Vertical SaaS companies often face a Total Addressable Market (TAM) challenge due to their smaller, niche markets compared to Horizontal SaaS, which targets a broader range of business users.
To assess whether demand for your solution is rising or falling, several key metrics can be insightful.
One such metric is the sales cycle time, which, when tracked over time, serves as both an efficiency indicator and a demand measure.
Essentially, the sales cycle time reflects the viability of a product; generally, products with sales cycles extending beyond three months are less likely to be economically viable unless they are high-ticket.
The sales cycle reveals much about operational efficiencies. At a certain point in the sales process, the deal is nearly done, and the remaining steps are largely process. How quickly you get a deal done during this phase can indicate efficiency.
Having in mind that your client has their own timeline, and you can only expedite the process so much, making sure you have a very efficient sales process.
Additionally, the sales cycle time also signals the demand for your solutions. A consistent decrease in sales cycle time across your business indicates rising demand, suggesting you might need to scale up capacity.
Conversely, an increasing sales cycle time across different regions and business units signals declining demand. This scenario not only requires more effort to build buyer confidence but also means you are facing tougher market conditions.
Progress made under challenging conditions, however, is how you put greater distance between yourself and the competition.
© Timur Hicyilmaz
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