Hey friends,
Last week I spoke with a founder. Let’s call him Mario.
His product sells for around €500 / year.
He told me he wanted to hire his first salesperson.
I asked him why.
He said his prospects always ask for a call before they buy. They are not sure.
They ask millions of questions via chat and emails, he just can’t convert them.
I understand him.
I see this every week.
There is an old idea in software, especially in the US.
If your product is cheap, let people buy it alone, online.
If your product is expensive, put a sales team on it.
Most US sales leaders put the mark at a 5K average contract value (ACV).
They say below 5K you sell it product-led - above you go sales-led.
On paper, it makes sense.
A salesperson costs money, taxes, commissions…so the deal has to be big enough to pay for that person.
But here in Europe, it is not so simple.
In Italy and Spain, where most of my readers are, I almost never see a product that people buy alone.
Most buyers here are not used to choosing software by themselves.
They want someone to show them. They want someone to explain, to help, to be there.
This is common in Italy, and often in Spain and France too.
I know this well, and I feel it too.
Selling product-led in Southern Europe is hard. Really hard.
So the founder is not wrong to feel the pull.
Still, I always look at one number first. The average contract value.
When you put a person on a €500/year deal, you pay a lot to acquire that customer.
The salary. The tools. The hours. The cost of supporting the sales person.
Many times, you spend more to sell the deal than the deal brings back.
So I use a simple principle: for me, a sales team starts to make sense around an average contract value (ACV) of €1.5K a year.
Above that, a person can pay for himself. Below that, ask the founder to try another way first. (if they want to).
What does that other way look like?
I am not against sales-led.
Sales is my whole life.
But I have seen many founders hire too early for deals that were too small.
They put money into people when the product needed the money more.
And then they pass the pressure to the salesperson who has to close 20-30 deals per month just to hit their 100%.
Nonsense.
So before you hire, look at your ACV.
If the deal is small, give the product a real chance to sell on its own first. Focus your money and effort there.
If the deal is big enough, bring in the human.
Thanks for reading this far. See you all next week!
