Selling software as a Service (SaaS) is vastly different from selling other, more traditional products.
Since your business model involves recurring revenue, your SaaS sales process can’t be the same as it would be for any typical B2B or B2C sale.
Considering that in 2020, the software as a service market was projected to be worth 101.5 billion U.S. dollars, the market size and growth opportunity are stupendous.
So, whether you’re a startup or an established SaaS company, building the right sales process is vital for today’s B2B companies. Let’s look at the sales process associated with SaaS products together and get you started on the right path.
What is SaaS Sales?
SaaS sales process is defined as a potential customer’s journey when sales discussions start, through signup, and finally to becoming a customer. Your SaaS sales process is a set of actions you initiate to turn visitors into paying clients. Software-as-a-service customers can be individuals or other companies and organizations. The SaaS sales process generally starts with the initial need to provide customer support. It continues with onboarding new users and ends with a variety of renewal options available for customers to choose from, depending on their individual situations.
And this isn’t just the case for startups. It is also the case for well-established companies that are looking to expand their existing customer base.
In other, simpler terms, SaaS sales are the complex process of selling full-featured software as a service, licensed for use over the internet. Having an impressive sales process isn’t easy, though, and many things can go wrong along the road to getting your prospective client signed up for your product.
- In fact, SaaS benchmarks show that software companies with an annual growth rate of 20% have only an 8% chance of surviving.
How Much Do SaaS Sales Representatives Make?
A SaaS salesperson’s salary on average is $51,040 (base salary) and $118,000 total on-target earnings. SaaS sales reps can make impressive additional income with commissions added to the base sales.
SaaS Sales is one of the major departments in SaaS(software-as-a-service). It is as important as SaaS Development, Customer Success, Marketing, and Product. SaaS Sales department’s main goal is to convert leads into qualified opportunities.
In the SaaS industry, common commissions tend to be around 7-10 percent of new revenue, but renewal commissions and bonuses/accelerators can make the total compensation of a SaaS salesperson even more profitable.
Here are some benchmarks to illustrate how much SaaS sales reps make:
- Worldwide employment website Indeed estimates the average salary for SaaS representatives in the U.S. to be $65,176 per year. For an inside sales rep, it is $46,420 per year.
- Glassdoor calculates the average base pay for a SaaS sales specialist to be $61,072/y.
SaaS Sales Cycles
The length of SaaS sales cycles vary depending on several factors such as;
- product price,
- product complexity,
- target customers.
For example, a product that’s $100/m will likely have a faster sales cycle than a product costing $50,000 a year.
Therefore, selling SaaS to enterprise customers requires patience. The more expensive a product is, the more complicated and longer the process gets. However, you can speed up SaaS sales cycles with marketing efforts. Here are other factors that can slow down SaaS sales cycles:
Type of Customer: Small business owners or entrepreneurs typically make the buying decision faster as there are fewer or a single decision-maker. On the other hand, enterprises usually take longer as there are often multiple decision-makers, formal processes, and steps involved before approving a purchase.
Product Complexity: The more customization options available in your SaaS product, the longer your sales cycles will be. More customization options will cause prospects to require more demos, support, and back-and-forth negotiations, which can take a lot of time.
Free Trials: The length of a free trial naturally adds to the length of a SaaS sales cycle. Therefore, be mindful when deciding your free trial durations. A 30-day free trial would take so much of your time than a 14 or 7-day free trial. Shorter trial periods are more likely to prompt users to act quickly and buy your product.
Read: What is Sales Velocity and How to Improve it for SaaS
What Are The Stages of SaaS Sales?
A well-structured sales process in SaaS highlights more than the purchase and focuses on building a lasting relationship.
From defining your ideal customer to sales to customer success hand-off, here’s what the stages of a sales process look like for a SaaS company.
1. Defining Your Ideal Customer
Define your ideal customer profile before chasing leads.
Once you define your buyer personas, you can go after prospects who match them. This way, you will acquire high-quality leads who are more likely to be retained than low-quality leads. Lower-quality leads result in wasted time and resources, which damages the SaaS sales processes.
The second stage of SaaS sales is prospecting your ideal leads actively or passively.
Whether you should adopt an active or passive approach depends on your company’s profile and your product’s nature.
- Active prospecting might be a better option for smaller companies or companies with a very specific set of buyer personas. For active SaaS lead generation, detect high potential prospects and make an initial approach via phone or email.
- A passive approach can be more effective for self-service companies or those with a more extensive profile. To generate SaaS leads with a passive approach, use content marketing such as high-quality SEO content, online seminars, or video series. Then, use onsite CTAs for product demos or purchase options.
Inbound marketing is also a very efficient method to capture SaaS leads. Several ways to achieve leads with inbound marketing include:
- Blog posts
- Online ads
- Social media
Regardless of the approach, you and your sales team should be persistent to see the results. The level of commitment in SaaS subscriptions can make closing the deals a lot longer than you expect or are used to, especially if you have a trade sales background.
Not all trial users or visitors of your blog will necessarily be high-quality prospects.
Not knowing which leads to follow-up can consume the time and efforts of your sales reps. To avoid this issue, you can try lead qualifying methods.
Lead scoring is a useful method to qualify leads automatically. There are platforms that score your website visitors according to their likelihood of closing. Another SaaS sales strategy for qualifying leads is to email or call leads soon after they start the trial of your software. This effort can move your leads to the next stage.
4. Follow-up for the Upsell
Your customers have now been using your software for a couple of months or near the end of their trial period.
They may need a little nudge to subscribe for a paid plan or renew their subscriptions. You can try getting qualified prospects into one-on-one meetings where you can understand their pain points and demonstrate the value of your product for those pain points.
However, face-to-face contact is rare in SaaS sales processes. So, you can’t rely solely on your presentation skills. In that case, keep another set of skills ready to convince them into upgrading or extending their plans through contact. I.e., when contacting via phone call, you need to be more conscientious of a customer’s tone and his interest in your offer via voice.
5. Dealing with Objections
After the presentations or contact, prospects are likely to raise questions or express concerns about your product.
If you don’t address these concerns and objections gracefully, you may risk losing the deal.
Common objections that companies face during the SaaS sales process steps include:
- “Your product is too expensive.”
- “Your product lacks X features” or “Your product doesn’t have the right features.”
It would be best if you worked together with your prospect to make them understand the value of your product and how it addresses their pain points. Explain the benefits they will get.
If they are concerned about a missing feature, ask questions to uncover why they are looking for that specific feature. Once you know what they actually need, you can demonstrate how your product’s existing features can solve the problem at hand.
Or if the client is really worth the effort, you can go ahead and ask your product team for the feature.
6. Closing the Deal
This is the stage where prospects become customers.
Deliver the final proposal, make the necessary negotiations, and have them sign the contract.
Bear in mind that you shouldn’t rely on discounts to close the deal with stubborn prospects.
Customers who are convinced only by a discount offer are likely to walk away and choose a cheaper competitor service over your product at the slightest opportunity.
The last one of the SaaS sales stages is customer retention which is vital for any SaaS company. Make sure you provide excellent customer support and success coaching if possible, for post-sale needs and questions. Additionally, you can:
- Offer training for new users
- Ask for feedback, reviews, and referrals.
- Upsell existing customers to upgrade their subscriptions.
SaaS Sales Models
Selecting the right sales model will define:
- how many salespeople you need to hire,
- who your potential customers are,
- how you will interact with them,
- and how you can successfully close the deal.
Even the slightest mismatch in your SaaS sales model between what the target market expects and the process you require it to go through can make the SaaS sales process challenging.
Below are the three common SaaS sales models that you can choose from to help you plan your SaaS sales strategy.
1. Customer Self Service (Often B2C)
Customer self-service is a SaaS sales model that requires customers to be willing and able to serve themselves.
This model is best when selling SaaS at a low price point and high volume.
Customer self-service SaaS examples include Netflix, Spotify, and Medium. Self-service SaaS sales models can’t support a full sales team, and customer service is often not comprehensive.
Common SaaS sales strategies to attract customers to the self-service approach are indicated below.
- Customers need to be able to service themselves. To ensure they possess the technical know-how to manage the process and get value from the software, you can use an onboarding sequence. An onboardçş.şping tool such as UserGuiding can help you build interactive product guides in minutes.
- Free trials or freemium models are also among common sales strategies for self-service SaaS models.
2. Transactional Sales
The transactional sales model is characterized by high volume sales, short sales cycles, support operations, and faster onboarding – all supported by automation.
The price point is higher for this sales model. Higher ASP (Average Selling Price) brings higher expectations for the business relationships, such as signed contracts or the ability to speak to a human when faced with a problem.
In this model, the marketing department’s focus is more on lead generation and building the pipeline for new opportunities or supporting the SaaS sales process with content marketing. Many self-service SaaS businesses decide to shift up to the transactional model as their businesses grow and expand.
Find out all it takes to achieve an effective SaaS marketing for any SaaS business.
3. Enterprise Sales
The Enterprise SaaS sales model is more complex than the other two models.
The SaaS products in this model are sold at low volume and high prices.
The sales team consists of territory-based sales reps focused on a narrow set of prospects.
This sales model requires a dedicated sales operation to identify, nurture, close, and support customers. Enterprise companies often employ multiple sales teams, supported by product marketing and other resources to convert and retain high-value customers.
How to Sell SaaS & Optimize for SaaS Sales Process
Before we conclude everything, here are 4 quick tips to optimize your sales processes.
1. Keep the trial period short
- Most people don’t use the product during free trials for the full duration.
- Shorter trial periods prompt users to test out and use your product as soon as possible.
- Shorter free trials also shorten the sales cycle and your customer acquisition costs.
2. Optimize your email campaigns
Most of your prospects may forget all about your product after signing up for your free trial unless you set up a successful email drip campaign.
These campaigns are effective in driving click-through rates and nurturing customers.
You may build a drip campaign for people who subscribed for a free trial or who downloaded your eBook.
3. Call prospects following their sign-up
If a prospect signs up for a free trial, it shows their interest in your software.
Within the first five minutes of their signup, you can call to qualify or disqualify prospects, handle possible objections, and improve your reach rate.
4. Offer short product demos
Offering high-quality leads is also an effective strategy for selling SaaS.
Make sure you qualify and research your prospect before offering a product demo. Keep your one-on-one demos short (i.e., around 15 mins) to leave plenty of room for questions.
The secret to effectively selling SaaS is by having a predictable sales cycle that perfectly matches your SaaS sales model, adopting the right sales techniques and right SaaS tools. Wondering which tool to test for your SaaS sales efforts and nurturing? Give UserGuiding a try to easily show users how your SaaS product works.
Yes, a sales process for a SaaS company is different than it is for other industries, but it all comes down to the same concept: “dedication”.
If you, your executives, your teammates, and every stakeholder in your company isn’t dedicated to success; you will have a hard time achieving it. Make sure everyone is aligned under your vision and that you treat your customers in the best way possible.
Frequently Asked Questions
How do I get into SaaS Sales?
In order to become a SaaS salesperson without any prior experience, you’ll need to land an entry-level job at a SaaS company as a sales associate and become knowledgeable in sales operations.
What does success look like for a SaaS Sales team?
High conversion rates and cold email/call reply rates are the most noticeable characteristics of successful sales teams in SaaS because they indicate high-performing sales demos and outreach efforts.
How is SaaS Sales different than traditional sales?
SaaS businesses are dependant on selling to the same customers again each month/year to protect their recurring revenue. This makes the sales process for SaaS more difficult because you’re asking the customer for a commitment, instead of a one-time buy.