Jade is thrilled about her unique class project. The assignment was “teach a neat trick that improves or eases daily life” to an audience selected by their teacher. The students had to also sell the attributes and benefits of the skill they were developing to their audience.
Ramona taught the audience a quick make-up trick to look less tired before a big presentation or a party. The audience - which consisted of the parents of the presenting students - loved it. They tried it immediately and found that it worked like a charm.
Leslie taught the audience a fast way to measure whether the food on their plates (or their children’s plates) represents a balanced diet. A standing ovation for Leslie.
Jade went up with her carefully curated rules about how to change your mindset and live a happier life. She was met with polite smiles. Half-hearted applause.
Until later in the semester, when the parents ran into Jade at a school event. Most of them made it a point to find her and tell her that her little presentation had changed their lives.
Clearly, Jade’s presentation had value. It's just that the value wasn’t immediately apparent because she was selling something intangible.
It's a lot like that with SaaS sales. It's not like selling an office chair or a laptop that you can test then and there. Its value becomes apparent over time.
What is SaaS sales?
SaaS sales involve selling software as a service, more typically cloud-based software. SaaS sales may be B2B or B2C although B2B SaaS sales represent the majority of the market since businesses use software for a variety of processes and operations.
Since you’re selling software as a service, and services are typically billed on a monthly basis, SaaS sales usually mean that you’re selling a subscription-based model. So, a SaaS sales rep would be selling a subscription to Slack or Dext or Quickbooks for a month or better still, for a year.
To encourage more annual subscriptions, you might notice that you offer more attractive rates for annual subscriptions versus monthly subscriptions.
If you boiled all these details down, SaaS sales would be defined as selling cloud-based software in either B2B or B2C markets on a subscription basis.
How is SaaS sales different from other types of sales?
Here are some characteristics of SaaS sales that make it subtely different from other types of sales.
- Wariness and unawaress among prospects
If you’re selling a SaaS product, you have probably felt like Jade on a number of occasions. Some tech-averse people in positions of power probably don’t even understand your product. The rest of the market might wait to witness a peer using your product just to be sure it's valuable and necessary. Your job isn’t easy.
- Product benefits become apparent gradually
However, like Jade, a lot of the time, when people do try a SaaS product, they find tremendous value in it. The relative ease of access, seamless integration, and automatic update of SaaS products makes them better than conventional software.
- Low entry barrier = tons of competition
Of course, your SaaS businesses-client relationships do not always play out so smoothly. There’s a ton of competition on the market, with new players joining the fray regularly. Software is easy to develop! And there are glitches and oft-lacking customer service that push your customers to want to look at their options.
- More than just the deal at hand in focus
SaaS sales teams tend to focus on upselling and repeat sales while bringing in new customers. There is admittedly a high level of pressure because sales teams are not making a one-off transaction.
- Success metrics included in sales discussions
A SaaS product has to deliver real, tangible, and measurable value to the customer to encourage subscription renewal and as such SaaS sales model also includes discussions on metrics that will allow your target audience to judge ROI as they utilize the product.
Which sales model fits your SaaS sales strategy?
Depending on your product’s nature and your potential clients, you can choose a sales model that works for you:
A transactional sales model is fast and robust. It’s a game of volumes where the faster you sell, the better. In transactional sales, you focus on competitive prices and create a sense of urgency around the purchase. “Limited period offer” is a buzzword in the transactional sales model. The sales cycles in transactional sales are shorter.
Transactional sales needs high input cost and targets high output in terms of sales revenue. You need a very big sales team announcing your “limited period offer” or “special introductory price” and they need to have a knack with persuasion. Give your SaaS sales team the coaching it needs using our handy guide.
Customer self-service model
If you are selling a low-cost product and have minimal budgets for customer acquisition costs (CAC) then this model might work the best for you. You don’t need a very large team like you would if you were undertaking transactional sales or enterprise sales.
There’s a caveat. You do need a dedicated marketing team helps you promote your SaaS product and sell higher volumes.
This model often depends heavily on free trials to attract potential customers to sign up via an online portal without the help of a sales representative. If there’s no human convincing people and allaying their wariness and objections, the product needs to have the opportunity to speak for itself.
Enterprise sales model
The enterprise sales model is not easy to implement because it requires getting a hold of more stakeholders, calls for more customization, and is characterized by longer sales cycles. That means that enterprise selling is labor-intensive therefore more expensive.
However, the opportunities are correspondingly super-sized. Dealing with large companies involves long-term contracts and typically a bigger deal size. Although the sales cycle is longer, it is, in most cases, well worth the sales rep’s time.
That about wraps up SaaS sales models.
Once you have chosen a sales model that works for your business and sector, your next stop is mapping out the different stages in your SaaS sales strategy.
SaaS sales stages
SaaS sales stages are fairly similar to the stages you would see in any sales process. You might, however, do things differently during each stage.
Prospecting becomes more important than ever in SaaS sales. If you’re going to explain the value of your cloud-based software, you’ll need to understand exactly what business obstacles your prospects and their companies face. For that, you’ll need to understand the sector and the business or company in question, and also their various products and processes.
Since you’re going to be addressing a specific person, you’ll also need to understand their job title and role, and their various job functions and KPIs so that you can explain your SaaS product’s value from their point of view.
Not everyone who has potential converts into a paying customer in the end. That’s why you need to be selective about where you channel your efforts. Start by driving interest in your product by telling leads how your SaaS product will help them overcome their pain points.
Depending on their reaction, availability of budgets, and so on, you can evaluate whether the lead is worth follow-up conversations that would allow you to score them better.
You finally pursue, nurture and offer personalized product demos to high-quality qualified leads with a keen interest in your SaaS product, along with budget availability and a general intent to buy in the near future.
Negotiation is the same bag of tricks whether you’re selling SaaS or socks. You need to explain how your SaaS solution delivers better value than similar products in the same price band. Prepare in advance for this stage by collecting testimonials, case studies, and actual ROI figures from existing clients. Talk about metrics that they can use to test your product once they start using it. Offer a free demo to prove that you’re worth the price you’re asking for.
If you hit a pricing wall and your deal is at risk, you might be able to save the day (and the deal) with value adds, payment flexibility, or maybe a discount on subscription renewal the following year. If your SaaS model’s pricing is per-user-per-month, maybe you can throw in a free account or several, depending on the size of the deal.
Closing the deal
The stage you’ve been waiting for is here. You saw the customers’ potential right from the start, and they have come through. You did it!
Sign them up for the subscription plan they have chosen. Ensure that demo and training, customer support, or any other after-sales support comes through for your prospect. Be sure to share metrics for them to measure success if you haven’t already discussed this.
Any SaaS product benefits from repeat sales, and as a result, customer retention is a big deal in SaaS sales. Customers need nurturing to remain loyal. Do whatever it takes to deliver a high-quality customer experience. Be sure to make follow-up phone calls to check that they are deriving maximum value, offer discounts on upcoming subscriptions, host promotions for upgrades, and deliver 24/7 customer support.
Pick up or respond if you hear that your leads are not receiving the support they need from your customer service team, and be sure to address any reported issues internally. You’ll need to approach this prospect once again next year, and you don’t want them to be absolutely furious and frustrated with your company by then.
SaaS sales best practices
1. Establish key metrics to measure success
Sales metrics will help you measure the success of each stage and the overall sales model. Here’s a list of SaaS sales metrics that you can readily use with your sales model.
- Lead velocity rate
- Monthly Recurring Revenue (MRR)
- Sales Qualified Leads (SQL)
- Net Revenue Retention Rate (NRR)
- Customer Lifetime Value (LTV)
- Annual Recurring Revenue (ARR)
- Net Promoter Score (NPS)
- Conversion rate/churn rate
- Customer Acquisition Cost (CAC)
- Demo-to-trial ratio
Also, establish key metrics for your customers to measure the success of your product in their context.
For example, if you’re selling accounting software, you might want to suggest metrics that measure whether the company is experiencing better cash flow or lesser supply chain leaks.
Similarly, if you’re selling a cloud-based data transformation software, you might want to recommend that the company measures timelines for data transfer.
You need to find metrics that work for the specific solution you’re selling in the specific context of your customer’s sector and operational characteristics.
2. Put together your SaaS sales team
A SaaS sales team will usually consist of a sales development representative, account executive, sales manager, VP, sales coaches, and trainers. There might also be other specialists whose expertise can be leveraged at every stage of the sales pipeline, just like any other sales team.
The difference is this: a SaaS sales team needs to have the technical knowledge both about your product and the target audience, inside out.
3. Use technology that will accelerate growth
The SaaS industry developed during the technological evolution. So not attaching the right technology to your sales strategies is like not practicing what you are preaching. There are various sales intelligence tools available in the market that can help you throughout the sales cycle, like sales enablement tools and conversation intelligence AI.
A Smart and SaaSy tool - Wingman
SaaS sales need not be a tricky business. Wingman is here to help you realize your sales forecasts.
Wingman is an AI-driven sales intelligence tool that works with you at every stage of SaaS sales.
When prospecting and qualifying leads using discovery calls, Wingman helps sales reps zero in on points of interest and relevance in the conversation. Wingman’s AI-powered note-taking lets the rep focus on making conversation while it records, transcribes, and annotates the sales call to help the sales rep catch on to the prospect’s sentiments.
During the stage where salespeople are negotiating and battling objections, Wingman provides support by way of monologue alerts and cues on when there is an opening to promote your solution or battle a competitor's mention.
Wingman ensures that you never lose another deal with real-time at-risk deal alerts for sales leaders – fly to the rescue of your reps when they need you most.
Nurturing and re-selling are also easier with Wingman because seamless integration allows you to get sufficient background info before you initiate a conversation with the prospects.
Rev up with Wingman! Book a demo with us and experience Wingman’s real potential hands-on.