Why SaaS sales can be a tricky business
SaaS sales are complex, and your customers may find the buying process intimidating. After all, purchasing a SaaS product or service is usually a long-term commitment that could affect many aspects of a business. It can also be time-consuming to set up. Many customers may have to make time sacrifices to take on new software, adjust their workflow, and train their employees.
As a business owner, your customers having access to information at their fingertips makes SaaS sales even trickier. Potential customers can ask questions online, compare your products to others, and ask for reviews and personal experiences (and they’re more likely to believe what they hear from third parties than what they hear from you).
In addition, selling SaaS products or services often involves a longer sales cycle. For example, it can take time to get in touch with decision-makers.
Finally, SaaS is a highly competitive environment. By 2025, Gartner expects the cloud enterprise software market to be twice the size of the non-cloud market.
So how do you build a SaaS sales machine that makes your business stand out? Start by following these five key steps.
1. Crunch the numbers: KPIs for SaaS sales
Track the below six key indicators and you’ll be able to tell how successful your sales strategy is:
- Monthly recurring revenue. This metric gives you an idea of how much money your customers are spending on your products every month. It’s the total revenue from active subscriptions.
- Customer acquisition cost (CAC). This includes research, marketing, advertising, and sales costs. Tracking these costs will help you see whether you’re getting the desired return on investment (ROI) on customers.
- Customer lifetime value (CLV). This represents the total revenue a business can earn from a customer over the total lifetime of the relationship. If this number is increasing, your customer is getting value from your product.
- Churn rate. This metric measures how many customers your business loses over time. It’s usually calculated monthly or annually in either customers or amounts of money represented by those customers.
- Sales cycle length. This refers to how long it takes you to drive a customer all the way through the sales pipeline and get them out the other side as a paying client. You guessed it: shorter is better.
- Market data. Your sales strategy needs to factor in market research. How do your customers behave? What are the specifics of the market? These and many other questions can be answered by thorough primary and secondary market research.
2. Understand the basics of building an effective SaaS sales machine
There are some fundamental steps you need to take when moving your business in a new direction or looking to improve any aspect of your business.
- Take stock. Take inventory of your current sales structure and strategy. Look at your metrics as they currently stand and compare them to your long-term goals.
- Know your customers. The more you know about who you’re trying to reach and why you’re able to solve their problems, the easier it becomes to seal the deal later on.
Personalisation and research is key. “Do your homework and build a relationship. We use a short intro and then three things about the prospect’s company that lead us to believe that they might need our product or our services,” says Bastiaan Janmaat, Managing Director of Linse Capital. “We also host leadership dinners where we invite six to ten people, usually decision-makers at accounts we’re prospecting into. It’s a great conversation with leaders among companies we’re trying to build relationships with.”
- Target customer pain points. Identify the problems your potential customer is facing and how your product can solve them. Empathise with the customer and figure out the language you need to use to reach them effectively.
- Show potential customers the value you can provide. Can you fix something for them? How much do they value solving a particular problem? Look at these questions rather than focusing only on product features, pricing and cost.
3. Build a high-impact sales team
Keep these key factors in mind when putting together a sales team that’s going to make your business a success.
Choose the right sales model: Internal or external sales team?
An internal or inside sales team is one that does its sales work from within an office environment. Sales reps will do business remotely via phone, internet, or email. An external or field sales team sells products through face-to-face meetings and other traditional events.
Changing technologies have led to a focus for many businesses on inside sales. Some still commit large-scale resources to external sales, while for some, a mix of internal and external sales teams can be highly effective.
Design a sales funnel using the AIDA principle
A sales funnel is the set of steps a person or business has to take to become your customer. This should be simple and actionable. The best structure for a sales funnel is the AIDA approach: Awareness, Interest, Desire, and Action.
The ideal customer becomes aware of your business, probably through your marketing efforts. They’ll then begin doing research into the product and compare it with others. Here, you should be showing them great content, but not yet pushing sales. Once the customer has decided they want the product, you need to provide them with your best sales offer. In the final step, the customer acts and signs up for your product.
Divide and conquer: Keep sales roles clearly defined
Within your sales team, make sure every person has their own KPIs and separate roles, so they can focus on their part of the sales cycle. For example, a marketing team member generates leads, an inside salesperson prepares the leads for a meeting, a field salesperson closes the sale, and a customer success team gets the customer on board ‒ and keeps them there.
The other benefit of separate sales roles is that each role requires a different kind of person – hire people based on their capabilities in fulfilling a specific part of the sales process
Hard sales first, organic sales later
As a start-up, you’ll probably have very little time to focus on SEO and content marketing. You need leads and sales, so that should be your focus initially – but not forever. “You only have to have a maniacal focus on winning customers for the first 20 to 40, if you’re selling a platform, and the first 20,000, if you’re looking at a subscription base,” says Jacco van der Kooij, Founder of Winning by Design.
Don’t neglect outbound sales
Bastiaan Janmaat shares his story on the importance of outbound sales:
“One of the bigger mistakes I’ve made is in building our outbound sales strategy too late. Frankly, like many start-ups, when it was just myself and three co-founders, we invested in content marketing. We didn’t have a sales rep. We were doing a bit of sales, but we invested in content marketing, another means to actually generate inbound sales. And it was a bit of a double-edged sword. It worked well enough that there wasn’t that much urgency to really go outbound, but not so well that we didn’t need any outbound sales. I realised we needed to make up for lost time and really take more control of our pipeline, and do that by investing in outbound.”
4. Implement effective sales techniques
Convert leads into sales with these top sales tips.
Content isn’t just for marketing
Your product presentation matters as much as sales conversations. Materials like ebooks, tutorials, blog posts, social media posts, webinars, explainer videos, and interviews with experts allow potential customers to do their homework.
Content can also work for you as an invisible salesperson. If you create great content, it will show potential customers that you’re an expert, and that they need your software to solve their problem. For example: someone signs up for a free trial of your product. They receive an email course from you. They read a few blog posts. They realise you really know what you’re talking about, and that they need to sign up for your product after their trial ends.
Get sales emails and calls right
Sending an effective sales email takes skill. Firstly, it needs a great subject line: short, punchy, and written like it comes from a human, not a bot.
Equally important is not deceiving potential customers with a clever subject line and then leaving them frustrated when they read the actual email. Provide the essential information first, and make every word worth the reader’s time.
In closing your email, leave the reader with one call to action. Don’t give them lots of work to do. No attachments or too many links to click on, and no long videos to watch. Keep it simple.
Bastiaan Janmaat explains the damage a bad sales email can do:
“I’m sure everybody gets at least an email a day where you’re like, ‘Are you serious?’ They left the first-name placeholder, or it’s fake personalised. It damages your brand and is also potentially damaging a future inbound opportunity.”
And what about the importance of sales calls? Steli Efti, CEO of Close, shares his top tips for designing a killer sales call:
- Call inbound leads as quickly as possible
- Speak a little more loudly and quickly than usual to convey confidence
- Don’t sound fake, but be enthusiastic
- Ask questions to understand the customer
- Answer their questions in concise and precise ways
- Keep sales calls to 30 minutes maximum
- Ask: “What would it take for you to become a customer of ours?”
- Design a basic sales conversation for off days and training purposes
Ask the right questions
If you’re making a sales call, learn to drill down to what it is the customer really needs. Keep asking questions until you have a clear idea of the customer’s pain points and desires.
Steli Efti has this advice: “Your communication in sales should always be dominantly driven by the other party talking. Somebody tells you something that makes no sense. You can ask, ‘Can you clarify that for me? Hmm. I’m still trying to understand you better.’ If you don’t understand your customers, you’re going to lose them. Whoever understands the customers best, sooner or later, will get them, right? It’s as simple as that.”
Perform effective demos
Demonstrations should be about showing potential customers the value your product can bring, and how it can solve their problems. Don’t waste their time going into the minutiae of the product’s features. Spend a maximum of 10 minutes demonstrating how the product can solve their problem. Take a few minutes for questions, and that’s it.
Keep following up, until you shouldn’t
You want to be the last person left in the sales race when other competitors have given up. Keep following up, even when it requires a second or third call or email.
Obviously, driving a deal to a yes is the best outcome. But according to Farlan Dowell, sometimes even more optimal is driving it to a no.
“I love to get a no. Actually, a no is progress, because usually after a no is a why. If I haven’t heard from them in a while, I would send an email to my main contact and I would just say something very candid and almost blunt. Has this initiative been de-prioritised or is this an initiative anymore? And they’ll usually respond. And then move on. Because you’ve got lots of deals.”
Bastiaan Janmaat agrees: “’No thanks’ is a great response for two reasons: first of all, now our rep won’t continue doing a bunch of homework on this person. Time saved. Secondly, you often get some intel out of it. So, getting a ‘no thanks’ is hugely valuable.”
Use your time wisely: Go virtual
Trekking across the city or country for sales pitches and meetings is costly and time-consuming – for you and your potential customers. It’s easier than ever these days to reduce physical visits and lean on calls and online meetings.
Anticipate the right time for cross-selling
Be sure that you can calculate when your customers’ needs are changing, and know how you can satisfy those needs for them. Thorough customer research and open lines of communication will help you find the right time to offer additional products.
Regularly check in with your customers
Being proactive and supportive is the name of the game. Don’t wait for your customers to contact you with complaints or concerns. Check in with them monthly and get ahead of any potential problems. Most customers will appreciate the chance to give feedback and will feel valued. This also helps reduce churn and opens up opportunities for upselling and cross-selling.
Match your marketing and sales motions
Make sure your sales and marketing strategies work well together.
“Your sales team, if you’re going outbound, is an extension of your marketing team,” says Bastiaan Janmaat.
For example, if you have 30 deals a year, you don’t need 2,000 leads a month. If that’s the case, your volume-based marketing doesn’t match up with your sales organisation.
Create a repeatable sales model
As an early-stage company, you need to create a sales model that’s predictable and repeatable. This will add to the consistency and efficiency of your sales efforts, so you can accurately forecast your sales for maximum profitability.
According to Jacco van der Kooij: “Compound impact [in sales] is like a machine that keeps on crank, crank, crank, cranking. This is a fantastic machine.”
Turn customers into salespeople
Anyone and everyone who buys from you can be part of your sales team and advocate for your product. Ask your best customers for referrals and follow up on their recommendations. Or get testimonials from your most successful customers to share with potential customers.
Create the best possible sales process
A sales process is the step-by-step sequence that has to happen for your company to close a sale. This process will be different from business to business. Design a standard sales process based on the guidelines we’ve outlined here, and apply it across your sales team.
Heed the advice of Jacco van der Kooij:
“Taking shortcuts to go faster is no longer the best way. The other way is process driven. It’s not just about taking shortcuts, but it’s knowing which shortcuts to take. It’s a combined process. If we combine it with science and data, then we know which shortcuts to take. We know when we should hire people and when we should scale.”
5. Invest in customer success
It’s no good making sales only to lose customers later. You want to avoid high churn rates and keep your customers happy and thriving. Your customer success team needs to make sure that your customers are getting the tools and support they need to achieve their goals with your product.
“Sales is now expanding, and soon it will include customer success. That organisation is where your profit gets made. But that organisation generally isn’t the best-compensated part of the company,” says Jacco van der Kooij. Don’t skimp in this department – happy customers make a successful business.
Let’s do this together
Now that you’re on the road to a successful SaaS sales machine, we can put you in touch with the best SaaS founders, and connect you with venture capitalists looking for great businesses. Whether you attend our in-person event in Dublin or one of our virtual events, learn from those who have been there and find a support network among your peers.
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