Your company's structure plays a vital role in the success of your SaaS sales pipeline. Applying the right company structure to your SaaS business will prevent a variety of common problems. For example, it helps employees avoid engaging in wasteful activities that use company time and resources ineffectively. Launching a product is already hard work; don’t squander the morale of employees and management on a company structure that doesn’t make sense for your size and organizational goals.
The SaaS organizational chart is a useful tool for avoiding chaos internally while preventing project milestones from collapsing. Deciding on the specific structure for your organization is a known formula based on company size. This is fortunate because it eliminates the need for you to reinvent the wheel. By applying the best practices to your situation, you can accommodate the growth of your company while structuring it as a startup during the initial stages. Selecting the right company structure goes a long way toward spurring the right kind of growth for startups and established companies alike. Each stage of the business’s growth can be matched by adjustments in the structure.
What Is a SaaS-Based Business Model?
Any startup SaaS company must balance the stated objectives for the original product line with the administrative support necessary to ensure customer success. The onboarding process is a part of the SaaS business model that is easy to overlook. Any SaaS startup company needs a robust plan to recruit and retain new customers. The SaaS business only grows when users can quickly and easily make use of subscription plans and licensing.
There are many benefits to be gained by adopting the SaaS business model, including:
- Monthly or annual payments are recurring, which ensures a regular revenue stream.
- Stabilize revenues by retaining customers with paid tiers and upgrades instead of one-time payments.
- Updates provide opportunities to improve customer retention rates while gaining feedback from surveys about the new product versions.
- Metrics provide reliable information about customer preferences. This includes metrics like the lifetime value per customer (LTV), the customer acquisition cost (CAC), and other metrics like MRR and ARR.
- Monthly and annual recurring revenue metrics, MRR and ARR, accurately track these financial numbers.
- Churn rates track procedural problems that affect customer exposure, onboarding and retention rates.
Need of Organization Structure for Your SaaS Company
The SaaS company founders must risk financial investment to launch the business, and risk is always an issue. The organizational structure that is selected helps to mitigate various risks inherent to the business. This is necessary because outside funding is usually unavailable for a period of time until the company gains the position to leverage its equity and engage in debt financing. Other options may be offered by lenders or investors, but these are typically unavailable during the startup stage. See the organizational chart in the next sections for details on the benefits and drawbacks of each option.
Accounting for expected growth is a great idea until it comes time to fully invest in this concept. Team members are typically energized during the early stages of their involvement, so you want to be prepared to make the best use of their enthusiasm for the product. Once the product is launched, the organization can experience rapid growth, and you’ll need a plan for this event. Expect that your company will need to quickly add marketers, sales reps, customer support staff and even more developers as the product takes off.
Roles are typically defined by qualities such as the specific department, function, region or market being targeted:
- Define each role's responsibilities and objectives clearly and in writing; this can be revised as needed.
- Describe the expectations of each new staff member in writing.
- Create an ideal ratio of company inputs to outputs; examples of inputs are company resources and labour hours, and examples of outputs include revenue targets, acquisitions and other company assets.
- Allocate resources according to the top priorities, which are periodically reviewed.
- Plan for contingencies, and create a feedback process for employees to help uncover bottlenecks and other performance gaps.
Before Investing in Your SaaS Product
Before you invest significant financial leverage into your SaaS product, consider all of the support systems that must be in place to get your software into the hands of your customers. This process involves recognizing that even the most amazing and useful software will sit idle unless it's being used by actual people. In addition, once the products are used, customers often try to innovate unexpectedly. This can uncover hidden bugs inside the program, so you must be well-prepared to deal with these contingencies.
The sales team must be as interested in learning about how customer support works to maintain ideal retention rates. All team members must become interested in identifying gaps in managing vendors, affiliates and even high-value clients. Finally, administrative and legal support will incur necessary costs, and you don’t want to deplete your operating budget by throwing all of your financial resources into one area to the detriment of all the others. Legal resources help to protect your SaaS business model by formalizing the interactions with your clients to maintain privacy standards and other legalities. All of these considerations play a role in the company’s pre-launch success.
SaaS Org Chart: Structuring Your SaaS Company
Structure the company to function at a small size while remaining capable of scaling up operations to meet the demands that success will impose. The size of the company is defined by the number of employees more than the revenues generated. The stage of growth is also a determinant of size because rapidly growing companies are considered larger even when the current employee number is relatively low.
Type 1: 5 - 20 Full-Time Employees
This is the smallest version of your company; consider this to be your skeleton crew. There will be around three founders in most cases, so each departmental role will be adopted by the most qualified member. For example, one founding member might take on the responsibilities of marketing and sales prior to onboarding any employees to handle these tasks. The second co-founder might be best suited to handle various aspects of IT and product development. The third co-founder should have experience in managing the administrative and procedural aspects of daily operations and internal processes. This includes compliance and legal issues, so expertise in this area is advisable. Each senior member of the core group will eventually need to hire full-time employees to which responsibilities will be delegated. In the later stages, these will be the core employees that report to their senior or founding members.
Type 2: 25 - 50 Full-Time Employees
This is the org structure that represents the next size of growth. This is also the first stage of your founding member’s process of delegating authority to various employees. This can be harder to accomplish than you think; many founding members can become quite attached to their accomplishments. It’s quite normal for them to be reluctant to hand over these operational tasks to new hires. However, the marketing, technology and product development areas need to be capable of coordinating with the administrative department independently of the founding members. Anticipate onboarding employees or automating various procedures to fill the demands of the customers. Roles are likely to include marketing and sales managers, product development specialists, and administrative and account managers.
Type 3: 50 - 100 Full-Time Employees
Organizations that hire between 50 to 100 full-time employees will need to adopt C-suite roles for various executives involved in directing the organizational activities. This may include roles like vice-president, directors, co-founders, CTO, CMO, CRM and CFO. During the early stage, this type of organizational structure isn’t warranted, but once there are over 50 full-time employees, it becomes necessary for team members to report to the appropriate C-suite executive.
Type 4: Over 100 Full-Time Employees
Organizations that have more than 100 full-time employees can add a number of additional roles. This may include various VP positions in sales, marketing and customer success. Various directors can be assigned to target markets and regions while handling specific brands. All of these roles will report to a Chief Marketing Officer, or CMO.
Additional structures might include:
- Vice-president, or VP roles, in product development, quality management and directors for development report to a Chief Technical Officer, or CTO.
- The VP roles in performance, operational management and directors for communication and implementation report to a Chief Operating Officer, or COO.
- The VP roles in human resources, finance, accounting and legal directors report to the Chief Financial Officer, or CFO.
- Every C-suite executive will report to the CEO.
Structuring Sales in the SaaS Industry
Coordination of the sales and marketing teams plays a huge role in your company’s final outcome. Each member of the sales and marketing teams needs to have clearly defined roles and metrics to track performance goals. The entire team must have access to real-time data that enables them to track their client engagements, leads, conversions, retention and churn rates. This data is critical for making evaluations of campaign performance. However, it also has secondary applications for new marketing campaigns and inbound traffic conversions. The SaaS org chart provides the overall structure for the company, but the team structure makes these details more visible.
Sales teams need to be fully prepared for rapid growth, which is common in the SaaS world:
- Prepare for rapid growth by having a template for onboarding new sales talent and getting them up to speed.
- Templates can also be useful for dealing with customers facing multiple solutions under normal time constraints.
- Assign the right sales reps to the most appropriate customers by defining both in advance.
Who Should Be My First Hire for My SaaS Business?
Planning for growth means that all of these areas should be set up in a way that enables expansion in the future. However, during the startup stage, the founders are responsible for tracking all of these departments within the organization prior to launching the products. One team member is recommended per focus area in order to support each founding member in expanding the relevant departmental area. During the initial stages, founding members may exercise more influence, but they often choose to delegate authority in the interest of sustaining the company’s growth over time.
Sales and marketing teams are critical first hires even before customers begin mass ordering. A customer success manager must be well-equipped to deal with steady or rapid growth, so craft templates for generating team leads, renewals and recruiting new customers. The B2B SaaS model requires the founding members to adopt a mindset of growth to anticipate success. Product marketing and sales are the foundation of this process; they function as the fuel that gets your company vehicle to hit its peak performance targets.