Every SaaS team in the world has a natural capacity. Fortunately, due to the nature of software companies, that capacity is incredibly high – in fact, if you know how to scale your services efficiently using tools like AWS, Azure, and CloudFlare, you can theoretically scale your service to cover hundreds of millions of people. This is one of the key reasons that the Internet is completely replacing entire industries with technology-driven equivalents, resulting in one of the largest movements of money in the history of the world.
Sadly, it’s not all roses and gumdrops. There’s a limit to your actual capacity, defined by the number of people at your company, how well they work, how many people want what you’re offering, and whether or not you’re delivering on your promises (in addition to the technical challenges of scaling, but that’s a blog post for another day). This natural capacity changes for every company depending on the variables we just listed, but the fact that there is a capacity is true for every company.
What Defines Capacity?
For SaaS companies, the capacity is defined by two functions on your team. The first is how many salespeople you have and the second is how many people are required to set up someone’s account. Now, there are SaaS companies that don’t use salespeople and allow people to sign up for accounts with no human intervention, but they are few and far between. In fact, the good money would be to bet that out of 100 SaaS teams, less than 5 have zero salespeople.
Assuming that you’re part of the 95% that do have salespeople on your staff, the question is how to use your sales team best. You don’t want to employ too many people and have half of the team sitting around, waiting for a spike in leads to appear – that would quickly kill your business.
On the other hand, you also don’t want to employ fewer people than you need, as that poses a more serious risk. The primary risk is that potential customers will materialize and you won’t have enough people on hand to sign them up, leading to lost revenue from both that customer and any customers that may have come as referrals from them. This risk is followed closely by a second, more sinister disease. Burnout. If you have too much work for too few people, it’s only a matter of time until members of your sales team begin to feel abused and start to look for work elsewhere.
With these risks in mind, you may be wondering what you can do about it. The answer brings up one of the trickiest tasks that a SaaS company encounters: balancing the pace of new sign ups with your team’s ability to capably process them.
Correctly balancing these two variables depends on an accurate knowledge of what’s going on at your company. First, you need to know what’s going on with your sales process, your sales team, and how involved your team is in the closing of deals. Second, you need to know how many leads are coming in, how many are successfully creating paid accounts, where they’re coming from, and why they’re coming to you. If, for whatever reason, you thought that leading a SaaS company would be a stroll through the park, it’s time to put that notion to rest. Finding out this information is no small task.
A Quest for Information
Managing your capacity may be a fairly new idea – back in the days when most business was done on Main St. stores, they’d sell to as many people that could fit in the door – but even though it’s new, it’s not impossible.
It all depends on how well you’re measuring what’s going on with your business. This means that for your marketing efforts, you need to be measuring the number of people being referred from each source and attribute the right source to the right people. For those who don’t have a background in performance marketing it may sound like a tall order, but there are plenty of tools to measure attribution.
The trickier measurement is finding out what’s going on with your team. This requires that you set up internal systems to measure how long each member of your team is spending on each new lead. Typically, this takes the form of a timesheet, but if you’re able to create automated systems to measure this, all the better. Once you have the raw data, you then need to turn that into a measurement of total capacity, which is defined by the number of hours you want each person to be spending closing deals – it’s different for every team and company culture.
At the end, when you know how much capacity you have and where your leads are coming from, it’s all a matter of increasing or decreasing the number of sign ups to match your measured capacity.
Managing the pace of sign ups isn’t easy and anyone who pretends it is hasn’t been in the trenches of a SaaS company. There’s the issue of understanding why balancing sign ups is so important and the entire problem of accurately measuring what’s going on with your company. However, just because it’s difficult doesn’t mean it’s impossible. With the right perspective and the right tactics in place, you can make sure that your capacity is always right in line with what your customers need.
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