Distribution Mode Versus Initial Contract Size



So how does initial contract size affect the distribution strategy of SaaS companies?  Here is some interesting data from a recent survey that is not all that surprising, but it does clearly show what has been intuitive for many building their own SaaS companies.  What this also confirms is that sales people are not only here to stay, but are critical for any SaaS company selling anything over $1K in contract value.

Over half of the companies with median ACVs below $1K relied primarily on Internet distribution, but once over $1K median ACV, companies shifted heavily towards inside sales. At the $25K ACV breakpoint, companies tended to shift to field sales. These results were largely consistent with prior year results. Given that companies employing a mixed distribution strategy tend to have higher growth rates (shown in the growth section above), it may be worth companies testing additional distribution strategies as their contract size grows to support it.


Reprinted by permission.

About the author: Mark Birch

Mark is an early stage technology investor and entrepreneur based in NYC. Through Birch Ventures, he works with a portfolio of early stage B2B SaaS technology startups providing both capital and guidance in the areas of marketing, sales, strategic planning and funding.

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