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What are SaaS Sales – a Welcome Guide with Examples

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  • Synergy Research reported that IBM had 7 percent of the cloud infrastructure market
  • These major platforms probably only went all-in on flexbox fairly recently
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You have an amazing SaaS product ready to be launched, but before you move forward you as an entrepreneur must understand what SaaS sales are. Sales are of utmost importance as it keeps your business afloat. So let’s dive deep into the SaaS sales process; this article explains sales models, the role of a SaaS sales rep, and important sales metrics. Hopefully, in the end, you’ll be a master at managing the SaaS sales cycle.


What Are SaaS Sales

It is the methodical, complicated process of selling your cloud product. In short, it’s the acquisition of new customers and upselling to existing ones. So, why is it such a complex process? 

SaaS products provide the user with complex values to solve the main problem. You need to construct the customer’s journey to convert a potential lead into a paying customer. Make your customers aware of their problems and educate them on any problems that may arise in the future. Then, show them why your product is the perfect solution.

A SaaS sales cycle like this needs many touchpoints through all the sales funnels. To be a successful SaaS entrepreneur or a sales rep you need to understand the ins and outs of the SaaS sales experience. Strong communication between the marketing and sales teams is a must to sell SaaS products.

A solid marketing team is responsible for increasing customer awareness; educating them about problems and their solutions. At this stage, the potential customer is called a Marketing Qualified Lead or MQL. As soon as the customer is ready to use the demo, the marketing activity stops and the customer is now a Sales Qualified Lead or SQL. Your goal is to somehow convert this interest into a sale. You can achieve this through your expertise in both business tactics and the technical aspects of your product. Sometimes, a SaaS product may be so intricate, that a technical expert needs to be hired to explain the products’ features. All of these factors make SaaS sales a time-consuming and lengthy process that requires a thorough study of the buyer.

Your sales team has to construct a sales strategy, select the best communication channels, and build a SaaS sales process taking into consideration based on the results of this customer study.

The SaaS Sales Process

The data derived from research on customer needs is essential for marketing and sales. In 2020, it’s crucial to remember that SaaS sales methodology is usually based on how relevant the target audience is to reach out. This is due to the fact that customers don’t know what problems they have and so it’s our job as an entrepreneur to educate them about it and then present our solution for it. If you want to win at the SaaS game where your competitors have failed, a sales process built from customer-centered data is the way to go.

Want to build a successful, repeatable, and scalable SaaS sales process? Here is our 5 step guide! 

Define the Ideal Buyer Persona. Identifying your ideal customer is the first step in successful sales. This way you’ll know how to reach the audience, the problems they might have, and why your product is the perfect solution. Here are some useful details:

Title

Age

Location

Income

Short bio

Defining personality traits

Goals

Frustrations

Build a sales pipeline. The sales pipeline is a visual representation of every marketing and sales stage your customer goes through. It is of the utmost importance to identify the stage at which the customer is and to strategize how to nudge them into the next stage. 

These days, a pipeline is an indispensable feature of any CRM. Here is why you need it:

  • To track win/loss sales statistics and identify the weak stages and improve them
  • To receive non-stop reminders to follow-up leads in the right time
  • To increase the possibility of closed sales deals. 
  • Filling the pipeline is a must, but it’s easier said than done. So, how do you implement SaaS lead generation strategies?

We recommend you to strengthen the inbound marketing efforts and reach out to leads via social networks. Here are our expert tips:

This is insane!

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Start your own blog. 

Fresh, top-notch content is a must to build trust and confidence. Create SEO optimized content so that Google sees and understands what you and your blog are talking about. It’s a proven way to increase organic traffic through social media activity.

Spread the word through social networks. 

Use your buyer persona research to find which groups and pages in social media are frequented by your target audience. Social media is a great way to attract new customers.

Set up a newsletter. 

You’ll need to collect a lot of relevant data about your customer audience through your newsletter subscription. You can also use a signup form for this. 

People love freebies! Share free product-related material like e-books, info-graphics, and ready-made templates. You could also exchange valuable product-related content in return for personal data.

Create qualification criteria. 

With an example, I will explain the difference between MQL and SQL. Let’s imagine that a new site visitor has subscribed to your site. You study their social networks and confirm that they are your target audience. However, you recheck and realize that their industry doesn’t have the problems you offer the solution to. In order to avoid such mistakes, you need to select key criteria and construct a lead qualification framework. 

Test new hypotheses.

As soon as you find a profitable workflow, begin to research ways to improve it. You could use additional channels of communication, modify content strategy, or use automation software. 

The optimization of the customer experience is your ultimate goal. Start by collecting customer feedback and crafting a solution taking their suggestions into consideration to make their lives easier. 

Do these steps and watch your leads multiply.

SaaS Sales Cycle

The length of the SaaS sales cycle depends on the price of the product and the number of decision-makers involved in the selling. In other words, the price of the product is directly proportional to the length of the sales cycle. Choose your SaaS pricing model wisely and carefully.

So what are the factors that decide the time needed to close or upsell deals?

Firstly, build sales in the new market. Spend additional time educating and convincing buyers before actually selling them the product. 

Enterprise-level contracts can also lengthen the sales cycle. It can be challenging to find specific product requirements and get approved by a complex, multi-layered decision-making structure.

The more complex your software is the longer the cycle will be. This is due to the fact you need to spend more time educating the customer on the various features and benefits. It helps if you have an expert doing all the talking. The length of your free trial period also matters as sales will happen only after the trial ends. 

Which sales model do you choose?

The cost of your solution affects the cost of your sales model. Here are the three SaaS commercial models we recommend using:

  • A cheap SaaS model – self-service model,
  • An expensive solution – enterprise sales,
  • A middle option – transactional sales model.

 The big players use a combination of all three, but if you’re a beginner stick to mastering just one. So, what’s the difference? 

The first model is the customer self-service sales. This one stands for a high level of customers’ motivation to use your product themselves. The solutions offered are clear and easy to use. Zoho is a great example of self-service cloud software.

Make sure your target audience understands the value and uses of your product before employing these SaaS models. As marketing activities promote these solutions themselves, the sales pipeline happens without sales communication or a dedicated sales team.

The second type of SaaS sales model is transactional sales. It’s more expensive and the clients want a more personalized approach, guarantees, and support. That’s why this model resembles a combination of self-service SaaS, automated lead generation software, and a little sales team. Zendesk is a good example of this SaaS sales model.

The enterprise software sales cycle is its own beast, very different from the other models. First of all, it’s the price. When it comes to selling SaaS to enterprise, the figures are astronomical. The second key difference is how difficult is to pick the right people. Enterprise-level sales are always stakeholder-focused sales where several decision-makers are involved. The third thing is an entire complex of the B2B SaaS sales at that level. It includes:

The custom registration process. As customers cannot self-register, they need the help of an account manager.

The custom list of features and user workflow

The on-promise version of the cloud solution

You need to be able to guarantee to this giant enterprise that each step of the SaaS solution will be flawlessly executed. 

“Typically when you’re selling SaaS to an Enterprise, many teams need to be involved in the decision and implementation process. Just when you thought you’ve sold the decision-maker, then another team gets wind of it and blocks the deal.

“In order to get ahead of this challenge, it’s important to ask to get any stakeholders involved early in the sales process so the deal can be tailored to each team involved early-on before it falls apart.”-Kean Graham, CEO of MonetizeMore.

SaaS Sales Metrics

You must keep track of your SaaS sales metrics. The single-sale is just a start point of the customer journey from the point of sales. Why is it important to understand?

This factor makes a difference. On the other hand, to generate new sales, a salesperson must generate recurring revenue by attracting new users and making them use an app for a long time.

The 6 most important SaaS and cloud sales metrics are:

Customer Acquisition Cost or CAC. This indicator shows how much it costs to acquire a new user. This metric shows the connection between marketing costs and the number of new users. An average CAC for SaaS shows the scalability of your current strategy and the entire product.

Lead Velocity Rate or LVR. It shows the growth of your Sales Qualified Leads through the months. It’s important as it verifies the market need in your solution. LVR calculates the growth of your business in the number of leads.

The customer’s lifetime value or LTV represents the overall amount of money spent by the user for your SaaS. This is the number of revenue per account per usage time. LTV also shows the probability of the success of your business model. If this indicator is higher than CAC, your business will grow. If it is lower, it’s time to change it up.

Win rate shows the performance of your sales team in closing contracts. It is calculated by dividing the successful cases by the total number of sales cases. But be cautious while using this metric. Instead of testing business hypotheses at the new market segments, your sales may close the most accessible deals.

Monthly Recurring Revenue or MRR. This is a complex metric. It includes the revenue from just-joined users, upselling, and users’ churn. We recommend that you use an MRR calculator to find out the current state of your business.

Churn rate shows the number of customers leaving your service during a certain period. It is indicative of the satisfaction rate of your users. Sixteenventures estimates, that a 5% annual churn rate is allowable for SaaS products. If it’s any higher, it’s time to revamp your strategies.

Metrics are an important part of the fundraising process. It’s essential that founders are transparent about the growth of the particular metrics at the market. Thus, an investor can be sure that the product has enough value and capacity for disruptive growth.

“The three most important metrics for SaaS sales rep would be brand awareness, brand consideration, and brand loyalty. Effective selling is all about knowing exactly what you’re offering and how your end consumer benefits of it.”

As an entrepreneur, you must have a clear insight into your brands’ customer perception, image, and the channels they associate you with. This is how you create brand awareness which is how you nurture leads and convert them into loyal customers. These are all crucial to creating a USP as a base foundation for how we expose our business and ultimately sell.

MarTech has become a very competitive place and the only concrete way to keep up and make a stand out in the crowd is to track the right metrics that actually convert.”-Steve Habazin, content management specialist at Latana.com

The sales process of your SaaS product is instrumental in your success as a founder and that of your start-up. Get your sales game on point and that’s half the game won. 

For more information and interesting articles, visit us at @www.saasindustry.com.

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