What is SaaS Sales:
Basic SaaS Sales Strategy
The Software as a Service (SaaS) market has been exponentially growing in the past 10 years.
Considering thousands of businesses have been forced to create an online presence due to the persisting pandemic, it’s only going to expand moving forward.
In fact, it’s projected that the SaaS industry will grow to $99 billion between 2021 to 2025.
Moreover, successful SaaS products have proven themselves to be incredibly beneficial for a business’s revenue potential.
As a result, executives are more than willing to embrace them since they can double, triple, or even quadruple a company’s profit. Despite this willingness, however, the SaaS sales strategy is still a bit hazy from the point of view of organizational leaders.
Complicating it further is the difficulty of selling the software to potential buyers in the first place. This is due to market oversaturation, which is referred to as SaaS pollution.
In this blog, we’ll look at effective SaaS sales strategies that’ll help you maneuver this competitive landscape. But before that, let’s briefly look at what is SaaS sales and who is involved in the process.
What is SaaS Sales?
SaaS sales are the act of selling cloud-based software to a business in an attempt to help it solve a problem and cultivate its growth.
The software can be accessed through a monthly, quarterly, or yearly subscription.
This pricing model ensures that customers continuously generate profit for the software company. As for who’s in charge of the sale itself, it’s generally operated by two roles in the organization.
You have the Sales Development Reps (SDR). They handle outbound sales and generate qualified leads.
And then you have the Business Development Managers (BDMs) who will handle product demos and converting prospects into actual clients. Due to these overlapping roles, the SDR and BDM team should work in concert to carry out a successful SaaS rep model tactic.
So what is a SaaS sales strategy that you should follow?
Is there a one-size-fits-all category for the entire industry?
Creating a Sales Strategy that Works
There’s no uniform SaaS sales process since every software solves different pain points. However, there are strategic foundations that every SaaS rep model should follow.
1. Creating a customer avatar
Put simply, your customer avatar represents the fictional customers you’re trying to acquire. Unlike traditional marketing, however, a SaaS marketing sales strategy is more specialized.
This is because SaaS products – SalesForce, Dropbox, Slack, Rake – are targeting businesses instead of individual customers.
As such, you’ll need to ask different questions relating to the service you’re offering.
These questions can be:
- What problems are you solving?
- Can your product decrease your customer’s expenses?
- Can your product increase your customer’s profits?
- How can your product streamline your customer’s operation?
- Who makes the financial decision in the company?
- How can your product help with the growth of your customer’s business?
Mapping out these questions will help you get a clear picture of who your target audience is. That way, it’ll be easier for your SaaS sales rep to create a detailed approach in acquiring them.
As mentioned in our questionnaire list, you’ll be targeting the person who makes the final financial decision in the company. Thus, you’ll need to factor in psychographic information in your evaluation as well.
Here’s an example:
Megan is the CFO of a content marketing agency based in California with 100 employees. She’s always looking for ways to make her writers’ job easier as this helps lower employee turnover.
Megan is between 30-50 years old and lives in the city with her husband and three children. While she trusts her own research in making financial decisions for her company, she also places a premium on referrals from her professional peers. Megan spends her free time on social media but also uses it to analyze customer satisfaction of different brands and services.
She favors her laptop more than her smartphone, which is why it’s difficult to reach her, especially during business hours. Megan habitually checks her emails first thing in the morning before she tackles her daily tasks.
With this in the hands of your SaaS sales rep, they’re able to get a clearer picture of your ideal customer. In turn, they’ll know how to communicate with them, the best time of day to reach them, and the things that they prioritize in their company. In Megan’s case, the satisfaction of her writers.
Of course, before you can craft such an elaborate customer persona, you’ll need in-depth knowledge about your target. So conduct diligent research, interviews, and data collection to be as accurate as you can.
2. SaaS Sales Funnel
Now that you have your customer avatar, it’s time to plan your SaaS sales funnel approach. In this regard, an e-commerce business and a SaaS company are pretty similar but with a few key differences.
You might’ve heard of AIDA, which stands for Awareness-Interest-Desire-Action. Think of this as an inverted pyramid where Attention is at the top and Action is at the bottom.
With every stage, the funnel gets narrower and narrower. This is due to the difficulty of guiding the customer from one level to the next until they finally make the final purchase.
So let’s break AIDA down:
Awareness – this is where your customer becomes aware of the service you’re offering. This awareness could’ve come from ads, blogs, social media, or word of mouth.
Interest – here, the customer evaluates your product and compares it to other similar services. They’re trying to determine whether the software is the best for their particular business.
Desire – the prospect has moved down the funnel and is one step away from acquiring your service. They’ll visit your sales page, evaluate customer satisfaction, or would even reach out to your SaaS sales rep.
Action – this is where your customer decides to acquire or decline your service. Your BDM will need to be on top of their game to close out the deal.
In e-commerce, most of them stop at the Action stage as they’ve now managed to sell a product. Sure, they would still nurture their customer to get them to buy again. But the usual process only revolves around the four steps above.
SaaS sales strategy is different as it adds a couple more steps. Let’s look at them:
2.1 Trial or Demo
Most SaaS companies provide a limited trial version of their product to showcase the software’s capabilities. How long this will take is a point of contention among experts.
Some choose a 30-day free trial, while others argue it should be shortened to 14 days. Close CEO Steli Efti heavily advocates the latter point. He said that the shorter the trial, the lower the chances of the customer getting lost in the SaaS sales cycle.
A shorter trial period will accelerate the customer’s movement in the pipeline as well. As for where the trial period fits in with the AIDA structure, it occupies the space between Desire and Action.
After closing a deal with a customer, your next step is to nurture loyalty. This is done through outreach, engagement, community development, listening to feedback, and software improvement.
Loyalty is incredibly important to a SaaS company since it ensures a client becomes a repeat customer. Moreover, once a customer becomes loyal, it’s easier to get them to advocate your product to their professional peers. And since word of mouth is a powerful tool in finding new clients, it could increase your customer base even further.
3. Upselling to your customer through added value
This is a tricky part of the SaaS sales process model as you’re selling to a customer who is already familiar with your product. Remember, they know exactly its capabilities. As such, they may be hesitant to pay more as they may already be content with the current subscription model they’re using.
But upselling, when done right, is incredibly profitable for a SaaS company. After all, while it’s difficult to sell to existing customers, it’s far more challenging to acquire new clients.
So how can you upsell to people who are already satisfied with their current plan? One of the best SaaS sales process tactics here is to leverage the existing data from your product.
Monitor how they’re using the features of their plan and see if upgrading to a higher subscription model makes sense in their case. Maybe their usage limit of certain features only lasts 15 days. That could tell you their current SaaS solution plan isn’t comprehensive enough to cover the usual monthly processes.
Another strategy is to position the premium model as a means for them to generate more profit. Explain to them clearly and comprehensively the benefit of upgrading from their current plan to the premium version. In other words, highlight the premium feature’s value to justify the price.
Foundation of an Effective SaaS Sales Rep
As you may have guessed by now, all SaaS sales cycle strategy hinges on your SaaS sales rep team’s performance. As such, your SDRs and BDMs should be in-synced throughout the SaaS sales model pipeline to smoothly guide the customer through each stage.
And even though both roles have distinct duties to play, they also follow similar foundations.
Here are three of them.
1. The best SaaS sales rep understand it’s a number’s game
A SaaS sales rep needs to be persistent to achieve success. According to WideAngle, a SaaS sales rep should be doing at least 50 calls a day. That’s because it takes an average of 18 dials to connect with a prospect. Moreover, call-back rates are typically around one percent.
But once these connections have been established, you already have one foot through the door. So instruct your SaaS sales reps to be persistent and increase their number to reflect the above call average.
2. Identifying the right customer for your SaaS product
While numbers play a huge role in growing your customer base, it’s also important to consider the right customer. It’s not enough to close a deal. Remember, the SaaS sales model is subscription-based.
What happens when the customer you closed didn’t renew their subscription? Well, you’ll increase your churn rate, which is the rate you’re losing subscribers. This could be fatal to a SaaS company if left unchecked.
To counter this, always ensure your SaaS product is serving the right business. This is why creating a comprehensive customer avatar in the first place is so important.
It allows the SaaS sales rep team to easily identify who’s a good fit.
And if they’re a good fit, that business will stay with you for years. Better still is that you could upsell to them so you’re maximizing your monthly recurring revenue (MMR).
3. Scheduling and performing demos
If your SaaS sales rep managed to get through the initial barrier, it’s time to schedule and conduct a demo. But the question is: when should they perform a SaaS product demo.
Here are a few tips to follow:
- A general rule of thumb is within five business days after the call. Do not exceed 10 days as your prospect might’ve lost interest, found other services, or completely forgotten about your product.
- Keep the demo short, around 30 minutes or 45 minutes. Highlight the best features that will help your customer. Do not overwhelm them with features.
- Send an email reminder for the demo to decrease the no-show rate.
- Ensure you’re performing to vital decision-makers.
- Connect the product with the business. SaaS sales rep tends to put the product on a pedestal and not much else. Always make it about their business. For instance, identify a problem of the client then use the product to solve that problem.
SaaS Sales Rep Compensation
An effective SaaS salesperson is one of the foundations of a successful SaaS company. And if you have one on your team, always make sure to compensate them well.
According to this report, 43% of SaaS sales reps said they’re willing to leave their company for a 10% salary increase. But compensation isn’t enough. You’ll also need to recognize the efforts of your team.
By doing, so you’re increasing your SaaS rep morale, while also improving your sales metrics. That’s hitting two birds with one stone right there. And for a SaaS company, that plays a huge role in its growth, expansion, and overall longevity.
Start Your SaaS Sales Strategy Early
Considering how thousands of businesses are adjusting to this new normal, the SaaS industry is poised to exponentially grow in the coming years. Remote teams, work-from-home setup, and employee onboarding from different corners of the globe are just some of these scenarios.
Thus, if you’re a SaaS company startup, it’s best to build your foundations now. That way, you’re positioning yourself up at the front of the pack. This is especially true since new SaaS products are just going to crowd the already fierce market we have today.