (SDRs) — They form the first touchpoint of your sales org. They handle inbound leads and also take care of prospecting. These teams at times report into the sales org and sometimes, though less frequently are a part of marketing teams as well. This is quite common in outbound first teams as well.
• Account Executives (AEs) — AEs perform a variety of functions. Once prospects are identified, the AE handles the entire lifecycle of that opportunity — right from initial meetings, to product demos and negotiations, until either closing the deal or the prospect drops out.
• Sales Operations (SalesOps) — They’ll work closely with the sales leader. Their role involves analyzing the market and customer data to predict trends, doing capacity planning, and providing necessary insights to the sales leader for them to make informed decisions. SalesOps teams will analyze, report and problem solve on sales performance metrics such as win rates, close rates, deal sizes, ACVs etc.
• Eventually the SalesOps function evolves into the RevOps functions (though it is advisable to keep these functions separate). RevOps tends to unify marketing, sales, customer success, professional services and finance and takes over the mandate of reporting and operations for the broader revenue function (not just sales).
• Pre-sales Engineers — They provide technical support during the evaluation phase. Pre-sales engineers will get an understanding of the prospects’ business and workflow and evaluate how much their product would fit the requirements of the prospects. They’ll also set up custom demo environments to give the prospects an idea of how their product would solve their problems.
• Customer Success Managers — The core responsibility of a CSM is to ensure that their customers get maximum value from the product or service. CSMs are often involved in onboarding, customer education and advocacy, and customer retention.

While such a structure is ideal for mature companies, early-stage SaaS startups cannot directly go from Figure 1 to Figure 2, it is a gradual journey. With our Compass Captain, Arundhati, we have tried to lay down the typical journey of building and scaling an early stage SaaS sales org, trying to give a playbook for which function to start with and when? We have not covered AE and SDR teams given they are usually the first sales hires anyway for most companies.

Step 1: Hire a generalist to help you in the zero to one journey

If you’re operating a ‘founder-led sales’ model, you need to hire a generalist to help you out.This person will take care of inbound lead handling, prospecting, customer communication, market and customer data analysis, and (if they have relevant experience and are fast learners) even initial product demos. This can significantly free up your time and allow you to focus on closing deals, building the product and other aspects of the business.

What should you look for in a generalist?

Remember that hiring a generalist doesn't mean you have to compromise on skill level. You need someone who can wear multiple hats and effectively manage the varied tasks with competency and efficiency. This person needs to be quantitatively strong, proactive and someone who can communicate with your customers. Potential ideal candidates can be junior consultants from MBB, or (even better) folks who have spent 1-2 years in strategy offices, RevOps teams of SaaS companies as Associates.

Also, remember that this is not a permanent solution. This works perfectly when you’re on your zero to one journey, and your growth pace isn’t too fast.

Step 2: Start building a strong customer support function

This is the first function every founder should strengthen. Proactive support is often a key criteria and differentiator for customers who work with early stage SaaS companies. More so, support tickets and conversations are a goldmine for customer insights and feedback. Most founders remain actively involved during the early days of the company and a lot of companies follow a ritual of a customer support stint for every new hire.

In the early days, quality of support will determine NPS, CSAT and how quickly your team learns from your customers (apart from retention and controlling churn). That’s why it is crucial to establish a support team before hiring a head of sales or scaling the sales team.

When to hire for the customer support team?

A good baseline is when the weekly support requirements exceed 15-20 hours, it is probably time to hire a dedicated support resource. Who and how many to hire is dependent on your product, market and pace of scale-up. If you are operating in the enterprise market (mid to large ACVs, long deal cycles), hire a small team of more experienced support executives to help your customers. These hires need to be able to manage relationships with senior customers, build deep customer relationships and quite often problem solve with customer teams. Each of these resources will manage around 10 customers and report to the founders.

However, if you are scaling an inbound led or a fast paced, low ACV motion, you will need to have a larger team - but the resources need not be as senior. These resources will be handling a large number of customers individually (~30 at times), and will be looking for quantitative (NPS Surveys) and qualitative signals (Product usage, customer support tickets) rather than investing heavily in direct customer interactions. Once the team is 5-6 people strong, you might think of hiring a customer support manager.

Expert Tip: Every key employee onboarded whether in the product, tech or GTM organization should ideally spend a few days as a customer support executive during onboarding. This is best way to learn about customers’ pain points and how your product addresses them.

Step 3: Setup a SalesOps function

As mentioned above, SalesOps is like the Chief of Staff for the revenue leader. A data-driven sales leader will understand the importance of establishing a salesops organization early on. This team builds transparency and identifies bottlenecks in the current sales funnels (opportunity to close), processes and subsequently works with the broader team to resolve them. In a fast growing organization, SalesOps ensures that the sales function does not lag behind in terms of readiness, when you are doubling (or more) in terms of number of opportunities and scale.

More importantly, they set up the systems which allow you to capture customer and prospect behaviors, which can then feed into learning across functions. By looking at patterns across the most successful deals and the more worse off ones, salesops plays a critical role in identifying the repeatability in the sales process that all founders are looking for.

What should you look for in a SalesOps hire?

At early stages, one does not necessarily require a seasoned leader. Instead, what's needed is someone proficient in data analysis and excel — someone who can function as a Chief of Staff to the senior sales leader, providing the insights needed to make informed decisions. A lot of the qualities we discussed in the Generalist hire, can be translated into this higher. In fact, this generalist hire can evolve into a SalesOps hire over time. Ideally some experience in program management and collaborative problem solving is advisable.

Step 4: Evaluate if you need a Sales Leader (Head of Sales/VP/Director)

Your first sales leader will be one of your most important hires, if not the most important hire. If you are selling in the US to enterprises, most likely this person will be based in the US and will easily cost upwards of $350K (OTE) (and may be over $450K if you are looking for someone senior). This leader will also set up the processes and practices which will affect your company for a long time to come. Timing, who to hire and when to hire - all are key to ensure that this leader is set up for success.

When should you hire a Sales Leader?

Good salespersons in general and sales leaders in particular get excited when there are enough opportunities for them to exceed their quota. This means you should have enough leads (from your ICP and customer segment) to give them the opportunity to do this. Assuming you are at $1M ARR right now. The Head of Sales ideally will have 3 AEs reporting to them and if we factor in a $750k quota on average, you should be targeting to grow to over $2.5M ARR over the subsequent 12 months. So here are a few ground rules:

1. You are confident about your ICP, customer segment and have early but strong signs of product market fit. A sales leader can accelerate once you have these ingredients, they can’t help you discover those.
2. You are projecting a fast enough growth, which means there is some kind of repeatability in your marketing/lead generation motions and now you need someone to scale the opportunity to deal conversion.
3. You are very clear of the mandate for this role. Whether this leader will be responsible only for conversion, or they will also be responsible for lead generation as well? Will they lead customer success? If you are multi geography, which geographies will this leader be responsible for scaling up?

What should you look for in your sales leader?

This question deserves a post in itself :). But a quick answer is as follows:

Our Compass Captain, Arundhati recommends looking for leaders who are still hands-on and willing to close deals directly when required. They should also be capable of setting up systems, processes and running a sales team. Most importantly they should empower the AEs, enabling them to learn, grow, and hit their targets effectively.

Ideally, you should look for someone who has seen organizations at a similar scale and stage. They should ideally have direct experience in dealing with your target segment (SMB/Mid Market/Enterprise) and experienced similar motions (PLG/Outbound/Inbound). If they have sold to a similar persona as yours, nothing like it :).

Step 5: Setup a small pre-sales team

Once you are getting enough leads predictably, adding a presales executive can significantly improve the efficiency of your team. Pre-sales can take over the burden of prospecting, discovery, qualification, deliver personalized demos, technical scoping and feature consultations during complex evaluation and RFP completions. Most importantly, a good presales hire can equip the sales representatives with important inputs about customer’s painpoints, their keenness/readiness to buy immediately, build account maps, help with intel on budgets and buying committees and help them prioritize and focus across the lead funnel better.

When to set up a pre-sales function?

Ideally, one should hire a couple of pre-sales representatives as soon as you are ready to hire a third account executive. A lot of seasoned leaders recommend onboarding a good pre-sales hire much earlier, considering the clarity they create about the customers’ painpoints, org structures, budgets etc. Typically, a ratio of 1 pre-sales rep for every 5 account executives can serve as a starting point, with flexibility to adjust based on complexity of use cases. However, it is beneficial to have at least two pre-sales individuals to avoid a single point of failure within the sales process.

Expert Tip: As you set up this function, be very cognizant to ensure that there are clear handovers between sales and pre-sales and there are strong lines of communication between the two functions. A good presales function can be a competitive advantage.

Step 6: Setup the customer success function

While conventionally it is recommended to wait to hit $4-5 million in ARR before investing in the customer success team, we recommend setting it up somewhere between $2 million to $3 million ARR mark. It is good to be scrappy in the early stages and founders want to be close to the customers, but good CSMs will help you be more proactive and responsive to your customers’ queries. This person(s) will be the voice of the customer in your organization and will help inculcate a customer-first consideration in other teams. More importantly, at this stage, churn and upsells will become as much of growth drivers as are the net adds and the CS function will be of great assistance in managing both.

Eventually, the customer success team’s scope will encompass everything: professional services/customizations, onboarding, support, data and migrations and managing customer relations on an ongoing basis. They will be responsible for several key metrics such as NPS,CSAT, retention, churn among others. Usually there is a separate post-sales function in organizations, which manages technical implementation including customer onboarding, data migration, user training and ongoing platform configurations, before handing over the account to a CSM.

What should you look for in a Customer Success Manager (CSM)?

If you can find someone who has been a CSM for 2-3 years in an organization which was at <$10M in ARR, they would be an ideal fit. Also, please ensure that they have an experience of handling similar ACVs as yours. An enterprise CSM will not be able to resonate with an SMB customer base and vice versa.

If you are unable to find experienced folks, then hiring generalists is also a good option, but the type of individuals will depend on your customer base. If your product caters to the enterprise/mid-market segment, opt for CSMs with prior consultancy/services experience, as it will help them to navigate complex deployments and high customer expectations typical of large vendors. If you operate in the SMB segment, hire generalist CSMs with less direct experience, their interactions with customers would tend to be simpler and transactional, but given the higher number of customers, you might need to hire more of them. A good rule of thumb is hiring 1 CSM per $1M in ARR (for enterprise) or 30-40 customers (SMB).

Pleaselook for candidates with prior customer-facing experience instead of just technical skills. The ideal profile is someone with a consultative, proactive problem-solving mindset instead of only reactive technical support tendencies. Good people skills are a necessity as the CSM function demands maintaining a healthy relationship with customers.

Bonus tip: Hire a customer marketer early on

We know that we are talking about the sales/revenue organization here, but Customer Marketing is one of those functions which is not spoken about enough. Customer marketers, while a part of the marketing org, are a distant cousin to the customer success function. For most SaaS companies, a lot of focus goes into generating net new leads, but at the same time a lot of revenue also exists in the current customer base, which is a high trust lead base waiting to be converted. Once you have hit $3-4M in ARR, you have a large enough customer base and some budget to start focusing on customer marketing. In the early days, customer marketer can double up a customer success manager as well, particularly in SMB-focused companies. While dedicated customer marketing professionals with direct prior experience are difficult to source in India, an alternative approach is hiring promising individuals from product marketing backgrounds and training them into customer-facing roles.

Mindfully scaling your sales org

Structuring your sales organization is like putting together a puzzle — each piece needs to be added at the right time to complete the picture. As an early-stage SaaS founder, resist the temptation to scale up too fast or copy the sales org of mature companies. Doing so can cost you time, money, and resources. And there is no right answer to this.

By leveraging our SaaS Compass Captain, Arundhati’s hands-on experience and our understanding observing a lot of early stage companies, we have tried to suggest one such thoughtful way of scaling this organization. Hopefully, this article helps you tohit your revenue goals, scale your company, and also deliver an exceptional customer experience.