The results are in. After a couple years of growth at all cost, the 2023 version of the tech industry has all been about reeling things back.
Next year will be much more about sustainable growth. Creative. Strategic. Metrics-first. Launching to new countries and verticals once you’ve solidified your home approach and identified your ideal customer profiles. 2024 will continue to be about aiming for the highest level of flexibility so you can make any changes to campaigns or staffing quickly, in response to the market. Lower risk, higher return on investment.
Successful SaaS sales in 2024 won’t necessarily be different, per say, but they will necessarily be very disciplined, following the best practices that you probably should’ve been following all along. Read on to learn about the good, the bad and the mandatory to creating a successful SaaS sales strategy in 2024.
It’s best to get past the downside first, right? It’s been a rough year for the tech industry — but not nearly as rough as many predicted back in Q1. Because every problem has at least a partly technical solution and the demand for these solutions will never disappear.
According to CloudEagle’s just published SaaS Spend Report, companies are facing a lot of pressure from finance teams issuing mandates to cut software spend between 10% to 30%. Add to that, most companies had some layoffs which means a cut of about 5% of subscriptions.
All this has seen SaaS sales dragging on.
This year, enterprise-focused B2B startups have witnessed sales cycles stretching from an average of 60 to 75 days. Another study found about half of SaaS companies in 2023 saw an increase in their time to close.
With longer sales cycles comes shorter runways, yet it’s getting tougher to raise investment.
It’s taking longer to raise from Series A to Series B, found Crunchbase — an average of almost three years! That’s longer than even during the COVID slump of 2020. Seed funding has also fallen 44% year over year. Investment firms still have access to more money than ever, but they are very hesitant to spend it yet. Tech startups have to prove traction with prospects and first customers earlier than ever.
Add to this, after the height of the global tech talent shortage and inflation, permanent salaries are up and not going down, keeping your OpEx high, particularly for specialized roles like cybersecurity and sales engineers.
All this has combined to see SaaS sales take a dip. But all is not lost.
Especially in tighter times, you need tooling to fill those talent gaps — or, increasingly, to automate the more boring, repetitive work, so people can focus on real problem solving and organizations can increase efficiency.
So while SaaS sales cycles are stretching longer, they’re not all dead ends. In fact, according to the same CloudEagle report, companies have an average of 262 different SaaS subscriptions. (That they actually are aware of. In reality, it’s likely higher due to autonomous team decision-making.)
While budgets are tightening, there’s still opportunity to expand your SaaS in 2024 — especially if you look to Europe.
European B2B SaaS sales is expected to grow by 10% over the next three years, driving a revenue of $86.79 billion by 2027. In particular, Germany and the U.K., respectively, are the third and fourth biggest markets for SaaS sales globally. As SaaStr’s Jason Lemkin reminded us, 20% of SaaS sales comes from Europe. In fact, known brands like HubSpot (54%!), Asana, Zendesk and Monday all derive a significant portion of their revenue from international markets outside of the U.S.
There are certain SaaS verticals thriving in 2023 that will do even better next year.
There’s more demand than ever for developer productivity enablement. After tech layoffs at the start of the year, companies are looking to do more with less. Add to that, almost half the SaaS spend is on engineering — although admittedly 45% of that goes to the big three cloud providers, so it ends up being more like 30%, but still the largest SaaS spend to support the largest employment cost center. Anything in the infrastructure as code or platform engineering space will sell brilliantly.
Similarly, across all sectors, the promise of AI is finally being delivered via generative AI for not only business process automation but now individual previously human-led tasks. The next six to 18 months will see a skyrocket of technological advancement among large language models or LLMs. Especially use cases within the perimeters and domain of your business — with the data not opting into train on external users — will sell well in 2024. Our client Nano-Tech leverages AI to develop new, stronger materials that solve industrial problems at scale.
Cybersecurity struggles with a 3.4 million job gap. Add to that increasing hacks and attacks, and cybersecurity automation and tooling is an evergreen vertical with an eager European customer base.
With finance capitals Frankfurt, London, Zürich, Madrid, Paris, Amsterdam and more, as well as a culture of Open Banking, it’s no surprise that Europe continues to lead the world in FinTech adoption. We’ve witnessed the warm welcome received by innovative FinTech startups Hakuna, MitiGram, and W2Bill, as well as InsurTech stars like MR HealthTech.
There’s no doubt that Europe is leading the world in green reporting. With the E.U.’s Corporate Sustainability Reporting Directive (CSRD) coming into effect, any technology that enables and/or automates corporate sustainability reporting will go far. Add to that, any GreenTech that helps decrease impact across sectors or use cases — like Meight for the transport industry and Paragraf for smart sensors — will only continue to grow in demand. Bonus is the continent may be the perfect place for your next funding round as Europe raised $35.6 billion for GreenTech startups and scale-ups in 2022.
As is the case with most recessions, marketing was one of the first departments slashed. But enterprises know they still need to market their products to continue to grow in 2024. MarTech continues to be one of our most successful verticals in Europe. In fact, Europeans expect a 60% surge in MarTech expenditure and a 57% climb in MarTech SaaS adoption over the next year. Again specialization is key, like how Endless Gain is gaining traction across European ecommerce.
Another area we continue to see growth — not only ourselves in offering lead generation and sales outsourcing services — in the expertise and flexibility of the consultancy model. European companies are especially wary of growing staff too quickly again with the stringent permanent contracts and are more likely than ever to choose an outsourcing model to scale up faster with less risk.
Whether you’re bootstrapped or seeking funding, if you want to grow in 2024, you’ve got to increase revenue. But next year — and even Q4 2023 — must be about sustainable growth. That comes from responsible expansion based on metrics and not casting a wide net across a continent.
Before you even consider heading abroad, you have to nail your USP in your home country. Only then can you work with locals to translate that to a new market and culture. European prospects will want to see proof of success. Not only do you need to work to retain your existing customers, you need to gather case studies early and often — and translate to different target languages and industries.
Europe tends to have smaller, more fragmented markets than the U.S. Use that to your advantage. Like in the telecommunications industry, focus on Tier-2 and Tier-3 logos that are very well-known in your target country market. By picking that lower-hanging fruit, you can gain market credibility and case studies that speak to your target culture.
By partnering with outsourcing services like Sales Force Europe, you are able to get to market faster with a team that already has the culture, language and connections to hit the ground running. We offer the flexibility of a single contract to test out new markets and pivot as needed. Once you’ve proven a market through a repeatable sales process, you can go all-in — or, if there isn’t a good product-market fit, you can just move on to testing out another market.
And don’t forget about providing a rich, localized onboarding experience and customer support. In order to retain European customers, everything must be in their local language. You need that recurring revenue alongside your international expansion campaigns — thankfully rolling SaaS contracts are perfectly set up for that, so you can keep your logo churn down.
How can we help shore up and speed up your sales cycle in 2024 so you get that next round of funding faster? Hit Contact Us