The Science of Enterprise Software Sales

Jyoti Bansal, founder and long-time CEO of AppDynamics (see S-1 IPO notes) that was recently acquired by Cisco for $3.4 billion, has an excellent blog post up titled The Science of Enterprise Software Sales — My Lessons from AppDynamics. Here are a few notes from the post:

1. Your Path to $100 Million (or $1 Billion) Sales
   • Need to get to $100M of revenue growing fast than 40% a year to get a $1B valuation
   • Calculate the number of customers required for $100M in revenue based on average revenue per customer (e.g. 5,000 customers paying $20K/year)
2. The Sales Capacity Model
   • Four key variables:
     1. Number of “ramped” sales reps.
     2. Productivity of each rep.
     3. Churn in ramped sales reps.
     4. Time to ramp a newly hired sales rep.
   • Track these variables and build a financial model
3. The Demand Generation Model
   • Three key variables:
     1. Average deal size
     2. Deal close rate
     3. Average sales cycle
   • Track these variables and build a demand generation model
4. The Sales Process
   • Three main objectives:
     1. Eliminate opportunities that aren’t well qualified.
     2. Justify the business case for your solution.
     3. Eliminate surprises.
5. The Growth Constraints
   • Only a few constraints:
     1. Not enough product demand to achieve a higher growth rate
     2. Can’t compete effectively on product/pricings, etc.
     3. Need more cash than investors are willing to spend
     4. Can’t recruit, train, and absorb new people fast enough

Want to learn more? Go read The Science of Enterprise Software Sales — My Lessons from AppDynamics.