How to Develop a 7-Figure SaaS Sales Process
February 11, 2022 Edwin Kooistra
Being from the industry you might have noticed that we globally are experiencing a Software as a Service (SaaS) boom, which was further pushed by the onset of the COVID-19 pandemic, where distant working and reliance on software became immense, which of course was a huge opportunity for SaaS businesses to carve a niche for themselves in the market and prove that what makes them stand out versus their competitors.
This growth in the industry and our reliance on software, in general, might give you an illusion that the SaaS sales process is relatively easier when it comes to other products or services, unfortunately, it’s the opposite.
The SaaS sales process is not only different from other sales processes that we deploy in the B2B sector, but it also has a lot of hurdles in its ways, unlike the traditional sales process.
In SaaS sales, you not only measure the rate of increase of new customers, but your actual sales success is measured in how low your customer churn rate is, and how high is your customer return rate alongside lifetime customer value (CLV) and monthly recurring revenue (MRR), as SaaS Sales are all about recurring sales rather than a one-time purchase.
With the SaaS industry growing at a rate of over 17% per annum and being valued at $146 billion, it is no shock to say that research predicts that by the end of 2020 twenty more than 98% of businesses in the world will be using SaaS in one way or the other.
Therefore, keeping in view, the transforming dynamics of the market and the increasingly important role of SaaS.
As a business owner, you as a business owner must familiarize yourself with the SaaS sales process and its different steps so that you can drive your SaaS business in the right direction and make the most of this once-in-a-lifetime opportunity.
One thing we must understand even if some of us are not from the SaaS industry, or a SaaS business owner is that the importance of the sales process for any product or service cannot be ignored.
The sales journey itself is not the only representation of your company, your value proposition, and how well you are invested in developing a customer relationship, but it also defines your business’ future in terms of brand rapport and customer satisfaction.
Therefore, no matter which industry sector you belong to always put special emphasis on your customers’ sales journey and keep on developing your sales process to enhance customer satisfaction.
- The SaaS Sales Process
- Defining the SaaS Sales Cycle
- Selling SaaS in B2B – Different Stages
- Different Models of SaaS Sales
- Best Possible Ways to Optimize for SaaS Sales Process and Sell More
- Tools Proven to Increase SaaS Sales
- Activities Performed by SaaS Companies
- Most Important SaaS Sales Metrics
- Way Forward
- Frequently Asked Questions
The SaaS Sales Process
The SaaS sales process refers to the steps and efforts involved in selling an online or web-based software solution, that customers can only access solution using the internet, to fulfill their business or personal needs.
Similar, to any other B2B or even B2C sales process, the goal of the SaaS sales process is to ensure customer satisfaction.
SaaS sales revolve around a recurring sales model such as a subscription model, therefore, inherently your customers become your returning customers based on a monthly quarterly, or annual basis.
But this return most definitely depends on how well you were able to cater to their needs in the first attempt followed by the development of a customer relationship, throughout their journey with your business.
Defining the SaaS Sales Cycle
Let us now discuss what a SaaS sales cycle is, in terms of different characteristics and in building blocks of the cycle itself. This will also help us in defining the average length of a SaaS Sales Cycle and how its duration is affected by different factors and elements.
Variety of Customer
As the SaaS industry is heavily dominated by B2B selling therefore the type of customers you get and the decision-making process in the SaaS sales cycle is very different compared to other transactions.
A budding small business operating in the B2B sector can decide for subscribing to a SaaS option maybe in a day due to the singularity of the decision-maker, whereas the majority of the B2B sector in which the SaaS players operate, the solution is being provided to an enterprise or an organization.
Therefore the decision-making unit itself has a lot of stakeholders and the process requires more time, of course, different stages of vetting are involved. This calls for buyer persona research and an in-depth understanding of your customer concerns.
The length of the SaaS sales cycle also depends on the product pricing. Research has derived a direct relationship between the cycle length and the pricing of the SaaS product or service.
This of course is also supported by general industry trends where we do see that the higher the amount of financial investment in a product, the longer the sales cycle due to increased vetting, demos, and budgetary reconciliations.
Product Features and Complexity
If your SaaS product has customizable features, then for obvious reasons a back and forth negotiation and interaction will ensue between you and a potential customer. This customization, beta-testing, addition, and subtraction of features of course require time and effort which adds to the SaaS sales cycle in terms of time.
Additionally, the more complex your product has in the terms of the user interface, the latest technology, or one of a kind services, the more time it will take for your sales team to ensure that the product demos have truly translated the service and its true value proposition to the customer which of course lengthens the sales cycle.
Option of Free Trials
If you offer free trials for a product then expect your sales cycle to be slightly longer in comparison to other SaaS products where no free trial option is available.
This is because once the option of a free trial is available to a customer, they are less likely to initiate a purchase before the trial ends.
But this does not mean that during this time you should not interact with your customer and learn more about their feedback.
Direct your sales representatives to keep in touch with the prospective client during the period of the free trial to not only guide them in terms of the features but also ensure that their seamless experience translates into a purchase or sale before the trial ends.
Selling SaaS in B2B – Different Stages
We will now look at the different stages and steps involved in initiating and finally concluding a SaaS sale. We will visit these steps one by one to explain the importance and role of each step in concurrence with the SaaS sales process.
Defining the Target Segment
The first and foremost step, of the SaaS sales process, is that you need to define your target market segment in terms of demographics, their needs, their industry, etc. Once you have the sketch of a potential customer or client developed then only can you direct your marketing efforts towards reaching out to them and deriving tangible results from these efforts?
In the second step, you must utilize the customer personas that you have developed in the first step and then start reaching out to your potential customers. This can be done via dropping emails, SEO-driven campaigns, cold calling, or even staging direct interactions with them.
This step is very important because not only will it generate leads for your SaaS product, but it would also sort of create a brand awareness campaign for your product within the lead generation efforts.
Vetting The Leads
With the lead generation process complete you will have a database of potential clients that might be interested in reaching out to you for using your SaaS product.
But not all of these will have shown the exact interesting enthusiasm that you expect from a customer or client and on the other hand, not all of these would also be themselves interested in reaching out to you to know furthermore about your product.
Therefore, at this stage, you will qualify your leads in terms of their tangibility and how real they are. For this, you can use different lead rating methods or even utilize website analytics to understand that which of the potential leads will eventually and most probably result in a sale and therefore requires defined attention and effort.
Exploring the Option of Upselling
Once you have qualified your leads, you’ll have to move on towards the demo process of this journey. You’ll have to reach out to your customers and make them realize, how your SaaS product will cater to their needs and take care of their pain points.
While doing this always remember to drive in the skill and tactic of upselling because once you convince them that your value proposition is what they need to tackle their issues then the customer is very well likely to get into a longer and more lucrative sale agreement with you as well as add on extra features for themselves in the SaaS product. This of course means higher revenue for you and better need satisfaction for the customer.
Providing Customer Support
Once the demo is complete expect your customer to have questions and even objections at some point in time. They might say that whatever you’re offering to them is more expensive than the market or they’re not satisfied with how well your product’s interface gels with their organization’s environment.
Use your best presentation and people skills to tackle these questions and drive the customer towards the true essence of value proposition and need satisfaction.
This is a stage where a potential customer is turned into a client. And hopefully a returning customer in the future. But do keep in mind that once you’re getting into a sales agreement with your customer if they have reached an agreement with you only because you were able to offer them lower pricing or maybe some discounts offer in comparison to the market then do remember that this customer might not be a returning customer and will have a shorter customer lifetime value because for them your value proposition is not enough, and they need financial incentives. Therefore, whenever they find a cheaper option in the market, they will abandon that.
Developing Customer Relationship
The last stage in SaaS sales is developing a customer relationship with your client. This involves providing after-sale services, customer support or even providing training to their new users.
Getting into a sales agreement or having made a successful sale deal does not mean that the cycle ends there. You must keep on nurturing the relationship between you and your customer for them to become returning customers and keep on benefiting mutually from this relationship.
Different Models of SaaS Sales
We will now discuss different SaaS sales models which will help you in strategizing and defining your sales strategy for your sales business. You must select the model that is best for your business.
In this model, the customer self-services themselves by subscribing to the SaaS product without any external help. This kind of model does not require extensive customer support but of course, does require your customer to be knowledgeable enough to operate the SaaS product.
Examples of such models are Amazon Prime, Spotify end Netflix. For such models to be successful you as a SaaS business owner should provide simple and easy-to-understand user guides, a user-friendly interface and of course, the option of freemium and free trials to let the customer experience the product for themselves.
In this model, your pricing is key to generating leads and attracting customers. In the transactional sales model, marketing teams reach out to potential customers and clients to generate leads which are then supported by marketing activities and even SEO-driven content marketing. For a lot of customer self-service companies, the obvious next step is switching to a transactional sales model due to the face-to-face human interaction factor.
In this model, the major focus lies on retaining and developing your current high-value customers for the future. If a company uses the enterprise sales model for its SaaS products, then its marketing team only focuses on a few major clients and nurturing a long-term customer relationship with them due to their customer lifetime value and sometimes also because of the niche category of its SaaS product.
Best Possible Ways to Optimize for SaaS Sales Process and Sell More
Now that we have developed an understanding of the SaaS sales process and its importance, we should l now explore the best options for increasing your SaaS sales as well as improving the SaaS sales process in general.
Transforming Email Campaigns
Use your email campaigns to reach out to customers who have signed up for trials especially those who have completed free trials but have not shown an interest in your product.
Strong Content Marketing Strategy
Develop a strong content marketing strategy to be used on relevant social media platforms and search engines to reinstate your value proposition and generate leads.
Length of Trial Periods
Experts recommend shortening the length of trial periods because not only does it, in turn, reduce the length of the sales cycle, but it also helps in closing a prospective customer quickly thus reducing costs for and even filtering trial users who will not make a purchase.
Following on Trial Prospects
As soon as your client signs up for a free trial call them up, reach out to them and ask them questions regarding their expectations from the product. Answer their queries and make them realize that you are there for them throughout this journey.
Product Displays and Demos
Always offer short but concrete product demos and displays and only to those leads who qualify your vetting criteria, to ensure tangible results and avoid wastage of effort.
Tools Proven to Increase SaaS Sales
Below is a list of tools that help you increase your SaaS sales and provide tangible results.
- MS Excel and Google Sheets – The most basic CRM tool used by 24% of SaaS Businesses
- Zoho CRM and Active Campaign – Used in combination by over 12.1% of SaaS players
- HubSpot- The obvious choice for over 26.8% of SaaS companies
- Salesforce- Used by over 17.5 %
- Pipedrive – Deployed by just 2.8% of the SaaS organizations
Activities Performed by SaaS Companies
Let us now look at the major activities performed by SaaS companies.
The activity where your marketing and sales team interacts with prospective clients using different social media platforms such as LinkedIn, especially in the case of B2B interactions.
In this activity, a sales representative drafts and develops content-focused and attractive email messages that are then sent out to prospective clients and customers.
As the name suggests, it involves calling a lead directly to tell them more about your SaaS product and trying to arrange a one on one meeting for an enhanced customer relationship.
Most Important SaaS Sales Metrics
Below are some of the most important metrics that are used to gauge SaaS sales.
- Monthly Recurring Revenue (MRR)
- Annual Recurring Revenue (ARR)
- Customer Lifetime Value (CLV)
- Customer Acquisition Cost (CAC)
- Churn Rate
Frequently Asked Questions
What Is a SaaS Sales Process?
The SaaS sales process is the set of different activities that are performed to sell an online web-based solution to a customer or client.
What Is the Typical SaaS Sales Cycle?
A typical SaaS sales cycle is determined by the type of customers, options of a free trial, the price and complexity of the product being offered.
How Is SaaS Selling Different?
SaaS selling is different than other forms of selling in the B2B industry because it involves a recurring sales model where your customer needs to keep coming back to you as a recurring client and the sale is not a one-time act only.
How Can SaaS Businesses Increase Sales?
SaaS businesses can increase sales by deploying different techniques such as email campaigns and SEO-driven marketing tactics as well as CRM tools including HubSpot and Salesforce.
The sales process for a SaaS product is no doubt different from any other product or service being offered in the B2B industry. Yes, it does come with its challenges but the process itself is very rewarding and a learning experience for everyone involved especially when all the stakeholders, teams and individuals involved work together in cohesiveness towards a common goal.
For any sales process to deliver results that the not only tangible but maintainable as well, we recommend using different tools and techniques as suggested in a combination that is the most appropriate fit for your business. Not only that true success in any sales process is achieved when all the units involved work together as one and knowledge is disseminated through the unit.