In a world full to the brim with technological acronyms, one stands out for both its importance as well as its cheeky pronunciation; SaaS, aka software-as-a-service. As organizations' dependence on software increases by the day, so does their need for accessing it easily and instantly, and SaaS makes it possible.
But while utilizing SaaS products is a relatively pain-free process, selling it can be an entirely different story.
SaaS means software-as-a-service, so SaaS sales is simply the process of selling web-based software to clients.
More generally, SaaS refers to an easily accessible online service that can be customized to meet user needs. SaaS is hosted, maintained, updated, secured, serviced, and managed by a single provider. It is accessible anywhere and anytime. All end-users need is an internet connection and a browser. Its elegance is in its simplicity.
SaaS demands lower entry costs than legacy software, and due to constant management, it is easily upgradable and much more customizable. This continuous cycle of improvement results in a more advanced and customizable product; one that is continuously evolving.
Selling SaaS, however, proves to be an often complicated process that requires unique techniques. As SaaS is entirely managed and maintained by a third-party provider through a group of engineers and developers, it’s often offered through different pricing models. For the enterprise buyer, a variety of cost levels mean longer, more complex sales cycles.
The nuanced nature of SaaS sales requires top-notch salespeople to get the job done. Their main objective is twofold; get new clients and upsell existing ones. To do so, SaaS salespeople should be fluent in technology, have the ability to create strong connections, possess strong sales skills, and have insights into their customers’ needs and behavior.
SaaS salespeople also require comprehensive knowledge about their product. They need to be able to demonstrate how their solution addresses and remedies a client’s pain points. The more flexible the solution, the more intricate a salesperson’s knowledge should be; allowing them to address various issues through the configuration of their software.
Because successful SaaS salespeople have such a unique blend of technical and traditional skill sets, it makes sense that their salaries are usually above the market average of other types of sales reps. The average SaaS sales rep salary clocks in at about $62,700, though that number varies based on the study:
**Salaries including bonus and/or commission can vary greatly depending on location, compensation plans, and experience, with top-earners landing $1 million+ per year.
The discrepancies in average salary are no surprise, as companies vary in their commission models for SaaS salespeople. The required skills and overall process are unique to other sales types, and often involve selling to an entire enterprise and multiple stakeholders. It is important to find the right commission structure to incentivize sales, while also maintaining a respectable profit margin for the company.
In addition to a salary base, some companies use commission schemes based on a percentage of the sale, paid either on signing of the contract or when the client pays the fee. Others use the accelerator model, meaning when a salesperson exceeds 100% of their target, their commission increases by the same rate of overflow: Achieving 110% of a target will earn the sales rep a 10% bump on their commission. Another common method is tiering the commission structure into different levels, and salespeople get bonuses or rates depending on their tier of achievement—bonuses can include fiscal rewards, perks, or otherwise.
SaaS sales is a unique process and requires techniques and strategies that differ from selling traditional products. Due to its complex nature, high competition, abundance of decision makers, technical nature, and potential impact of the product on a client’s business, it has become one of the most challenging, albeit proportionally rewarding, sales jobs.
Nailing the stages of the SaaS sales process can mean the difference between surpassing competitors and flailing behind. These are the key stages you’ll need to master:
You’ve identified which company accounts you’re going to target and are ready to hit the ground running. But in order to effectively sell, you first need to understand your actual customer. Pitching your SaaS product blindly to just any company persona can result in lost time, over-utilized resources, and increased costs. Identifying the optimal client persona (and the traits tied to that individual or group of individuals) is a crucial step for properly positioning your efforts and resources to increase your chances of engaging a qualified lead. Some of the criteria you should consider when identifying your key buyer personas are:
Once you begin collecting data and filtering potential customer contacts, you’ll be off the races in targeting the right people within the right organizations.
The modern buyer does not carry much trust in traditional marketing ads and messaging, and relies instead on peer reviews and credible content. To grab their attention and begin fostering trust, you’ll need to create positioning for your product. Work with your marketing team to create content that answers some common buyer questions:
By proactively answering some of these questions, you’ll ensure your SaaS pitch provides unique value, and gives you a strong foundation on which to close the deal.
Utilizing inbound marketing techniques is not just a solid way to get more leads; it spreads more awareness of your SaaS offerings, expands your brand, helps you collect invaluable data, and simplifies the process for both your marketing and sales team. Clients who start their journey with you through inbound marketing activities usually require a shorter time to close the deal, as they already have a solid amount of information about your product. Here are some of the best techniques you can implement:
A strong marketing and sales strategy is for naught if your teams are not enabled to do their jobs properly. Investing in training, providing them with the right knowledge and tools, and giving them proper technical support to convert leads into paying clients is key. Consider the following tips to better enable your team:
You now have leads coming in and the sales team is busy pitching, but the process doesn’t stop there. You’ll need to start optimizing your SaaS sales process, and to do so you’ll have to adopt a mindset of continuous improvement. Mastering your process can lower costs, help you fully utilize resources, and cut short the sales cycle. There are some great strategies you can adopt to enhance your SaaS sales process:
Having a robust sales pipeline is a staple of a successful SaaS sales process. This pipeline not only ensures streamlined operations, but also provides you with the information and data needed to tweak your processes based on informed decisions (rather than assumptions). Consider these key components of a creating a dynamic sales pipeline:
Now that your team has all the information, plans, strategies, and detailed workflow needed, reps can begin closing deals. This is the most crucial—and possibly the most difficult—part of the SaaS sales process. Keep in mind that mastering the previous steps in the sales process can ease the burden on reps when closing a deal; as customers are better informed and better understand the ins and outs of your product. This stage includes signing the deal and collecting payment, which can be done via varying payment methods, such as monthly subscriptions or discounted yearly contracts. You can (and should!) create payment options that meet client preferences (as long as it’s scalable, profitable and approved by your finance team) and nudge them across the finish line.
Continuous monitoring and evaluation of your SaaS sales process is key to optimizing your process. In an era when businesses rely more than ever on data and analysis, it’s imperative to properly utilize that data to maximize ROI and reduce costs. This requires:
Set out a plan not only to measure your SaaS sales process, but also to continue improving it. In such a competitive and volatile market, finding a successful SaaS sales process is a great way to ensure your company survives. It’s how you improve upon it, however, that enables you to truly thrive.
SaaS sales cycles differ depending on a multitude of factors, and because it is more complicated than other sales cycles, SaaS companies report varying lengths of sales cycles. The main factors that affect the length of a SaaS sales cycle are:
While the sales cycle can be affected by a multitude of variables, there are some tried-and-true best practices you can adopt in to shorten it:
SaaS sales models differ depending on the product you offer. Giant SaaS providers usually have a plethora of products that encompass all SaaS sales models, but for a newer provider, it’s important to choose the model that best suits your offerings. There are three prominent types of SaaS sales models:
The self-service model is used for basic SaaS products that are simple, have specific functionalities, and do not require continuous support. These models range from free SaaS products, such as draw.io, to reasonably priced SaaS products, such as Google Workspace. This model rarely requires active sales and is more focused on marketing and awareness. Clients usually come by these products via their own research and complete the transaction without ever interacting with a sales rep.
The enterprise model is by far the most complex SaaS sales model. Because SaaS products geared towards enterprises are extremely expensive, highly complicated, impact the whole company, and require a seal of approval from multiple decision makers, the enterprise sales model requires an intricate sales approach. B2B SaaS sales require more support from the provider, as tasks such as highlighting features, customizing the solution to meet a company’s need, and full-time customer service are generally included.
This sales model sits between both of the aforementioned ones. SaaS products within this model are pricier than those in the self service model, but less expensive than those in the enterprise model. The transactional SaaS sales model requires a personal touch in the shape of support, guarantees, training, and sales. A small sales team, along with a customer support rep, would be sufficient to handle a transactional SaaS sales model.
SaaS sales teams cannot afford to underestimate the importance of analytics in this data-driven market. Obtaining high-quality data is a great first step, but without the correct metrics it proves useless. Here are some of the most important SaaS sales metrics to utilize:
Simply put, churn rate is the rate at which a company loses clients in a specific period. Calculating churn is equally as simple, as you divide the number of lost customers by the total number of customers with which you started. This metric is great for assessing sustainability and customer satisfaction.
Calculating a win rate is a great way to know how strong your team is at finalizing deals and onboarding clients. The higher the rate is, the better your SaaS sales team’s performance. To calculate win rate, just divide the number of closed won opportunities by the total number of both closed lost and closed won opportunities.
A simple yet crucial metric, customer acquisition cost is calculated by dividing the sum of your marketing and sales cost by the number of closed deals within a specific period. Enterprise SaaS sales models will logically have a higher customer acquisition cost, while self-service models will have a lower one. This is a great indicator of the efficiency of your spend and will help you assess whether you’re able to invest in growth or need to address unwarranted costs.
A sales qualified lead (SQL) is a lead that has matured through the marketing stage and is now ready to engage with a SaaS salesperson. The number of SQLs is a great indicator of your marketing content, your marketing targeting, and the responsiveness of the market to your product. This metric involves dividing the number of SQLs by the total number of leads during a specific period, which gives you a ratio or indication for A/B testing of marketing activities. The higher it is, the more effective your marketing approach.
Calculating the revenue per lead is a great indicator to accurately assess the number of leads a SaaS sales rep can handle before productivity starts to drop. Just calculate the revenue per each lead and look for variations as numbers of leads handled by a rep start to grow.
This metric shows the ratio of the growth in leads per month. It is a robust metric that demonstrates how well your marketing is doing and how popular your product is in the marketplace. Just subtract last month’s qualified leads from that of the previous month, and divide the result by the former.
The customer LTV is one of the best metrics used to assess your business model. It can show the overall amount of money the customer will invest in your product. By dividing the customer value (money spent) over the average lifespan of the customer, you will get a customer LTV. If the LTV is lower than the customer acquisition cost, then your business model is working nicely. If not, it may be time to rethink your strategy to maintain a strong profit margin.
Let’s face it: A company’s bottom line is its key driving force. In order to secure a strong revenue stream, you’ll first (and continuously) need to optimize your SaaS business model and customer acquisition strategy. Here are some of the best methods to drive revenue:
Providing clients with demos is a great way to shorten the SaaS sales cycle and create better awareness for your clients; but offering any old demo won’t do. Demos need to be effective, meaning they have a certain objective to fulfill and should not go beyond that objective.
Offering demos that bombard your leads with information about features and customizations may lead them to think your product is overly complicated or not user-friendly. Keep demos simple, straight to the point, and make sure they address the main function of your product and how it solves their unique pain points.
Offering free assessments to potential clients is a great way to increase awareness about your product while simultaneously highlighting why they need a solution. Presenting a free assessment without proper nurturing, however, is just a waste of time. Make sure to follow up your assessment with marketing material, demos, or other resources. You want to keep leads interested and help them to fully understand your product, why they need it, and, in the end, follow through on making a purchase.
Many clients will contact you in the beginning of their research stage, but without proper, timely follow up, they may just slip through the cracks. Utilize solutions with automated follow up, such as automated emails, timed text messages, or targeted social media marketing to keep your product in the client’s mind without draining your marketing and SaaS sales team’s time.
SaaS sales is a complicated and rewarding process that requires the best of the best—both in terms of talent and approach. Its complexity and cycle depend on internal and external variables, but one factor remains constant: A successful SaaS sales process incorporates best practices and leverages the right technology to streamline operations.