The Biggest Challenge With Vertical SaaS: Your Sales Team Has to Be Domain Experts

#SmallBusiness

Probably the biggest challenge in vertical SaaS I see is scaling the sales team.

It’s pretty easy to hire SaaS sales execs to sell … a SaaS sales product. That’s what they know. It often takes little training, and they already have a lot of domain expertise.

But who do you hire to sell a very complex piece of vertical software?

In vertical SaaS, most customers demand to talk to a domain expert. So if you hire reps for standard B2B companies, they often literally close nothing. They never really understand.

At the same time, it’s very hard to turn a domain expert that doesn’t know sales into a great SaaS salesperson. I’ve almost never seen it work out. They are great middlers, great at helping out. But they never close all that much. It’s tempting to hire consultants in an industry to do sales for you. I do think they can help. But if they haven’t truly done software sales — I see them struggle when turned into SaaS sales execs.

The reality is I see most vertical SaaS startups that sell to a complex industry … basically stay founder-led to $10m-$15m ARR.

They find a way to hire a few great sales reps, and once in a while stumble into a great VP of Sales before then.

But mostly they have to brute force it until they have enough scale, and enough of a brand, to hire sales execs who don’t have to be industry and product experts. That’s often $10m+ ARR or well past.

At least realize that might be the case for you.

A few actionable thoughts:

Don’t be swayed by the fact a sales rep worked at a top B2B SaaS company. Make sure before they start they can truly pitch and sell your complex vertical SaaS product. I see way too many SaaS founders hire sales reps who figure because they sold well at Gong or Carta, they can sell a complex compliance tool for a very specific industry. Well maybe.
Plan to be in founder-led sales mode longer. As discussed above. Maybe much longer than your peers and friends as non-vertical SaaS complained.
Focus on internal promotions. You may need to make your first head of sales out of the 2-3 reps you somehow find a way to make successful.
Make sure VP candidates know what they are getting themselves into. Most SaaS VP candidates just by the numbers com from selling traditional B2B tools. Can some make the jump to nuanced vertical SaaS? Yes — some can. But many I’ve worked with don’t even want to. At least don’t oversell the opportunity. Get them 10 great calls to listen to. Make sure they really know what it would take.