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Too Much of the Wrong Tech for SaaS Companies

SaaS go-to-market teams (especially sellers) use many technologies and tools for prospecting and forecasting. Despite large investments in these technologies, teams are largely unable to forecast accurately on a long-term horizon; accuracy and predictability are likely just 90 days forward. Given the high degree of spend, companies should expect (and demand) predictable booking numbers on a longer-term horizon. Predictability matters in the current economic climate. In mid-May, Federal Reserve Chair Jerome Powell said, “It may be that (high interest rates) take longer than expected to do their work and bring inflation down.” Higher interest rates mean economic headwinds will likely continue, forcing companies to become more efficient and predictable, especially SaaS companies.

Current economic headwinds, coupled with the onset of the SaaS recession in 2022, have had a significant impact on B2B subscription companies. According to a Maxio Institute Report, these companies' average growth rates plummeted from 31% in 2Q 2022 to 18% in 4Q 2023. While it may seem alarmist to label 18% growth as a recession, it's important to note that efficient investment planning, particularly in sales and marketing, becomes paramount in a slowing market. This entails evaluating numerous investment options, specifically technology, and selecting the most suitable technologies based on anticipated returns and the predictable timing of these returns.

It is crucial to understand why companies aren't building a predictable bookings model using their current go-to-market technology stack. Perhaps the investments are indexed toward supporting the near term. As deployed, most of these technologies are costly and largely designed to help the seller or first-line leader advance deals in the pipeline. A representative list of technology investments is shared below. Though impactful, these solutions are opportunity-driven and designed to get deals done.

Examples include:

  • Pipeline & Prospecting: LinkedIn Sales Navigator, ZoomInfo
  • Conversational Intelligence: Chorus, Gong
  • Sales Engagement: Salesloft, Outreach
  • Forecasting: Clari, Boostup
  • Business Intelligence: Tableau, Power BI
  • Video: Loom, Vidyard
  • eSignature: DocuSign, Adobe

For clarity, all of the technologies listed above add value to businesses. (Full disclosure, our team members have used each and every single one of these tools; we aren’t recommending just cutting the contracts!) However, predictability challenges remain even when these platforms are thoughtfully and well deployed. If you ask most CFOs their confidence level in the bookings forecast beyond the next quarter, you will likely hear a lot of hedging and equivocation. This is partly because many of these tools aren’t meant for predictability but to increase velocity or conversion rates, which should factor into predictable forecasting.

SaaS companies should invest in technologies and methods that create long-term booking predictions using data points beyond opportunities and seller inputs to establish a predictable and sustainable go-to-market motion. Ideally, companies should invest in a predictive platform that:

  • Makes data-driven predictions on a 12+ month horizon.
  • Evaluate future bookings based on top-of-funnel inputs, not just opportunities created. 
  • Apply the right level of AI/machine learning to generate accurate predictions.
  • Pulls predictions out of spreadsheets and into an application the Executive Leadership Team (ELT) can engage with directly.

If effectively implemented, predictive technologies and methods can enable SaaS businesses to identify potential gaps to goals at least 6 months in advance. Moreover, these tools can assist in determining where and how much to spend by dimension–segment, geography, channel, etc. This strategic expenditure can efficiently bridge those gaps and reliably anticipate when investments will bear fruit, paving the way for growth and success.

Perhaps most importantly, a sound predictive platform or model will lead to an aligned Executive Leadership Team (ELT); a team that understands the bookings direction of the business, visualizes gaps, and makes informed decisions on how to close those gaps.

Interestingly, the substantial investments in sales technologies that sit atop Customer Relationship Management Platforms (CRMs) have not been the solution that executive teams have hoped for, nor have they driven long-term bookings predictability. For example, the Ebsta 2024 B2B Sales Benchmarks Report revealed a staggering 81% decline in win rates, a 21% drop in deal values, and a 16% elongation of sales cycles in 2023. This surprised many, especially considering the promises the platforms promised to deliver.

There should be zero long-term pipeline opacity, just a clear vision of future bookings on a 12+ month horizon. Companies need to include non-opportunity-driven predictive capabilities to create clarity.

Want to discuss your pipeline predictability? We’d love to speak with you about how you can make your sales technology stack more efficient as we face these headwinds.