Businesses today use 5x more SaaS apps than just three years ago.
What does this mean for SaaS businesses? First, SaaS is a booming industry. Second, how do you sell a product that has no physical presence to a booming industry? Can you apply the same B2B and B2C strategies that traditional products and businesses use?
The truth is that the SaaS sales process needs to be highly strategic and methodic to get healthy conversions.
As a link-building and SaaS SEO agency, we work closely with SaaS businesses and their sales processes. With our combined experience and research, we present a one-stop guide on SaaS sales models, sales processes, and how you can improvise your sales cycle.
What we’ll cover:
What is a SaaS Sales Process?
The SaaS sales process consists of different stages in a potential customer’s journey, like when a lead shows interest in the product or finally signs up for it. These customers could be individuals or other businesses.
The ultimate goal of any SaaS process is to turn a lead or a free trial customer into a paying one. The SaaS process may have one or all of these elements:
1. Lead generation: You generate interest in your SaaS product through content marketing and paid marketing.
2. Outbound prospecting: Your sales team reaches out to prospects via email, social media, or different channels.
3. Sales qualification: Your SaaS sales team checks whether the lead/prospect fits into your business’s ICP (Ideal Customer Profile)
4. Sales demos/onboarding: You either provide demos to the lead or have them onboard with a free trial account and test out the product.
5. Closing the deal: This involves making a sale by turning a free trial user into a paying user.
The three most important things that make a great SaaS sales process are a knowledgeable SaaS sales team, optimization of demos to suit the customer, and an excellent onboarding strategy.
How are SaaS Sales different from traditional sales?
Here are five main reasons why SaaS sales are different from traditional sales:
- Integrating a SaaS product into your customer’s existing tool slack is difficult, which is why the SaaS sales cycle is longer than the traditional sales cycle.
- Selling a SaaS product is more complex than selling a physical product. Your SaaS sales team must know your product thoroughly, how it is better than competitors, the problems it solves, the various features, etc.
- Traditional products may not need a personalized approach, but it’s not the same with SaaS. As each customer and their requirements differ, you need to use personalization at every stage in the sales process.
- As SaaS operates on a recurring revenue business model, the teams need to offer continuous customer support to keep retaining the customers.
- Unlike traditional products, most SaaS businesses offer a free trial period. A reason why their sales process often involves letting the user first try the product and then encouraging them to switch to the paid version.
What are the 3 SaaS Sales Models?
Selecting the right SaaS sales model will make your SaaS sales process easy. It will also help you determine how many people you’ll need to hire, your potential customers, how you’ll interact with them, and what a successful close will look like. Below are three common SaaS sales models you can choose from:
1. The Self-Service Model
- They do not rely on sales representatives to sell the product. Instead, they drive traffic to their sales funnel with their marketing efforts. (For example, Netflix drives so many customers with their social media strategies)
- These products are easy-to-use and don’t require a complex onboarding process. (For example, the moment you sign up on Spotify, you know what to do next)
- These companies rely on a low price point and high volume.
This is what a self-service SaaS industry looks like.
The sales process for these self-serve products often involves generating awareness about your solution, publishing content that draws in potential customers, and reducing friction in the sign-up process to get the maximum number of people to start using the product. This model often leverages free trials and freemiums to attract customers.
Here’s how you can create an onboarding email sequence for a customer self-service model:
Note: While these SaaS companies may not have a full-fledged sales team, they choose to have a customer success team that ensures the churn is reduced and helps upsell higher-priced plans to existing customers.
2. The Transactional Model
The transactional sales model is one of the most scalable models when it comes to SaaS. It’s built on the premise that the price point is higher, so buyers will need more personalized service to convert.
You’ll need a dedicated sales team who can build professional relationships with the customers and guide them towards tiered pricing plans. Along with that, you’ll also need to have a strategic content marketing plan to nurture leads throughout the sales cycle and create selling opportunities on different platforms.
The role of the marketing department shifts from pushing leads through the automated funnel to sending qualified prospects to the sales rep. A SaaS business often shifts from the customer self-service model to the transactional one after a given time. The reasons could be many: more expensive plans are created to cater to complex requirements, additional features are added to the product, and so on.
3. The Enterprise Model
The most complex SaaS sales model among the three, the SaaS products in the enterprise model, are sold at high prices and low volumes. The target audience is majorly large companies that have sufficient budgets. The offerings tend to be complex and feature-intensive, so enterprise SaaS sales reps need to learn a lot of technical know-how about the product. These sales reps work closely with engineers and product marketers to get information that helps them crack high-value deals.
The sales cycle is typically long in this model because, at the enterprise level, the agreement has to go to different departments and processes to get a signed deal. This process may even take more time if you need to wait for the client’s existing contracts to expire, migrate all the data to your platform, and draft SLA agreements.
Many SaaS businesses move to the enterprise model when their product or customer needs become complex. This may lengthen the sales cycle, but the upside is the increase in average Customer Lifetime Value (CLTV)
The SaaS Sales Cycle
The SaaS sales cycle showcases the journey from a prospect to a closed deal. It defines a gradual process of understanding what the consumer wants and convincing them that you can help solve their need. Understanding your SaaS sales cycle can help you better predict revenue growth and make strategies for the future.
While different companies may have minor changes in their sales cycle, the basic steps remain constant across SaaS sales models and deals.
The average length of a sales cycle is 84 days, but many factors impact the length of your SaaS sales cycle. Let’s take a look at them:
- Type of customers: Buying decisions are taken faster if you cater to small business owners or individuals. On the other hand, catering to enterprises or large businesses usually takes longer as multiple decision-makers and formal processes are involved in approving a purchase.
- Price of the product: As the price increases, the sales cycle length tends to increase. More expensive products generally require significant budget planning, approval from many decision-makers, and multiple rounds of demos to understand the product’s value.
- Complexity of the product: More customization options and features mean prospects will require more demos, support, and back-and-forth negotiations lengthening the sales cycle time.
- Availability of free trials: The length of the free trial adds to the length of your sales cycle, as a prospect will not buy your product before the free trial comes to an end. This is why shorter free trials like 7-day and 14-day trials are popular.
What are the stages of the SaaS Sales Process?
Having a well-structured sales process helps your sales rep know what to do next and how to sell effectively. When it comes to the SaaS sales process, the emphasis is on creating a lasting relationship as much as it is on making a sale.
Let’s break down the process into seven steps.
1. Identifying your target market
Before you try to gather leads for the next stage, define who your ideal customer is. If your tool caters to multiple target segments, you can create different profiles by getting details like the ones shown below.
You can even think about the major problems you are solving with the tool and then figure out which businesses or individuals are looking to find a solution for the same problem.
Problem: Managing projects efficiently so you don’t overrun your budget
Solution: A project management tool with a budgeting function
Target Audience: Any company managing projects — construction companies, design agencies, IT firms, consultancy firms, marketing agencies, and manufacturing companies.
Keeping your target audience open-ended can help you widen the net, but you’ll end up with low-quality leads that result in wasted time and resources. This might also increase your CAC (Customer Acquisition Cost).
On the other hand, defining the target audience lets you go after the right kind of prospects. This way, you can get high-quality leads and improve your conversion rates.
Here’s how Canva can make use of personalization because they have narrowed down their target audience:
2. Generating leads
Once you know the characteristics of your ideal prospects, you can start prospecting leads. You can either take an active or passive approach to win new customers. Active prospecting is a better option for small companies targeting a specific niche or a set of buyer personas. It involves detecting the right leads and contacting them via email or phone.
Passive prospecting, on the other hand, is ideal for self-service companies or larger companies. One way to get leads to sign up for your product, in this case, is by using content marketing to attract visitors to your website and then using strategic CTAs to invite them for a product demo or purchase.
Many SaaS businesses prefer having a hybrid approach where they combine inbound marketing (content marketing, online ads, video marketing, etc.) with a sales team that actively finds opportunities to engage with potential customers.
Here’s a report on which strategies work best for SaaS businesses to generate leads.
Regardless of your approach, ensure that your sales rep knows what makes a high-quality prospect so they only bring in leads with a high probability of conversions.
3. Qualifying leads
You don’t want to spend time and resources working on leads that aren’t going to convert. That’s where qualifying leads come into the picture. After all, not all your trial users and blog visitors are necessarily high-quality prospects.
Here are three lead classifications you need to keep in mind:
- Marketing Qualified Leads (MQLs): This involves prospects interacting with your marketing content and showing purchase intent. This intent could be opening an email, sharing their email address for an ebook, visiting your website, etc.
- Product Qualified Leads (PQLs): These prospects have signed up for your free trial or are using the freemium model. In addition to signing up, PQLs should also have completed some onboarding tasks or certain milestones. For example, adding five tasks to a project in your project management tool.
- Sales Qualified Leads (SQLs): This involves prospects that have opted for many marketing messages and have shown sufficient interest in your product. This shows that they are now ready for your sales pitch.
You can even use lead scoring software like Zoho and Freshsales that gives your website visitors a score according to the likelihood of their purchase.
4. Presenting your product
Once you’ve qualified your leads and separated the high-quality ones, the next step in the SaaS sales process is to present your product as a solution to their problem. This will look different for every SaaS company as the product varies and the sales cycle length differs.
If you choose to set up a meeting, make sure you ask them the following questions to better present your product:
- Which industry are they in?
- What problem are they trying to solve? Are they trying to solve an urgent problem?
- What is their current process like?
- Are they looking for other options?
Once you get some background information, you can present a personalized and customized demo. You can even give examples of how similar companies have used your product and the results they have achieved. Note that you may not be able to do this for all your customers but make sure you follow this for your enterprise customers.
Here’s how Asana has showcased a general product demo on its website. This is a great way to see which leads are actually interested in the product, and by gathering their details, you can send them targeted email campaigns.
You can even make use of free trials, case studies, and presentations at this stage.
5. Handling objections
After the demo or presentations, your prospects may have questions or objections about the product. If you don’t address them in a proper manner, you may risk losing out on the deal.
Make sure you don’t interrupt them and instead take time to listen to their goals, motivations, and where they are coming from with the objections. Here are some common objections prospects have and how you can respond to them.
- Your product is too expensive. Instead of debating the price, talk to them about the value your product generates, be it increased productivity or better margins. You can even quantify those benefits by showcasing the success stories of previous clients.
- Your product lacks X features. Ask follow-up questions to understand why they need that feature and what problem they are trying to solve with that feature. You can then present some existing features that solve the same problem. If that’s not the case, you can politely say that you may need to talk to the product team to see when such a feature could be released.
- I am looking for other options. Ask them which other providers they are looking at. Then gently guide the conversation on how your product differentiates from others and why it’s the best choice.
- I can’t authorize this purchase. Politely ask them who the right person is and if they’d be willing to share their contact details.
6. Closing the deal
This is when a prospect will finally tap the “Subscribe” button and become a paying customer. If your prospects are still not sure whether to take the leap or not, you can make use of any of these strategies:
- Give them some discount or a month’s subscription free if they opt for the annual paying plan. This way, the prospect will not leave, giving them some time to reach their Aha moment, where they realize the product’s value.
- Extend their trial by a few days to give them some more time to explore the product’s features
- Talk to them about an upcoming feature or update that will benefit them
- Ask them questions like, “Did the product solve your problem?” or “What is the reason behind you not subscribing to the product?” This gives you more information on how to nudge them to make the purchase.
Note: Do not rely on discounts to close the deal every time. The customers who purchase because of a discount may leave you once a cheaper solution is available or when it’s time to renew.
7. Nurturing your customers
Unlike traditional sales, SaaS sales don’t stop when a customer makes a purchase. You need to continuously work towards customer retention, and that’s why nurturing the customers is so important.
You need to offer excellent customer support even post-sale. This could look like:
- Sending emails with articles, guides, and case studies on how they can achieve success with your tool. Look at how Wistia sends a warm onboarding email that welcomes new users and leads them toward their resources for tips, tricks, and how-tos for their tool.
- Provide in-app guidance so that even non-tech-savvy users can navigate and make the best of your product.
- Ask for feedback and reviews. After a point in time, if a customer is happy with your product, you can even ask them for a referral and feature them in a testimonial.
- Look out for moments when you can upsell a more premium version of your product to your existing customers.
- Create moments with human touches, like sending a birthday greeting or celebrating their anniversary with your company.
How to improve your SaaS sales cycle?
Here are five ways you can improve your SaaS sales cycle:
- Keep your trial periods short so users can test your product as early as possible. This also improves your CAC and shortens the sales cycle length.
- Make use of personalization. Not all your customers come with the same problem. You may miss out on the conversion if you give a demo or send an email targeting a different pain point. Instead, always ask for basic details at the start.
- Always upsell or cross-sell to your existing customers. For example, while Zoom is famous for its freemium plan, it managed to clock a $1.8 billion gross profit in 2021. The secret lies in their wide array of add-ons, some of which cost $600 per year.
- Stay in touch with prospects during the entirety of the trial period. This way, you can shorten the sales cycle by helping the prospect overcome obstacles and discover features they haven’t tested.
- Offer value at each stage. For example, Mailchimp offers a variety of free ebooks to its customers and prospects. This adds value to the users and builds credibility for your brand.
Selling SaaS products can be challenging, but once you have finalized a SaaS sales model and outlined the whole process, things will get easier.
Make sure you don’t ignore the basics, such as defining a target audience, finalizing the SaaS sales metrics you need to measure, and setting up a sales team that is pro at both technology and negotiation. Without this, you may have a hard time getting conversions.
If you are a SaaS company just starting out and need help with SEO or link-building, get in touch with our experts today.
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