When stuck in a scenario where revenue is growing at a moderate pace, but not fast enough, and burn is putting the pressure on getting to the ARR target of $1M+ faster, Founders need to find a way to grow revenue quickly. One thing Founders get advice on is "increase the deal size and you only need X deals to get there." The problem is, it's not just about hitting a revenue milestone — it's telling the story of your ability to acquire and grow your customer base for the next 10+ years. Aside from your team, product, and market, two key traction metrics matter:
- ARR — Annual Recurring Revenue (🗣️ Recurring!)
- NRR/NDR — Net Retention Rate (or Net Dollar Retention)
Rather than looking at increasing price as your only option, consider the following:
- Have I made it easy for customers to buy from us? Rather than $100K upfront, do I have other levers that allow me to close a much smaller deal ($15K+ in weeks vs. $100K in 8 months)?
- If I make it easier to buy, can I grow into that same revenue target around the same timeframe, just in smaller increments?
- If I am able to do that, will it improve the actual adoption of my product instead of closing a big $100K deal with the daunting prospect of getting anyone to use my product since we did a lightweight POC to start?
- Can I outpace my incumbents who are coming in with the "we don't get out of bed for anything under six figures" mentality and get the customer excited about growing with us and influencing our roadmap?
Let's look at two companies with the same ARR. Which one signals a better growth trajectory, and which would you likely invest in?
Company A
- $1M ARR in 1 year
- 5 customers
- 100% NRR (zero growth)
- 2 churned customers, 2 upsells allowed for steady revenue
- All deals take 6+ months. Founding team doesn't have time to build pipeline, going to hire an SDR now that relationship deals have gotten the company to $1M. Two key must-win deals $250k+ in pipeline, early-stage opportunities.
Company B
- $1M ARR in 1 year
- 25 customers
- 200% NRR (doubling growth)
- 2 churned customers, 25 upgraded within first 6 months of contract
- All deals take 2-4 weeks to close. Founders too busy to build pipeline, but focused on increasing spend of existing customers, using their learnings to incorporate into outbound messaging before hiring sales to learn how they hit $3M ARR. Two expansion opportunities $100k+ each expected to close in Q3.
This is easier said than done, but the goal here is to look at sales as a more creative endeavor than a "rah-rah" enterprise sale. As a founder with a great product, people are rooting for you and want to make a bet on your business. Just try to make it as easy as possible to build upfront trust, then go sign a bigger contract in the future that your competitors always wished they could have done with their army of reps in their pleated khakis.