The Ultimate Guide In Creating A SaaS Sales Team
The SaaS industry has grown exponentially over the years. And with the onset of the COVID-19 pandemic, the SaaS market is growing rapidly. The shift from on-site work to remote work has skyrocketed the demand for SaaS products.
But it’s not just the market that’s growing. Even the competition. More and more companies are taking advantage of this new opportunity. As a SaaS startup looking to make it big in this continuously growing market, you need to grab a big share of it.
In fact, growing your customer base is the key to survival in the SaaS world. Venture capitalists use the rule of 40 in evaluating potential businesses to finance. And your ability to get investors could make or break your company.
The pressure and the potential for SaaS companies to grow are so real that the T2D3 framework was created. This model states that SaaS startups should triple their annual recurring revenue (ARR) for two straight years, then double for the next three years. If you do it right, you could go from $0 to $100 million in ARR in less than six years.
But how is that possible? How do you grow at such a staggering rate?
One of the proven ways to grow a SaaS business is having a solid sales department. Alongside marketing, it’s your tool for raking in prospects, building relationships with them, and getting them to buy your product.
Challenges Of Creating A SaaS Sales Team
SaaS sales processes are very different from those of traditional companies. Sales in other types of businesses are generally a one-time thing. You generate leads, nurture them, then make the sale. That’s it. Unless the customer buys again in the future.
But for SaaS, the relationship is always continuous. You’re dealing with recurring revenues. You maintain relationships with customers not just until the deal is closed, but even well beyond it.
When you’re building your SaaS sales team, you need to overcome these challenges:
Crafting A Repeatable Sales Process
Selling a SaaS product is easy if you made it yourself. You know every feature, every bug, and every patch it took to get to that point.
And of course, you’re easily passionate about your product. It’s your brainchild. But sadly, a hired sales team won’t always have the same sentiment.
That’s why you need to gather all that passion and pour it out into a clear sales process. Hired sales professionals may not easily catch how you feel about the product. But they can understand well-laid-out processes.
The sales pipeline and its individual stages have to be clear. Sales reps should know the tasks they need to do in each stage and the goals they need to reach before going to the next.
What SaaS sales strategy would be best for your product? Will a free trial enable prospects to see its value? Do you want them to contact your team for a demo? How will you execute upsells for your existing customers?
There’s also the matter of sales channels. What platforms will you use? Will you be using email? Social media? Calls? SMS? What tools do you need in order to manage tasks and conversations?
Creating An Organizational Structure
Another challenge you may face in building a sales team is laying out an organizational structure. At some point, you’ll need to assign a sales manager who will make sure that the team is doing what it is supposed to do.
Sure, you may say that you can manage your sales team yourself. But what about your marketing team? Your customer success team? Your product development team?
Handling these different departments by yourself may work for the short term. But it doesn’t lead to sustainable growth. As your business grows, you need to assign people to take care of your teams, including the ones for sales.
You also need to decide what kind of structure your sales team will have. One way to go about it is to have a bunch of all-around sales pros. They have almost the same set of skills. And they handle their leads from lead generation to deal closing.
The good thing about this structure is its continuity. The lead communicates with the same sales representative from lead generation to conversion. This also gives your sales rep the time to build rapport with their leads, which increases the chances of closing them for a long-term relationship.
Another road that you could take is to have various specialized teams for your different pipeline stages or tasks. You have a team for outreach. You have another one in charge of quotes. Then another one for demos. And for every single task in your sales process.
The beauty of this structure is that you can maximize the strengths of your sales reps. You have a set of people doing what they do best.
The tradeoff, however, is the leads having to contact multiple sales reps. This may lead to confusion and possibly the loss of those leads.
This structure also needs seamless communication between teams. Each team has to know whenever there’s a new lead in the stage they are in charge of. If you fail to do this, you risk getting leads stuck in the pipeline and, again, eventually losing them.
SaaS sales teams that have this kind of structure often use CRM solutions to make sure that no lead falls through the cracks.
Finding Sales Reps With Tech Knowledge
Another thing that sets SaaS sales apart is the technical knowledge and skills it takes. A SaaS salesperson needs to be tech-savvy to a certain degree. They need to know your product inside out so that they could show how it addresses your prospect’s pain points.
Aside from that, they need to be up to date regarding the trends in your industry. I’m not just talking about news and technological advances like AI or 5G. They need to be updated on what your competitors are offering.
Many of your prospects will be evaluating whether to buy your product or your competitors’. So you need salespeople that have a good understanding of how your product stacks against your competitors.
How To Build A SaaS Sales Team
But how do you even start building your SaaS sales team? It’s not just simply hiring a bunch of people and getting them on board. Although those things are part of creating a sales team, there is so much more to it than those.
Here are some things you can do:
Get Your Marketing Team’s Perspective
To maximize your growth, your marketing and sales efforts need to be cohesive. After all, it’s the marketing campaigns that generate the inbound leads that your sales team will work with.
If you have a fractional marketing setup, you can consult your outsourced CMO. Who knows? Maybe they even know people who would be perfect for the job.
SaaS marketing and sales need to be consistent in terms of branding and product messaging. Your marketing team can help you build a sales process that builds on your marketing efforts rather than start from scratch.
If you’re running behavioral marketing campaigns, you can also build on that. You already have a bit of information on what your potential customer likes, where they’re from, or what they’re working on. You can personalize your sales content and increase the chances of closing a deal with them.
Remember that we call it a customer journey. The transition from being a prospect to a lead shouldn’t be confusing. Or else you risk losing them.
One of the ways to ensure continuity is having a centralized database for your marketing, sales, and customer service team. Through this database, they would have access to your leads’ contact information and prior conversations.
Your sales team will have a better perspective of your prospects if they know what content they engaged with, the marketing channel they used, and more. In the same way, your support team can better serve your existing customers if they know what got them to buy your product in the first place.
Find And Vet Qualified Sales Reps
As we discussed earlier, SaaS sales reps need to have technical knowledge and skills. But those are not the only things you need to look for in a SaaS salesperson. Relational skills and a good track record are also important.
Technical knowledge: Your sales rep has to be able to walk the talk. Many of your leads will have questions that require technical answers. They want to see every feature you have to offer. They want to try possible integrations. They want to know what it’s like to use your SaaS product.
Your sales reps have to be able to answer those questions well. And the only way for them to do that is to be very acquainted with your SaaS application.
Just to balance it out, though. Your sales reps also need to be careful not to cross the line towards customer service. A sales conversation can easily turn into a premature support conversation if the sales rep doesn’t take control of it.
Relational skills: This in itself is a broad term that can mean different kinds of skills. But let’s start with the ability to identify the right leads.
Each lead you will get will be different. Some are managers. Some are end-users. Some are executives. Each of your sales reps must be able to know what buyer persona they can work with the best.
Sales reps must also be good at nurturing your leads. Remember that a good relationship is key in closing deals. Your sales rep has to know what kind of content and which messaging platform works best for each lead.
A good track record: And when I say track record, I mean numbers. If this isn’t their first rodeo, their past experience as sales professionals should reflect good performance.
In their previous jobs, what’s their individual conversion rate? How well did they meet their quotas? What’s their average sales cycle?
There are a lot of possible metrics for evaluating your potential sales reps. We’ll talk about them later. But for now, let’s talk about one more thing about building your sales team.
Onboard and Train Your Sales Team
Now even if you get experienced sales reps who are well-versed with tech, you can’t just “plug-and-play” them into your sales department. You still need to onboard them, not just with the product, but for the business.
As the term “sales representative” suggests, your reps are like your ambassadors. They are speaking on your behalf.
Aside from just being familiar with the product, they need to be acquainted with your company’s mission. They have to know and agree with why you are doing what they are doing. You need to train them to embody your company culture and brand.
Now when it comes to the technicals and practical sales processes, you can apply a mix of methods in training your new sales reps. You can do in-classroom training, on-the-job training, and performance-based coaching.
In-classroom sessions: These mostly deal with principles and initial onboarding for your sales strategy. It would help to treat these sessions as actual classes in school. Letting your sales reps speak in class or even teach each other not only accelerates their learning. It also displays their skills.
But dealing with theoretical concepts in a classroom setting isn’t enough. Your sales reps need to experience it for themselves.
On-the-job training: Experience is the best teacher. The fastest way for you to train your sales team is to empower them to do their jobs. That means letting them handle actual leads, use your tools, perform tasks, and every step of your sales process.
But don’t expect them to get it perfectly the first time. They will make mistakes. Sometimes, your job as their boss and leader will involve cleaning up their messes.
But these are crucial points for your sales team’s development. What kind of a boss would you be? Will you bite their heads off each time they screw up? Or will you use it as a teaching moment and help them learn from those mistakes?
Performance-based coaching: There is a huge difference between instructing and coaching. Instructions merely tell people what to do. Coaching involves setting them up to be better sales professionals.
As you train your sales team, you need to be a coach to them. That means tracking their performance, providing feedback, and acting on it.
Just a pro tip. If you’re giving out positive feedback, do it in public. Do it in front of the whole sales team. Not only will it boost your sales rep’s confidence. It will also inspire their teammates to follow suit. Or make them competitive.
Whatever pushes them to do better, right?
If you’re giving negative feedback, however, do it in private. Do it in your one-on-one coaching sessions. And help them find ways to make sure that they don’t repeat the same mistake. This allows them to take responsibility for their actions without the need to be humiliated.
Don’t get me wrong. I’m not saying that you should tolerate poor performance. I’m saying let them learn from their mistakes. Give them a chance to improve. And you should do so expecting results.
That’s one of the reasons why it is important to track their sales metrics.
SaaS Sales Team Performance Metrics
You measure what you value.
And if you really value having a world-class sales team that closes hot leads, you track the necessary metrics. There are a lot of KPIs that you can use for your sales process. But for this article, we are going to focus on those that concern your team’s performance.
The conversion rate refers to the percentage of qualified leads that resulted in closed-won sales. Each sales rep’s individual conversion rate indicates their ability to actually sell your product.
There are other factors that can affect conversion rates. One would be the quality of the lead. No matter how good a salesperson is at selling, they can’t make the sale if your product has nothing to do with their pain points in the first place. So conversion rates can also indicate how well your sales reps are at qualifying their leads.
If you want to dig into more detail, you can also track conversion rates for each pipeline stage. Find out which stages have the greatest conversion rate and which have the least. This indicates your sales rep’s strengths and areas of improvement.
The sales cycle is the time it takes for a new lead to be converted into a deal. This indicates how fast your sales reps can sell your product. It tells you how efficient they are.
Like conversion rate, you can monitor this metric not just for the sales pipeline but for each stage as well. This helps you find bottlenecks in the sales pipeline. It can also indicate which tasks and stages your sales rep is having a hard time with.
Speaking of tracking the time each lead is in a pipeline stage, this is essential to avoid losses. Constantly monitoring these times enables you to detect stuck leads and prevent loss.
As the name of the metric suggests, this is how well your sales rep can achieve their quota. You can compute it with this formula:
Yes, the number can go beyond 100% if your rep exceeds their quota.
You can tweak the formula depending on your sales practices. The quota can be a number of deals or amount of revenue. The time frame can be per month, per quarter, or per year.
Provided that you’ve set a reasonable quota for your sales team, this is a more direct performance indicator for them.
You can identify reps who need more coaching. It may also give you an opportunity to allow top performers to coach their teammates themselves. Who knows? One of them might even show that they can be a strong sales manager.
Annual Recurring Revenue
SaaS revenues don’t work like traditional businesses do. Like I mentioned earlier, SaaS products offer subscription-based purchases rather than one-time deals. You get recurring revenues. And the primary metric used to measure your income is the ARR.
The ARR is the amount of revenue that you can expect to receive in a fiscal year. You can sum it all up to see how your business is generally doing or even predict your future growth rate. But you can also monitor the ARR that each of your sales reps is bringing in.
At the end of the day, it all comes down to revenue. It’s the most direct measurement of your sales team’s performance. Still, you need the ones mentioned above in order to pinpoint things that they are doing well and which they need help on.
How To Manage A SaaS Sales Team
When you have a newly onboarded sales team in place, it’s still up to you to continue pushing each member to be better at what they do. And sometimes, good management makes all the difference.
We have already touched on a bit of some management principles above. But here are some more pointers to help you manage and scale your sales team:
Agree To A Compensation Structure
The key to keeping any employee happy is to pay them fairly, if not generously.
That endeavor can be relatively easy for SaaS sales representatives. The standard practice is to pay them fifty-fifty. Half would be their base salary and the other half comes from commissions.
Take note that the second half should be equal to the commission they would get from attaining their quota. The full salary is called the on-target earnings (OTE).
The most common percentage for commissions is 10%. For example, you pay a base salary of $50,000. You set a quota of $500,000 in sales per year. And if they hit that quota, their commission would be another $50,000 resulting in an OTE of $100,000 per year.
If they don’t reach their quota, however, you can give them a lower percentage for their commissions. You still need to implement consequences for poor performance. This would push them harder to attain their quota.
But where do you get the commissions? Do you get it from the ARR they bring in? Do they get commissions every time their customers pay for their subscriptions?
This is an important question. But the quick answer is no.
While it wouldn’t be wrong to give your sales reps a commission from the recurring revenues, it wouldn’t exactly be right either. See, the sales team is in charge of bringing in new users. Customer retention is a collaborative effort by your customer success, marketing, and development teams.
But your sales rep can still be a huge factor in how long a new customer subscribes to your product.
One agreement that you can come up with your sales representative is that they would get commissions for the first year of that revenue.
For example, if they sell a monthly subscription worth $300 per month, their commission for that particular deal would be $30 per month for twelve months. If the new customer cancels their subscription within the year, you could simply stop paying the commission.
Putting these limitations on commissions will push your sales reps to find more customers and target long-term relationships.
Define Your Goals
Having goals is essential for any endeavor. Sales reps must have a target number of closed deals or target revenue generated.
For a sales team, the most basic goal is the quota. But goals can go beyond that. It can be any of the metrics we discussed earlier. By how much do you want to increase your conversion rate? How much revenue growth are you aiming for next year?
More than the quota, sales reps need to know what it looks like to be killing it in their jobs.
But sometimes, merely telling them about your goals isn’t enough to push them. That’s why you need to motivate them with incentives.
Incentivize Good Performance
Sales reps won’t always be as engaged in their jobs as you would want to be. There can be bad days. That’s why it’s important to keep them motivated to do what they do. Or even better, you can make them excited to do their jobs.
Here are some things you can do:
Provide bonuses: Giving bonuses to employees is the most common way to motivate them to do a good job. For SaaS sales reps, you could increase their commission percentage for deals beyond their quota.
You could also offer bonuses for above and beyond tasks. Like outbound sales, for example. You can incentivize doing cold calls or emails by rewarding it with a cash bonus.
Post a leaderboard: Salespeople are competitive by nature. You can tap into that fighter instinct by posting a leaderboard for everyone to see. The top three by the end of the quarter could receive a prize.
The prize could be cash or anything that would motivate them. It can be an all-expense-paid trip. It could be vacation days with pay. Or it can simply be the right to sit in the only office chair that has no broken wheels.
Gamify your sales efforts: One way to make goal-setting fun and exciting is to gamify it. A gameplay mindset can work wonders in sales reps’ performance.
In video games, particularly role-playing games, you have quests with a clear set of objectives and tasks. For each objective you complete, you get rewards and experience points. You spend the experience points to continually increase your character’s skills.
A gameplay mindset can help your sales reps know that they are gaining skills and progressing as they do their tasks. And of course, your part would be rewarding them for the milestones and objectives they complete.
But sales gamification doesn’t have to have an “every man for himself” setup. It can also promote collaboration within your sales team. For example, one of your “quests” could be having all sales reps attain their quota. If they hit that goal, everyone gets a reward.
Give Them Sales Tools
Imagine you are assembling a piece of furniture that requires screws. A manual screwdriver would be enough, right? It takes some time and effort. But it gets the job done.
Now imagine that you have a power screwdriver. It costs more and needs electricity. But it does the job so much faster and easier. And you could assemble more furniture in less time than the other scenario.
You can also get “power tools” to make your sales team more efficient and more productive at closing deals. These are other SaaS solutions that could help your team organize leads’ contact information, centralize communications, manage sales pipelines, and a lot more.
Below are some of them:
Customer relationship management (CRM): This is one of the most crucial tools in a sales rep’s arsenal. It acts as a database for contact details and communications with leads. Most CRM solutions like Salesforce, Pipedrive, and Insightly also include visualized pipelines and reports.
It’s currently common for CRM software to integrate with email providers. This allows you to create, schedule, receive, and store emails within the platform itself. But more advanced products expand this scope to include social media, telephone, and SMS communications as well.
Remember the metrics we discussed earlier? CRM solutions can also generate reports and analytics on those metrics. Visual reports include graphs and trends to help you see how your sales team is performing over time.
Some solutions like Agile CRM and Zoho CRM even give you the option to gamify your sales processes. These tools let you create and display your objectives, progress bars, and leaderboards.
Voice over Internet Protocol (VoIP): These are also called telephony solutions. A VoIP enables you to make outbound calls or receive inbound ones on the platform. VoIP providers even offer custom toll-free numbers.
Video conferencing: With the pandemic going on, all businesses now need video conferencing software. For sales, this is the most important tool for your demos and product tours.
Specifically for sales meetings, you would want to get an easy-to-access platform like Zoom. For your demos, you should get a video conferencing solution with solid screen-sharing tools.
Team communications: Speaking of online communications, you also need a chat messaging platform for your team. You can use Slack and Facebook Workplace. If you want a free solution (who doesn’t?), you can go with Discord.
Provide A Career Path
Having opportunities for career growth is a powerful way to motivate your sales reps. Positions and roles in the sales department vary depending on your organizational structure.
New and inexperienced sales reps often start out with roles that involve cold calling or qualifying leads. As they grow their skills and consistently exceed their quotas, they can move on to higher positions with bigger commissions.
As I mentioned earlier, among your sales reps could be future managers as well. Be on the lookout for those who show strong leadership and coaching skills.
Building a SaaS sales team is a challenging but rewarding process. SaaS sales itself requires a certain set of skills. Training your new hires could take a lot of time, effort, and cleaning up messes. You will need to shell out money to buy the tools you need.
But that’s what it takes to grow and grab a huge chunk of the rapidly growing SaaS market.
If you train and equip your sales team well, it could skyrocket your customer acquisition. More customers mean more revenue. And more revenue can be reinvested for even more growth.
For more strategies on growing your SaaS business, visit our blog here.