SaaSletter - Too Little Value Selling
SaaSletter - Too Little Value Selling
A podcast + deep dive into Ebsta / Pavilion's "2024 B2B Sales Benchmarks"
Our Episode 15 podcast guest Matt Slotnick, Co-Founder and CEO of Poggio Labs, an AI-native Sales Workspace backed by Accel and Spark Capital, asked:
For emphasis, “It’s really surprising how often organizations aren’t value selling.” His observation is consistent with the data we covered earlier and is repeated below:
Price Intelligently’s “State of B2B SaaS Pricing 2023” report featured rare + meaningful data on pricing strategies, specifically the low share of value-based pricing:
In fact, value-based pricing is the least common strategy through $99m of ARR.
Why does this matter?
Value-based pricing and selling allow software vendors to share in the value creation of their products at high (~80%+) incremental margins.
These incremental profits can be a critical and rare driver of capital efficiency.
The typical large scale of vendors using 3rd party ROI studies - a proxy for value selling - in their go-to-market aligns with Price Intelligently’s data. Large, market leaders use analyst-firm ROI studies for a reason:
By contrast, thanks to some AI queries leveraging Clay Labs (no affiliation but we’ve been impressed; our Clay referral code gets you 3,000 credits = $229 value), only 10.3% of middle-market PE-backed software companies have an ROI calculator on their website. While I’m biased, this is a missed value creation driver… that, fortunately, can be quickly solved.
Why Does The Lack Of Value Selling Matter?
Ebsta (a revenue intelligence platform) and Pavilion recently published an authoritative “2024 B2B Sales Benchmarks” report (28 slides covering 530 companies across *all of B2B*, not just software, $54 billion of revenue, and 4.2 million opportunities) that was so good I set up a report deep-dive podcast with their CEO. Notable findings:
Top reps are 9x more productive today, versus a 4x-6x gap earlier
61% of deals are lost to no decision
The lack of value-selling shows up in where deals break down: top performers address ROI early (~5x more at Qualification, ~3x more at Discovery) and later.
My *personal* take is that the magnitude of deal losses at the Negotiation phase for average performers attributed to Budget and Priorities is directly linked to the lack of ROI/value selling: if there is no compelling ROI case presented, why should this software be a priority worthy of budget?
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We covered this dynamic in the clip above - I particularly liked Guy’s quote:
I think the reality is that there's a lot of opportunities that the average performers are still leaning into and spending time on that aren't real. They were never real.
It's not that they lost them. It's just that they were never in a sales process in the first place.
Just because you got off a call with a prospect who might have in came inbound and put their hand up and said I'd like to know more about what you're doing, that doesn't necessarily mean that they've got a budget, there's a definitive timeline they're working to and they they're the economic buyers and all the other key data points that we need to understand.
These fake deals can help explain poor quota attainment: the Ebsta/Pavilion report showed strong pipeline levels, which justify maintaining quota capacity. However, if fake deals often break down late in the Negotiation phase, quota attainment will fall below a rational target.
Which we’ve seen from Bridge Group and RepVue quota attainment data:
This chart covering objections supports why you should address ROI earlier in the sales cycle:
More From Ebsta/Pavilion “2024 B2B Sales Benchmarks”
Some other worthy highlights from the report:
Great pipeline vs revenue benchmarks: the outperformance of Partner Referrals is the most notable:
Beyond being consistent with this post’s value selling emphasis (i.e. top performers disproportionately address the Economic Buyer in MEDDPICC), flagging this 1 for our operator readers:
Want To Start Value Selling With ROI?
Answer: Add third-party analyst validation of your ROI to your sales + marketing mix with Cloud Ratings True ROI:
Curated Content
“Slides from Balderton Webinar on Entering New Markets, The Key to Efficient Growth” - great deck + advice from Dave Kellogg
“Your Complete Guide to Sales Rep Compensation - Part III: Commission Rate Benchmarking” - great data - like full-commission stack %’s, not just AE data - from
“Did growth endurance endure?” - from
→ a decline in growth endurance (i.e. % of growth rate retained each year) from 80% to 65% has real implications for what multiples SaaS companies should command“The Rise of Enterprise Grade Vertical SaaS” - from Pat McGovern at Bowery Capital
“Mapping the impending impact of Vertical AI” - Marissa Moore and Taku Murahwi from OMERS Ventures
“The Next Blackstone” - how AI might influence the next generation of private equity takes from
’s SubstackFresh *March* 2024 SaaS Benchmarks from ChartMogul
$1m-$10m ARR SaaS Benchmarks from Capchase
Great stuff as always Matt