Dear SaaStr: Did it Ever Take You a Year Or More to Close a Sale?

Dear SaaStr,

We all know that closing a sale can be a challenging process, especially when it takes an extended period of time. For many SaaS startups, the journey to secure a significant deal can stretch out for months or even years. This is a common experience, as evidenced by the example of closing a deal with Google, which took approximately 18 months.

The process of closing such a deal is complex and involves multiple stages. Initially, there is a need for identification and discussions with the project manager, which can span several months. This stage is crucial as it helps in understanding the client's requirements and aligning the product or service to meet those needs.

Following the initial discussions, there are typically about six on-site meetings to review the need identification and discuss the matter with a broader group. These meetings are essential for refining the understanding of the client's business and ensuring that the proposed solution addresses their specific challenges.

Once the need has been clearly identified, the next step is to prepare a Request for Proposal (RFP). This document outlines the scope of work, timelines, and deliverables, allowing the client to evaluate the potential solution more objectively.

After submitting the RFP, the startup must ensure that the proposed workflow can be integrated with the client's existing custom applications. This integration is critical, as it determines the feasibility of the solution in the client's operational environment.

Additionally, the startup may need to wait for new features to ship, further extending the timeline. This is particularly true when the client requires specific functionalities that are not yet available in the product.

Once the product is deemed ready, the startup may proceed with a 90-day unpaid pilot. This trial period allows the client to assess the value proposition of the solution without incurring significant costs. The pilot can either lead to a successful closure or provide valuable feedback for improvement.

Another significant hurdle in the sales process is getting through a security audit. For large enterprises like Google, security is a top priority, and the startup must ensure that its product complies with stringent security standards. This process can be time-consuming and may require additional resources and expertise.

Furthermore, the procurement team may cut the deal size by 90%, which can be a significant blow to the startup's revenue expectations. However, this is often a necessary compromise to secure the deal and establish a foothold in the client's organization.

Despite these challenges, the sales team's persistence can eventually lead to a successful closure. Once the deal is secured, the startup can focus on scaling up the number of seats and growing the core deal size over the next 18-24 months.

As the startup's brand grows and its sales team gains experience in enterprise deals, the sales cycles may become shorter. However, there are limits to how much the sales cycles can be shortened, especially in six and seven-figure deals. It is essential to expect long sales cycles, particularly in the first two years of operation.

In the early days, startups may experience frustration with slow-moving deals, especially when they are trying to demonstrate quick progress. However, as the startup accumulates experience and builds a track record of successful closures, the sales cycles will become more predictable.

With 5, 10, or 20+ longer sales cycle deals in the pipeline, the startup can expect regular closures every quarter. While individual deals may still take a long time, the overall pipeline will provide a steady stream of revenue.

To cope with long sales cycles, startups should focus on building trust and credibility with potential clients. This can be achieved through transparent communication, demonstrating a clear understanding of the client's needs, and providing a proven track record of successful deployments.

In conclusion, long sales cycles are a common challenge faced by SaaS startups, particularly in the early stages of their journey. However, with experience, a robust sales team, and a focus on building trust, startups can navigate these challenges and secure significant deals. While the process may be slow, the eventual success will be well worth the effort.