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Are larger SaaS deals always harder to win? And is the 6+ month sales cycle just ‘part of the game’ for $50k+ deals? Our data-backed SaaS proposal analysis would actually say ‘no’ to both of these.
In this edition of the SaaS Proposal Study, we’ll look at the relationship between deal amount, sales win rate, and average days to close.
This data comes from a randomized sample of 10,000 proposals that were created and sent in 2023 from Cacheflow customers. These companies are all global SaaS companies, ranging from 5 to 500 employees.
The ‘average days to close’ window starts the first time a proposal is viewed by the prospect and ends the day the deal is signed. This isn’t meant to reflect the entire ‘sales cycle’ length which can start well before the proposal is sent, depending on which market you serve.
Instead, we’ll focus on the ‘proposal cycle’ and highlight everything you can do to improve your win rate.
To learn how number of proposal views effects sales win rate, check out our first SaaS Proposal Study blog.
For proposals under $5k, there's notable deal efficiency, with a 61% win rate and an average close time of just 14 days. This suggests smaller projects not only attract in-market buyers but also achieve swift conclusions. You’ll often be selling directly to founders in this category, meaning you can skip the approval and finance process, saving weeks for each deal.
If you can sell into a large TAM, make your deal-closing process low touch, and low cost in the form of PLG or one-call-close demos, the $5k deal market can work great for you.
The average days to close doubles for $5 to $10k deals, but there are no significant changes in win rate or proposal views.
The increase in days to close can be a combination of more meetings required, and approval processes being introduced. This deal size segment is also ripe with competition, meaning buyers will likely be evaluating multiple vendors at a time.
Perhaps the most surprising data point is that $10k to $20k deals have a dramatic increase to 42 average proposal views. This suggests a peak in interest that doesn't translate into higher completion rates (54%) and could imply a mismatch between what attracts viewers and what actually gets completed.
This is a highly competitive category, so the abnormal average views could suggest price shopping, where one vendor's quote is leveraged to obtain cheaper pricing from a competitive vendor. Nevertheless, if you compete in this deal range, you want to be a leader in your category with an above-average win rate to avoid a race to the bottom on price.
This appears to be the ‘sweet spot’ compared to all other deal amount categories. With the shortest ‘days to close’, second lowest proposal views, and yet a solid win rate rate of 47%; 20k to 50k deals can provide big ARR growth in a shorter amount of time.
Vendors begin to break out of ‘price shopping’, high competition, and commoditization and can value sell much easier (and faster), based on the size of each prospective company. 15% of deals analyzed in this study fall into this amount, indicating plenty of companies are finding consistency and success here.
$50k+ deals do appear to be harder to win. The win rate drops down to only 38%, and ‘days to close’ shoots back up to 20 days. Software vendors playing in this range are more likely to experience ‘last-mile’ hurdles to get the deal done.
Strong executive-alignment between the vendors and buyers team is necessary. There are no $50K+ deals that get approved without a CFO, or a strong business case for when, how, and why the buyer will be better off using your software.
It might be surprising that deals ranging from $5k to $20k, on average, have longer days to close as well as views than their $50k counterparts. Why might that be?
Could it be that $50k+ deal sizes have stronger executive alignment prior to sending out the quote? Sure. However, this situation can be attributed to several factors beyond executive alignment, including but not limited to:
Larger deals often involve a more streamlined decision-making process with clearer procedures and greater urgency. Companies may have predefined budgets and project scopes for high-value investments, leading to faster decisions. In contrast, smaller deals, falling within discretionary spending limits, might require more validation and consensus among stakeholders, extending the decision timeline.
Larger deals might involve more upfront planning and negotiation, with risks being thoroughly assessed and mitigated early in the sales process. For smaller deals, the perceived risk might be lower, leading to a more extended evaluation period as stakeholders might deprioritize these decisions in favor of more pressing matters.
As suggested, deals over $50K are more likely to have direct executive involvement from the start, ensuring alignment with strategic goals and faster decision-making. Smaller deals might not initially warrant this level of attention, causing delays as they work their way up the decision ladder for approvals.
Larger deals often command more resources, including dedicated sales and support teams, which can efficiently address concerns and push the deal forward. Smaller deals might not receive the same level of resource commitment, leading to slower progress.
High-value deals may involve more negotiation on terms and conditions and customization of solutions, which, paradoxically, can expedite closure once these negotiations are satisfactorily resolved. In contrast, smaller deals, while seemingly straightforward, might get bogged down in departmental approvals or budget allocations.
Organizations might prioritize closing larger deals due to their significant impact on revenue and strategic objectives. Smaller deals, despite their number, may not individually influence broader company goals as much and thus might not be pushed as aggressively.
The sales cycle for larger deals is often more structured, with a clear understanding of the steps required to close. Smaller deals might follow a less formal process, leading to variability in closure times.
For larger deals, the sales approach may be more closely aligned with the buyer's journey, ensuring that each interaction moves the decision forward. Smaller deals might suffer from misalignment, where the sales process doesn't match the buyer's readiness or information needs, causing delays.
The timing of the deal in the fiscal year can also play a role. Larger deals might be timed to coincide with budget cycles, facilitating quicker closures, while smaller deals are less dependent on these cycles and can thus experience more variability in closure times.
The analysis uncovers that smaller proposals (under $5k) boast a high completion rate (61%) with a swift average close time of 14 days, suggesting an efficient segment for quick wins.
In contrast, proposals ranging from $5k to over $50k show a decline in completion rates as the amount increases, with the largest deals (over $50k) experiencing faster closure times despite higher values, potentially due to stronger executive alignment and streamlined decision-making processes.
This paradoxical trend suggests that while higher-value proposals attract significant attention, they don't necessarily guarantee a higher success rate, pointing to the need for tailored strategies across different deal sizes to optimize sales outcomes.
The data not only informs strategic planning and resource allocation but also emphasizes the importance of aligning sales strategies with the buyer's journey and managing risks to improve overall sales performance and customer satisfaction.
Whether you’re shifting up-market, or preparing to scale deal volume, your quote-to-cash stack and processes will have new requirements. Many SaaS companies realize this too late and aren’t able to build quotes correctly or fast enough, forget to send invoices, or under-charge customers.
That’s why Cacheflow is designed to quote, close, bill, and renew almost any type of SaaS deal and pricing model. No more delays or resistance to change when experimenting with SaaS deal amounts.
Book a 30-minute demo to see how you can transform your SaaS revenue operations.
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