B2B SaaS sales are dynamic and ever-evolving. Software needs to adapt quickly and be maintained frequently to keep up with user needs, tech trends, and the speed of innovation.
The SaaS sales process is no less unique, with lots of room for growth and flexibility. Getting to know the sales process, best practices, and choosing the right model for selling are all crucial to the success of an SaaS business. And if you’re the CEO or founder of an SaaS startup, you’re going to want to dive into a deeper understanding so that you can find and hire the best sales professionals to help your business scale.
→ If you missed our earlier blog on SaaS Sales, you can find more information here. It explains what makes it different, the key metrics to focus on, and the commission structures that are commonly used.
What is the SaaS Sales Process?
The SaaS sales process is complex compared to other sales processes involving a one-time purchase of a product or software. For this reason, the SaaS sales process is typically longer and requires a more customer service focused approach to selling. When starting your SaaS sales journey, keep in mind that the initial investment in sales may appear costly. However, because SaaS is usually sold based on monthly or annual recurring revenue, the customers you acquire through this investment tend to have a higher lifetime value.
How long is the SaaS Sales cycle?
How the SaaS sales process plays out can vary from one company to another. This depends on the size of deals, number of stakeholders involved in their sales, and which model the company chooses. The whole cycle can range from a few weeks long to several months long, with the average cycle around 80-90 days long.
Sales cycles will be shorter for:
- Lower-priced products (under $5,000)
- Smaller companies with fewer stakeholders involved in the purchase decision
Sales cycles will be longer for:
- Higher priced products
- Larger companies with more stakeholders involved in the purchase decision
- Enterprise clients and SaaS sales models
Given all of these variables, there are still some general principles in the SaaS sales cycle that apply to nearly all SaaS companies. We’ve gathered the nine steps most commonly integrated into every company’s SaaS sales process.
The 9 Step SaaS Sales Process
Since the SaaS sales cycle is overall longer in nature, it has more touch points between the potential customer and sales representative before a deal is made. This longer and more complex process requires sales representatives to be deeply educated in your software, highly motivated, and extremely agile in their skill set.
Step 1: Find Leads — While lead generation is a function of marketing, it’s worth mentioning how it can play a very crucial part in an SaaS Sales process. Marketing helps people become familiar with your brand and understand how you can assist them by increasing brand awareness and encouraging engagement. It can even motivate users to sign up for free trials of a SaaS. You should aim to get in front of your customers before they’ve done extensive research on your product and your competitors. The earlier you gain control of the conversation and begin educating potential customers on your terms, the better.
Step 2: Focus on Prospecting — The B2B SaaS sales cycle really kicks into gear with prospecting. In this stage, warm leads may be contacted through a call or email. Cold calling and cold email can also be a part of prospecting.
Step 3: Set a Qualification Framework — This step is particularly important early on in SaaS sales. Since sales representatives spend a substantial amount of time educating, connecting with, and getting to know potential customers’ needs, it’s imperative that time isn’t wasted on companies that aren’t a great fit. Through qualification, sales representatives determine if a prospect has needs that match with their service. Having a set qualification framework ensures consistent customer qualification. This is also the point in the sales cycle where representatives should confirm that the potential client has the budget for their service and when they should find out if they are connected to the person with the authority to make a final decision to purchase.
Step 4: Provide Valuable Product Demos and Presentations — A cookie-cutter pitch doesn’t work in B2B SaaS sales. The best results are found when sales representatives are able to demonstrate the product features and benefits in a way that is tailored to the prospect. In today’s fast-paced business landscape, customers also expect this to be done quickly. They won’t want to wait weeks or even days to get a demo from your team. You can show your product to B2B customers with a proof of concept (POC). This allows them to test the software with their existing systems before investing. In the demo stage, representatives should be ready and able to answer questions and troubleshoot their software for potential customers as well.
Step 5: Offer Service Testing — In order for companies to experience a proof of concept, a testing or trial period is often allowed. This hands-on time gives potential customers time to see how the software works, what its full capabilities are, and the value it will bring to their company. Trials should be designed strategically to support customers in getting to know the value of the software while also guiding them into a sale in a timely manner. Read more about how to determine your trial length here.
Step 6: Have Clear Pricing & Proposal Plans — In the proposal stage, the SaaS sales representative gives the potential customer an overview of the available services, their recommendations for service, and lays out customized pricing or subscription plan costs.
Step 7: Prepare for Negotiation — Leading up to and during the negotiation stage, you want to ensure that you’ve educated and equipped your ‘champions’ inside the company. Key decision-makers will be getting involved in this stage, and you and your company contacts should feel prepared to keep things moving forward. In negotiations, the sales rep will handle any remaining concerns, talk about terms, and agree on pricing.
Step 8: Close the Deal — Once both parties have committed to all terms, the deal is finalized, and the customer is guided into the onboarding process. This is where the company’s focus becomes customer success, and later, potential expansion or renewal is also important.
Step 9: Create a Positive Onboarding Experience — In SaaS Sales the purchase doesn’t end when the salesperson closes a deal. Once a prospect has become a customer, they’re likely to be paying for your SaaS on an ongoing basis and, therefore, need a continually positive experience to continue their subscription with you. During the onboarding process, sales representatives have the most opportunity to train, educate, and prepare customers for getting the most out of their SaaS purchases. You’ll reduce churn and maintain or increase your recurring revenue by nurturing new customers from the start. You’ll also set up your customer relationships for easier maintenance, smooth account management, and prime upselling opportunities in the future.
Which SaaS Sales Model is Right for Your Company or Startup?
Every SaaS company must select a model for their business and modify it to fit their service, sales process, and customer requirements. It’s normal for companies to blend SaaS sales models and structures to find a fit that is right for them.
In this article, we’re going to cover the most common models: subscription-based, freemium, pay-per-use, and enterprise.
The first of these three models can be structured for self-service, where the sales process relies more heavily on lead generation than on sales reps to close deals. Or they can be more transactional in nature, depending on sales representatives to guide a customer experience and inspire conversion when prospects might be hesitant to pay a higher price for a SaaS product. The enterprise model and structure always require a sales team.
The Subscription Based Model
This is the most common model for an SaaS company. If you choose this model for your company, you’ll have a more predictable recurring revenue and the costs incurred for automatic updates and regular software maintenance can be expected as well. This model allows you to remain flexible and can be scaled up or down to meet customer needs.
The Freemium Model
The freemium model (a play on the words free and premium) offers a basic version of the software for free. Customers can easily say ‘yes’ to the free version, so a large number of users will sign up to try out your software. This low barrier to entry gives you an advantage down the line. Leads become even warmer prospects once they’re using your software. That means every upsell within your software is being offered to someone who is already actively engaging with your software.
This is an advantage you must leverage strategically, though.
If your free version features are too limited, users won’t find your SaaS beneficial and won’t buy your premium version. On the other hand, users who have everything they need on your free version won’t experience any pressure to upgrade. While it’s unavoidable with this model that some customers will stick with your free version indefinitely, many will choose to pay for advanced premium features when you strike the right balance between your free and premium features.
Consider what a customer needs to get a hands-on experience with your most impressive features while also limiting their access so that upgrading becomes the most convenient and economical option. You might limit the number of entries or records a customer can create in your free version, only allow a limited number of team members, or save high-end integrations for your premium users.
Scaling with this model can be a bit tricky, but isn’t impossible. You’ll just need to consider how you’ll cover the cost of the SaaS sales and customer service staff needed to support a growing number of free members while you work to increase your paid membership.
The Pay-Per-Use Model
In the pay-per-use model, customers do not pay a flat-rate recurring fee for your SaaS software. Instead, they’re charged in a tiered structure or based on thresholds based on what they use within your SaaS platform. Transactions, storage space, data transfer, or another relevant metric could measure usage. Users benefit from this model because they only pay for what they use, so their cost is directly proportional to the benefit they receive. Companies benefit from this model because it’s easier to scale as usage fluctuates. When changes are too rapid, though, challenges can arise in managing or forecasting costs, leading to unexpected or unpredictable expenses.
The Enterprise Model
If your SaaS solution has a high level of complexity and serves a very specific type of B2B client, you’ll want to consider an enterprise SaaS model. In this model, the sales cycle is heavily focused on outbound sales rather than on inbound marketing and sales.
This model involves long-term contracts and is well suited for SaaS used by large corporations, government agencies, and institutions with complex requirements and substantial budgets. Given these unique characteristics of the model, the customers must make a significant financial investment as well as a significant time investment in purchasing the new SaaS. Sometimes, customers need to wait for other contracts to end or will have to migrate their data and modify their infrastructure to make the switch. While this increases the time it takes to convert and onboard a customer — and therefore increases the cost of the sale — it also means that customers have to go all in on the transition and are less likely to churn.
One of the keys to long-term SaaS enterprise success is finding the sweet spot between the cost and features of your product. If the product is too complex for the price, your company will struggle to support its users appropriately. If you’re concerned about this in your own SaaS, consider how to trim down your software to appeal to a broader audience or increase the price so that you can sell to bigger clients and adequately cover the cost of more intensive support.
The SaaS enterprise model usually involves custom pricing structures that take into consideration the size and usage of each organization. This allows the SaaS company to provide dedicated support and grow with the needs of its customer companies. Combined with the annual recurring revenue model, this style of pricing and support can make for more profitable and dependable revenue for the SaaS enterprise company.
What are SaaS Sales Best Practices?
No matter the model you choose for your SaaS business, you’ll want to follow a few best practices in your sales cycle. These practices ensure that every sales representative you hire is thoroughly trained in how to uphold these practices as well.
Know Your Target Market
Sales representatives who have deeply studied their target market will be able to efficiently qualify prospects, connect with buyers about their niche needs, and address challenges in their industry through a tailored pitch. Look for opportunities to network within the industry you’re selling to and join online forums or communities where customers are asking questions and talking about the issues they have that your software solves.
Become a Team of Trusted Advisors
All SaaS solutions boil down to three types of solutions: increasing efficiency, creating cost savings, or saving time. As you get to know your target market, you’ll be able to clearly connect your customer’s problem with your solution. This level of expertise allows you to build reliability, trust, and rapport with customers that lays a foundation for beneficial long-term relationships in SaaS sales.
Gain an In-Depth Experience of Your SaaS
Whenever possible, use your own SaaS software to gain and maintain a sense of what it is like to use your product first-hand. If it isn’t possible or practical for you to do this on a regular basis, consider how you might involve your sales team in simulated use or shadowing the use of customers. Experiential expertise beats observational expertise every time. Experiential expertise will give your representatives anecdotal and personal knowledge about the features and benefits of your product most relevant to each customer’s pain points.
Leverage Your CRM
A customer relationship management (CRM) software isn’t just a place to house customer information. It can also become a place where you optimize your responsiveness and the quality of your customer service. Keep detailed notes as your team manages leads and tracks interactions throughout the sales pipeline. Even sales interactions and cycles that end in a ‘no’ the first, second, or third time could turn into a yes down the road. As you navigate those rejections and nurture those relationships, having an organized system for your client information will be invaluable.
Every Hire in SaaS Sales is High Stakes!
Since the sales cycle is longer and more complex than in other business models, it can also be far more expensive. Choosing eager, adaptable, and motivated professionals who understand your business model is paramount to your success.
Not just any great salesperson can sell SaaS, and we’d love to help make sure your team has the perfect mix of sales skills for your SaaS sales model. Contact us today to explore our network of qualified SaaS sales experts!
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