How Cleanshelf achieved 650%+ ARR growth and $8M Series A—all in one year4 min read
This is a guest post by Farlan Dowell, VP of Sales at Cleanshelf. Cleanshelf is the leading enterprise SaaS management platform focused on tracking, controlling, and benchmarking SaaS applications.
On March 12, 2020, in the midst of one of the worst market meltdowns in history, Cleanshelf announced that we’d secured an $8 million Series A lead by Dawn Capital.
This announcement came after Cleanshelf had a monumental year, growing ARR 1,000%+, and working with clients like Hilton, JAMF, AT&T, and Looker.
I know there’s a lot going on right now. As businesses look for new ways to innovate, increase revenue, and cut costs in this volatile season, some of the ideas in this article might help your team get ahead.
And if you don’t have time to read this article, and just want to know what we did to massively accelerate sales, here it is:
- Refined Ideal Customer Profile (right target)
- Built outbound SDR team (right lead gen)
- Stopped AEs from doing full cycle sales (right allocation of resources)
- Hired a killer AE from a previous team (right people)
- Doubled down on discovery, stopped doing free trials (right process)
- Stepped on the gas pedal (right tempo)
First: What investors want
There’s a general template I use for determining if a company has what it takes to attract investors. In Silicon Valley, people refer to this standard as the Four T’s:
- Technology: A valuable, high-quality product
- Team: The right (bright / experienced) people in the right roles
- Traction: Proven repeatable sales and product-market fit
- Trajectory: Consistent, scalable growth and a promising roadmap
Having all four of these factors in place doesn’t guarantee investor attention. Think of it more as the minimum barrier to entry.
Fortunately, Cleanshelf already had a high-performing product by the time I joined their team. Starting with a proven technology (Product Market Fit!) made it easier to get the other three factors up to investor standards.
Cleanshelf also had a solid team, though when I joined we reorganized some positions to maximize everyone’s performance.
To meet traction and trajectory goals, we had to rethink our sales process, including how our sales team was organized and our model for attracting and converting new users.
Below are some major changes we made that helped Cleanshelf raise funding and cross the $1M ARR threshold.
The journey past 1MM ARR
I recently wrote about the three fundamental principles—focus, simplicity, and accountability—I use to help companies scale from 0 to 1 million+ in revenue.
In the case of Cleanshelf, here are a couple actionable examples of how we used these principles to grow and mature the company:
1) Mature the sales team structure through specialization
“Perhaps the most impactful learning I’ve got from Farlan is that lead generation is fundamentally different from the closing process. Once we our AEs stopped doing full cycle sales, our sales numbers exploded.” – Dusan Omercevic, CEO – Cleanshelf
When you have the right people in place—with the right focus and accountability, where there’s simplicity around the sales process and ICP—great things can happen.
This sums up my goal as I started working with Cleanshelf.
At the time, Cleanshelf had two sales reps, both performing full-cycle sales (i.e. prospecting leads, then trying to close them). This was a problem.
There wasn’t enough focus. The breadth of their roles hindered them from doing their best work through specialization. So we redefined their roles, turning one into a Sales Development Representative (SDR) and the other into a full-cycle account executive.
Sales picked up right away. We also added another experienced account executive who I knew from a past team at a previous company.
Fast forward six months from the day I joined Cleanshelf, we had two SDRs, 2 AEs, and a Sales Engineer.
The name of the game here is repeatability. Once you have SDRs generating 720k in pipeline per month, and AEs closing at 20%, you can do the math. Focus + accountability wins the day.
2) Eliminate free trials
It’s common for SaaS companies to spin their wheels on free trials.
You know the deal: Low-value prospects sign up, ignore the product during the trial, and then never make a purchase because the stakes are so low.
Cleanshelf knew this customer acquisition problem all too well.
So I suggested we get prospects to put more skin in the game.
We switched to a paid trial model, which immediately prompted commitment from serious prospects and ended the conversation with non-serious prospects immediately. We could stop wasting resources on companies who would never convert.
Results from switching to a paid POC were immediate. We started to see paid POCs convert within 30 days to annual agreements.
We were also able to focus our resources on the customers that mattered: This increased conversion from sub 50% to over 80%.
Just because every other SaaS company does something doesn’t mean it’s a good business practice. A free trial certainly works for off-the-shelf tools which can be installed instantly. But it doesn’t work for Enterprise Software platforms.
In Dusan’s words:
“I think key difference is complexity of adoption. If people buy software for themselves, free trial makes a lot of sense. If they buy software for others or their team, they need proper support that free trials typically cannot provide.”
Introspection on your business helps here, a lot.
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