The 6 Stages of the Sales Cycle For SaaS Startups

Most SaaS startups fail because they can’t generate enough revenue to sustain themselves. According to a study by CB Insights, 38% of startups fail because they can’t find a monetization model, and only 19% of them make it to their fourth year. A big part of this has to do with the sales cycle – the process by which a company sells its products or services.

In this article, we’ll take a look at the different stages of the SaaS sales cycle and how you can make your startup more successful.

What are SaaS Sales?

The SaaS sales model is the process of selling software that is hosted remotely, or “in the cloud.” It’s a relatively new sales model, and many startups are adopting it because it’s a more efficient way to do business.

For SaaS enterprise sales, software needs are being outsourced without having to worry about maintaining the infrastructure or dealing with updates and maintenance. For the startup, SaaS sales are a way to get their product in front of potential customers without having to spend a lot of money on marketing or sales.

The Stages of the Sales Cycle for SaaS Startups

The life of a SaaS startup is filled with many ups and downs. A big part of this is the sales cycle – the process by which a company sells its software. Companies use it to identify and qualify potential customers, build relationships, and close deals. It can be long and arduous.

The SaaS sales process is different from typical B2C or B2B sales as the model involves recurring revenue. This is what makes the sales cycle for a SaaS business so difficult – it can take many months or even years to land a customer that’s willing to pay for your product on a monthly basis. Moreover, it is dealing with intangible products.

The following are the four stages of the typical sales cycle for a SaaS company:

1. Prospecting

This is where you generate leads and try to turn them into customers. This can be done through various means, including:

• Online advertising: You can use Google Ads, Facebook Ads, or other online platforms to reach potential customers.
• Content marketing: Creating helpful blog posts, eBooks, or other forms of content can attract leads to your website.
• Search engine optimization: Making sure your website is optimized for the right keywords can help you attract leads that are already interested in what you have to offer.
• Word-of-mouth: If you have satisfied existing customers, they can spread the word about your company to their friends and colleagues.

Check out this article for more tips:  16 Growth Marketing Strategies for your SaaS Startup

2. Qualifying

Once you have a lead, you need to qualify them to see if they’re a good fit for your product or service. This involves asking questions and doing research to see if they’re likely to be interested in what you have to offer.

The best way to identify the most promising leads to your business include:

• Using lead scoring: A tool like SalesforceIQ can help you score leads based on their likelihood to buy your product.
• Using buyer personas: Developing profiles of your ideal customers can help you target the leads that are most likely to convert.

Your sales team should also be trained to ask the right questions when qualifying a lead. They should be able to determine whether a lead is ready to buy, what their budget is, and what their timeline is.

3. Presenting

Once you’ve qualified a lead, it’s time to present your product or service. This can be done through:

• A demo: Giving potential customers a demo of your product can help them see how it works and how it could benefit their business.
• An overview: Sending a potential customer an overview of your product or service can help them understand what you have to offer.
• A proposal: Putting together a proposal that outlines the benefits of your product or service can help you close the sale.
• A webinar: Hosting a webinar can be a great way to present your product or service to a large group of potential customers.

At this stage, your sales professionals should be able to answer any questions the prospect has about your product or service.

4. Objection Handling

No matter how good your product or service is, you’re going to run into objections from potential customers. This is where your sales reps need to be trained to handle objections. They should be prepared with answers to common objections, such as:

• It’s too expensive: Your sales representative should be able to explain how your product or service is a good value for the price.
• I don’t have time: Your SaaS sales rep should be able to explain how your product or service can save them time and money.
• It’s not the right time: Your sales rep should be able to explain how your product or service can help them achieve their goals.

5. Closing

If the lead is interested in your product or service, it’s time to close the deal. This involves negotiating terms and getting them to sign a contract.

The best way to close a deal is to:

• Get the commitment: Ask for a commitment from the lead, such as signing a contract or putting down a deposit.
• Get the sale: Once you have the commitment, close the sale by getting the lead to pay for your product or service.
• Use a CRM: A CRM can help you keep track of your leads and their status in the sales cycle.

Your SaaS salesperson should be able to close the majority of deals that they pursue. However, there will always be some leads that are not interested in your product or service.

When closing deals, your sales reps should:

• Be prepared: They should know their product or service inside and out, and be able to answer any questions the sales qualified lead has.
• Be professional: They should be polite and respectful, even if the prospective customer is not interested in your product or service.
• Be persistent: They should not give up if the lead is not interested in your product or service. There may be other opportunities to sell them something else.

6. Retaining

Once you’ve closed the deal, it’s important to retain the customer. Customer retention means providing them with good customer service and ensuring that they’re happy with your product or service.

The best way to retain customers is to:

Make them happy: Make sure you’re providing your customers with a good experience and meeting their needs.

Make it easy to contact you: Make sure your contact information is easily accessible on your website and in your products.

Offer support: Offer support through phone, email, or chat to help them with any problems they may have.

Make it easy to upgrade: Make it easy for customers to upgrade to a higher tier of service or a new product.

Your SaaS rep should always be trying to upsell the customer, and they should be able to do it in a way that doesn’t seem pushy.

Customer success is all about making sure your customers are happy and that they get the most out of your product or service. And that’s something that can only be achieved by working closely with them and providing support long after the sale is complete. By following these steps, you can increase your chances of success in the SaaS market.

The sales cycle for a SaaS startup can be long and difficult, but it’s important to remember that every sale is different. Some leads will convert quickly, while others will take more time. The key is to keep working at it and never give up.

Check out this article for more tips: SaaS Customer Retention: Best Practices and Pitfalls

Factors Influencing the Length of SaaS Sales Cycle

The length of the sales cycle for a SaaS product can be affected by a number of factors, including:

• The complexity of the product: If your SaaS product has more features or is more complex, it may take longer to sell. This is because potential customers will need more time to understand how it works and how it can benefit their business.
• The price of the product: If your SaaS product is expensive, it may take longer to sell. Potential customers will need to weigh the cost of the product against the potential benefits.
• The competition: If your SaaS product is competing against well-known brands, it may take longer to sell. Potential customers will need to be convinced that your product is the best option for them.
• The market: If the market for your SaaS product is crowded, it may take longer to sell. Potential customers will have more options to choose from and maybe more hesitant to commit to your product.
• The size of the company: Larger companies will take longer to make a decision than smaller companies. This is because they have more people to consult and more red tape to go through.
• The budget: If the potential customer has a limited budget, they may be more hesitant to commit to your product. They will need to be convinced that your product is worth the investment.
• The time of year: The length of the sales cycle can vary depending on the time of year. For example, potential customers may be more hesitant to commit to a new product during the holiday season.
• The location: The farther away the company is, the longer the sales cycle will be. This is because there will be more travel involved and more time needed to coordinate between parties.
• The culture: The company’s culture can also affect the length of the sales cycle. For example, if the company is risk-averse, they may be more hesitant to commit to a new product.

These are just some of the factors that can influence the length of the sales cycle for a SaaS product. The key is to be aware of them and to adjust your sales strategy accordingly.

How to shorten the Sales Cycle

There are a number of things you can do to shorten the sales cycle for your SaaS product.

1. Identify your ideal customer: Knowing who your ideal customer is will help you focus your sales efforts and target the right people. The best way to do so is to create a customer persona.

2. Understand their needs: Once you know who your ideal customer is, you need to understand their needs and what motivates them. This will help you sell them on your product.

3. Build a strong sales deck: Your sales deck is your most important tool in the SaaS sales process. It should be clear, concise, and easy to understand.

4. Prepare for objections: One of the best ways to shorten the sales cycle is to be prepared for objections. This means having a solid rebuttal ready for any potential objections.

5. Follow up consistently: Following up with potential customers is essential in the SaaS sales process. You need to be consistent in your follow-ups in order to stay top of mind.

6. Offer a free trial: Offering a free trial is a great way to get potential customers to try your product. This will help them see the value of your product and make a decision faster.

7. Build a relationship: Building a relationship with your potential customer is essential. This way, you can gain their trust and show them that you’re invested in their success.

8. Make it easy to buy: Make it easy for potential customers to purchase your product. This includes having a clear pricing structure and easy-to-use checkout process.

9. Use social media: Social media is a great way to reach potential customers and build relationships. You can use it to promote your product and generate leads.

10. Offer discounts: Offering discounts is a great way to close a deal. This will show the potential customer that you’re willing to work with them to find a solution that works for them.

Make sure to also track your progress and measure your key performance indicators including:

• Net promoter score: This will tell you how likely your customers are to recommend your product or service.
• Churn rate: This will tell you how many of your customers are canceling their subscription or not renewing.
• Customer lifetime value: This will tell you how much revenue you can expect from a customer over the course of their lifetime.
• Annual recurring revenue: This will tell you how much revenue you’re generating on an annual basis.
• Monthly recurring revenue: This will tell you how much revenue you’re generating on a monthly basis.

By tracking these metrics, you can get a better understanding of your business and make the necessary changes to improve your results.

Key Takeaways

The length of the sales cycle for a SaaS product can vary depending on a number of factors. However, there are a number of things you can do to shorten the sales cycle. By understanding the factors that influence the sales cycle and taking steps to shorten it, you can close deals faster and increase your chances of success.

For more tips on growing your SaaS startup, don’t forget to check out our SaaS Marketing blog.