SaaS companies use a subscription-based pricing model. Instead of selling a physical copy of a product, they allow users to access their tool via the internet for a limited period (usually a month or a year). Depending on marketing and sales goals, SaaS brands package products as customer self-service, transactional or enterprise sales.
“Things that separate SaaS from other products are trials and demos.”
A prospective buyer can check out the tool’s main features during the trial period. This is a perfect tactic for qualifying leads and expediting onboarding. Free trials are especially fantastic for brands that have a massive competitive advantage over their competitors.
In this guide, we’ll talk about different SaaS business models, roles, and SaaS sales tactics. We’ll also explain what a SaaS sales process looks like. Enjoy!
SaaS Sale Basics
Like in any other industry,
“SaaS sales team helps a company convert leads into paying customers.”
Selling Sofware-as-a-Serivce is very different from selling some other products. SaaS is a web-based software allowing users to access the platform anywhere. When you sell a product, there’s no transfer of ownership. Furthermore, a person doesn’t get a physical product as they would with other types of software.
For a SaaS business to be successful,
“It needs to minimize Customer Acquisition Cost (CAC) and maximize Average Selling Price (ASP).”
A company’s success depends on maximizing customer lifetime value. High retention rates are especially important for expensive enterprise-level SaaS with long sales cycles and a high customer acquisition cost (CAC). Some brands also make good money upselling extra features.
What Makes SaaS Sales Unique?
In many ways, SaaS is a cutthroat industry.
Brands compete against other international companies, so Total Addressable Market, or TAM, is huge for this industry. Unfortunately, this also means new software companies go against multimillion global brands with massive marketing budgets.
“Any business can benefit from a quality SaaS product.”
Given the nature of SaaS products and market opportunities, most companies avoid traditional marketing channels in favor of digital promotion. Using search engine optimization and social media marketing allows you to reach numerous users in your country and abroad.
The sales process usually varies depending on the sales model that you’re using. Some of them don’t even require sales teams. Instead, they focus on marketing as the optimal method of generating leads.
Quick Breakdown of Every SaaS Sales Role
Depending on your model and SaaS product, you might need the following sales professionals on your team:
Business Development Representative
As their name implies, these experts analyze the market for new developmental opportunities.
They’re crucial for qualifying leads, finding new vendors, and exploring new markets.
These professionals cooperate with various departments, including sales, marketing, research, and development.
A SaaS company might not need a business development representative from the get-go. However, they’re crucial during the expansion stages.
Account executives are the backbone of every team. Basically, this is a different name for sales representatives. Here’s how Indeed defines the position:
“Account executives make the first contact with potential clients and focus their work on moving the client through the sales funnel from a potential lead to an existing customer.”
Aside from qualifying and closing a lead, executives might perform other tasks. Depending on company needs, they can serve as account managers, upselling and retaining current customers.
The account manager’s job is to manage existing accounts. They’re especially important for large enterprise suites, helping clients resolve various issues and serving as a contact person in the company. They can increase customer retention and upsell by staying in touch with users.
3 SaaS Sales Examples
Just so you have a better understanding of SaaS sales and marketing funnels, we’ll share a few examples:
Harness is a software delivery platform that targets engineering and DevOps teams. The platform uses AI machine learning to help developers during their software creation.
The company uses a simple, yet effective homepage design. There’s little text on the landing page, allowing quick browsing. Harness offers a massive resource library with lots of downloadable content. Although the SaaS brand doesn’t offer standard demos, you can access the free Community Plan.
When we talk about communication platforms, it’s hard not to mention Slack. Nowadays, many companies use this platform for team interaction, sharing files, and performing other tasks.
The fantastic thing about Slack is that you can use it anytime. The tool doesn’t require payment; you can get lots of value without spending a dollar. Its basic paid plans are relatively cheap, so it quickly became popular. However, you also have an enterprise-level plan for corporations.
Mailchimp is one of the best tools for email campaigns. They’re also one of the most creative brands in the industry. Mailchimp uses a mix of traditional and digital marketing campaigns, where they rely on funny messaging and bright colors.
If you check their site, you’ll notice that the management is instantly trying to qualify you. At the top of their homepage, you’ll notice pricing plans. This makes sense for a major brand such as Mailchimp, as most users know their software and what it does.
So, instead of sending a person through a long sales funnel, they don’t waste time selling the product.
3 SaaS Sales Models
A new SaaS brand can choose between three main sales models:
- Customer Self-Service
- Transactional Sales
- Enterprise Sales
Each one of these approaches differs in complexity, pricing, target audience, and sales team size. A SaaS company should revise its product and resources before choosing one of them. And although mature businesses can employ all three sales models, up-and-coming organizations have to choose one of the three.
In most cases,
“A SaaS brand chooses a model based on the complexity and price.”
If you’re selling complex software with many features, you must push the price up to justify the expenses and vice versa. Unfortunately, a potential customer doesn’t care about your operating costs. So, you also have to account for current market demand and competition.
Companies that focus on the self-service model create solutions that are cheap and easy to use. Their main goal is automating the entire process, where clients don’t need a customer support team to help them. Furthermore, the target audience should understand the platform’s benefits without your assistance.
“Customer self-service focuses on high sales volumes.”
Most of these products are interchangeable and don’t provide a major advantage over the competitors. If we also consider low ARS, you must acquire as many customers as possible to make this SaaS sales model feasible.
Although they have basic functionality, the self-service products must still fulfil clients’ needs. Otherwise, given their low prices, it’s relatively easy for users to change to another SaaS solution. Companies often use free trials and freemium models to attract potential customers.
- Low price
- Low complexity
- No sales
- Mass marketing for the broadest audience
- Marketing creates awareness and provides educational content
- Basic or lack of customer support
- Clients use the help section and templates to solve their issues
The transactional sales model is the best for scaling and the most popular option out of the three. It has similar complexity as the self-service model but has much better, dedicated customer support. Most notably,
“Transactional SaaS provides a high level of customization.”
Brands that rely on this model use sales reps. The companies’ sales teams can negotiate the prices and offer customized features. Due to high software prices, clients also expect better customer support.
Products that use a transaction model aren’t necessarily better than self-service platforms. The main difference is they’re much more professional and customer-focused and emphasize building a business relationship. Like self-service products, they need many clients to survive in the market.
- High price
- Low complexity
- Sales teams receive training and performance incentives
- Fast sales cycle
- Mass marketing for the broadest audience
- Heavy use of sales and marketing pipelines
- Customer support representatives are available at all times
- Custom-made solutions
As you can tell by the name,
“Enterprise solutions are the biggest, most comprehensive SaaS on the market.”
These products have the highest complexity out of all the models and give the users a complete experience. They also tend to be the most expensive SaaS, and, in most cases, users have to contact the company for a quote.
“Enterprise products have long B2B sales cycles and few customers.”
The SaaS is ideal for large corporations that prioritize functionality over price. Nevertheless, sales managers still have some leeway during price negotiation. An enterprise customer can choose between different features, and the client often has access to an account manager who can help maximize the tools’ benefits.
- High price
- High complexity
- Sales teams receive training and performance incentives
- Slow sales cycle
- Sales often include back-and-forth negotiations
- Niche marketing that focuses on top-tier managers
- Complex marketing approach
- Customer support is tailor-made for the company’s needs
- Dedicated account manager for each subscriber
What Does the SaaS Sales Process Look Like?
As mentioned, companies that rely on self-service don’t even have sales teams to begin with. On the other hand, enterprise-level products entail detailed planning and execution to warm up leads, communicate value and turn them into clients.
Product marketers and salespeople usually get commission rates based on closed deals. This forces the teams to be extra aggressive when pursuing potential buyers.
1. Lead Generation
No matter what kind of product you’re selling, you’ll need some sort of lead generation process to attract people.
“Companies commonly use SEO, SMM, PPC, email outreach, and influencer marketing approaches to generate leads.”
Your main goal of SaaS inbound marketing is to bring a person to a site and put them into a SaaS sales funnel. Driving website visits is crucial as it gives users a chance to check out a free trial or product demo. However, this approach is much more efficient for self-service and transactional sales.
2. Direct Outreach
Enterprise B2B SaaS sales and lead generation are more complex. Unlike the other models,
“It isn’t uncommon for enterprise SaaS sales rep to pick up the phone and starts calling prospects.”
Cold calling and cold outreach make sense for enterprise companies as they allow you to contact top-tier executives. The high cost of SaaS products justifies the long sales process and the time spent chasing a lead. On the other hand, this sales method would be abysmal for self-service brands.
Aside from phone calls, a SaaS salesperson can also use emails and social outreach to contact a prospect. Sometimes, you need a combination of these methods to connect with a lead.
3. Qualifying a Prospect
Like in any other industry, SaaS brands use cold and warm leads as the basic lead segmentation. However, if you check major marketing sites, you’ll notice that most software companies prefer using MQL/SQL/PQL classification.
Here’s what each one of these acronyms means:
· Marketing Qualified Leads (MQL)
Marketing-qualified leads are prospects qualified by your marketing team. In this particular case, company representatives check interaction with the site, social media, and other company assets to qualify a lead. For example, marketers will focus on users who have read multiple articles on your blog, downloaded eBooks, and performed similar actions.
· Sales Qualified Leads (SQL)
A person becomes an SQL after interacting with a SaaS sales representative. After exchanging emails or a long phone call, a company rep will determine whether a prospect is interested in software. In most cases, a lead was already in the sales funnel before connecting with the rep (i.e., they interacted with the brand).
· Product qualified leads (PQL)
Unlike other industries, where it takes time to generate a qualified lead, the SaaS process is straightforward.
“As soon as a person signs up for the software, you can consider them a potential client.”
These prospects show the highest level of interest in your offer. Subscribing to a demo or a free trial tells you they’re seriously considering your SaaS product between a few options. As they’re using the software, company representatives try to help them achieve customer success and close the deal.
4. Offering Demos
Once you qualify a lead, your sales team should give them the opportunity to try out the demo. Of course, in the case of MQLs, you can simply skip this step.
“The nature of SaaS products gives an inherent advantage to quality software.”
Free trials and demos are an important part of the SaaS sales pipeline. They’re crucial for expensive enterprise products, where clients must spend a lot of money on purchases. Trials have become a common promotional tactic, and it would be concerning if a SaaS business didn’t offer them.
5. Negotiation and Closing
Negotiation and closing are the last steps of the SaaS sales cycle. At this point, the client and provider are establishing the contract terms and signing the deal.
“Negotiation and closing become more important with the size of a SaaS purchase.”
Companies that use simple, cheap SaaS don’t require that much persuading. They simply subscribe to the software and continue with their day. However, negotiation and closing are important when you must pay for numerous seats and want to customize product features.
6. Nurturing Clients
Nurturing is a post-sale process and one of the main reasons why certain SaaS businesses succeed over the competition. By staying in touch with the existing customer, a brand can significantly increase customer retention. In turn,
“Nurturing helps boost monthly recurring revenue.”
However, this practice provides another immense benefit. It allows you to upsell your current clients. You can significantly improve your monthly performance by offering various promotions and discounts.
How to Create a Winning B2B SaaS Sales Strategy?
Algocentric Digital offers its users an AI-Powered CRO Playbook. This digital content is a fantastic starting point when developing a SaaS strategy. In particular, we talk about ways to improve your conversion across the board, which includes sales.
Anyway, here are different ways to attract and convert users:
1. Limit the Number of Options
When a website visitor goes to the SaaS pricing page, they might get turned off by the overwhelming number of options. Whether we’re talking about available plans or software, some companies try to provide several solutions that would cover different segments of the audience.
Unfortunately, this approach often tends to backfire. As a small SaaS brand,
“You should limit your offer and focus on the winners.”
Here are a few tricks that will help you optimize pricing policies:
- Don’t try to diversify too early. If you can develop several SaaS products, you should focus on clear winners.
- Similarly, you shouldn’t have too many pricing plans. Experts suggest that you stick with three or four options. Doing so keeps the value proposition simple and easy to understand.
- Use the initial sales to improve engagement and onboarding.
- Monitor users’ behavior and needs, and provide marketing material that would help solve their problems.
- Once you hit a wall with a specific product, you can diversify your offer. Develop other SaaS that would make sense in conjunction with the current platform. Diversification would allow you to reach different segments of users and increase brand awareness.
However, you don’t have to diversify at all costs. There are a lot of SaaS brands that don’t change their pricing or add new tools. Instead,
“They reinvest earnings to improve existing software or achieve higher market penetration.”
Sometimes, your initial assessment was right, and you won’t gain much by adding new options.
2. Create an Amazing Value Proposition
In the SaaS industry, it’s hard to differentiate yourself from the pack. Most brands copy ideas from others, adding small twists to existing solutions. This is why the value proposition is so important.
“You need to show users why your product is better than the field.”
The best way to sell SaaS is by focusing on potential clients’ pain points and solving them. With that in mind, your value proposition should do the following:
- It should be enticing so that leads would use it instead of competition.
- The SaaS should be different enough to warrant a purchase.
- A new customer should believe that you can deliver on your promise.
You shouldn’t neglect the importance of trust.
“According to Business Wire, 80% of B2B clients switch their suppliers because providers couldn’t meet their expectations.”
3. Invest in Sales Training
Being a salesperson is extremely hard. According to SalesForce, 72% of reps don’t expect to hit their annual quota. This sounds scary for new SaaS brands who want to maximize their revenues by investing in a sales team.
The good news is that you can significantly improve those numbers with proper training.
“An average program costs between $400 and $3,000.”
Although this might sound like a huge figure for new brands, it’s an investment that will yield massive benefits in the long run. Besides improving the company’s results, improving the team’s sales skills will affect the leads’ sales experience.
4. Treat Qualified Leads as Cold Leads
Sales reps sometimes make the mistake of not trying hard enough with qualified leads and existing clients. What’s worse, out of 61% of leads marked as qualified, we should only consider 27% of them as such.
“You need to put maximum effort in every lead even when it looks like a done deal.”
Similar can be said for existing clients. As we all know, retaining a customer is much easier than closing a new one. Among others, it’s also the best way to increase overall company profitability. So, don’t presume that just because someone is a subscriber, they will stick with your solution in the future.
5. Learn to Overcome Objections
Leads have a natural resistance to salespeople. Even if they’re completely satisfied by the offer, there’s a good chance they’ll find a reason to object. While working in the field, you’ll hear things such as “That’s too expensive!” almost daily.
“Ability to tackle objections makes the difference between bad and good salesmen.”
Here are a few tricks that will help salespeople improve performance:
- A company representative should take time to answer the objections. Even if a person has a few rebuttals in their head, they should analyze the lead’s comment and try to provide an even better answer.
- Many salespeople make the mistake of talking too much. Sometimes, they don’t neglect the objection and continue talking about product features. This can make a wrong impression as a prospective customer might think that a salesperson isn’t listening.
- Sales reps should use lots of open-ended and probing questions. This can help them come to different conclusions from what a person told them. As a result, they can overcome unspoken objections.
- Selling a SaaS is a bit different from other services. Aside from the price and features, potential customers are also interested in how you’re handling data breaches and ownership. So, these things might commonly pop up during sales talks.
- Lastly, a salesperson should know when to close.
6. Simplify Free Trials
Free trials are the best way to entice and qualify users. However, you should be very careful as to what you’re offering. Also,
“A SaaS brand should simplify activation and logging in.”
Depending on your model, you don’t have to offer all the features you would with the paid option. Instead, focusing on functions that are more likely to lead to sales is much better.
7. Provide a Better Solution, Not Different One
Sometimes, salespeople get caught trying to oversell. They might offer lead or existing customers new SaaS products they never asked for.
Instead of trying to diversify your offer, you should provide more of the same.
“Companies can get better results providing additional features for the same SaaS than by offering new SaaS.”
As a person has already signed up for one tool, you can at least be certain new features won’t turn them off. Furthermore, focusing on just one suite simplifies the value proposal.
Best SaaS Sales Metric to Track
Lastly, we would like to discuss SaaS KPI metrics that will provide better insights into your performance.
● Monthly Recurring Revenue (MRR)
This metric shows us the monthly revenue a company makes during a 30-day period. Brands use it to evaluate the stability of a business. Monthly recurring revenue is also crucial for assessing your marketing and sales activity from month to month.
● Average Revenue per User (ARPU)
ARPU is important for evaluating the average return on a SaaS plan. As such, you can use it to adjust the pricing policies. It can also help a sales manager and customer success teams assess how much they can spend on customer acquisition. ARPU is a valuable tool for planning marketing and sales budgets.
● Customer Acquisition Cost (CAC)
SaaS brands measure CAC by adding marketing and sales costs and dividing this figure by the number of new users. Customer acquisition cost shows us how efficient our sales and marketing activities are. Ideally, a company should try to minimize this score to improve operational efficiency.
● Customer Lifetime Value (CLV)
Customer lifetime value shows how much an average user spends over the years. It’s cumulative revenue from multiple subscriptions. When you compare this score to ARPU, you can tell how much money a business receives from a user after the initial purchase. In other words, it tells a company how important it is to retain SaaS clients.
● LTV vs. CAC
By dividing customer lifetime value and customer acquisition cost, you can see if your sales and marketing strategy is feasible. The general rule is that this number should be above 3. Having an LVL to CAC ratio of one or lower indicates inefficient marketing and sales operations.
● Churn Rate
Churn is a crucial metric for SaaS brands. It tells businesses how many clients they’ve lost on a month-to-month basis, and it’s crucial for assessing customer retention policies.
● Conversion Rate
Conversion rate can pertain to any type of conversion. However, when analyzing sales, we mainly talk about sales conversion rates. You can use the metric to assess how many website visitors you turned into leads and how many leads you turned into customers.
● Lead Velocity Rate
The lead velocity rate shows you how quickly you can grow your lead funnel. Companies use it to evaluate pipeline efficiency and the brand’s growth potential. However, you shouldn’t increase the lead velocity rate if it presumes excessively high acquisition costs.
● Monthly Active Users
The monthly active users metric shows the users’ level of activity. SaaS businesses primarily use it for free trials to evaluate potential clients’ satisfaction with the product.
● Net Promoter Score
Net promoter score is the best way to measure customer experience. Companies use it to assess users’ satisfaction with a SaaS product by using a scale from 0 to 10.
Best Way to Sell SaaS Products: Conclusion
Selling SaaS products revolves around free trials and demos. Potential clients can try different solutions before choosing one they like.
Due to the fact that companies sell subscriptions, not real products, the ownership never changes hands. Users can access a platform via the internet for as long as the subscription lasts. Due to the cloud-based nature of these products, clients can store all their data on the web, which can help them save resources.
As for the SaaS sales process, it has numerous similarities to other types of sales. The main difference has to be how companies qualify users and how they present the software during free trials.
Is it hard to sell SaaS?
The difficulty of selling SaaS varies based on the product, the niche it covers, and a few other factors. The good thing about this industry is that customers can try different solutions and go with products that suit their needs.
What does a SaaS salesperson do?
A SaaS salesperson is tasked with qualifying leads and engaging them via phone, email, or social media. They should introduce individuals to their product and try to put them in the sales funnel with the ultimate goal of closing the deal.
Can anyone do SaaS sales?
Anyone with the right attitude and willingness to learn, can do SaaS sales. However, to get good at it, you’ll need time to develop your skills and learn the market and product nuances.