Do you want to grow your SaaS sales team and improve your processes? Here is a collection of 10 resources that will help you:
If you look through the contents, you will notice that we cover pretty much all the important aspects related to SaaS sales. From sales & marketing alignment to SaaS salespeople compensation. And from SaaS sales models to SaaS pricing. (Did we miss anything? Hopefully, no.
You can still contact us via our live chat or contact us page if there is still anything that keeps you awake at night.
If you are satisfied with your sales model and need to learn about the employee compensation model, just skip the first article.
Take as much as you can from this collection. The more you learn, the happier we are.
P.S. Our collection is rich in screenshots, bullet points, examples, statistics. Hope you will enjoy your time reading it.
TABLE OF CONTENTS
SaaS Sales Models
Do you know the 3 most popular SaaS sales models? Choose the right one for your SaaS startup
Which SaaS sales model to choose for your company? (3 examples for you)
Skills for SaaS Sales Team
6 Essential skills for SaaS inside sales team to boost the product’s sales. (and how CEO’s can measure these)
SaaS Sales team compensation
What’s the typical commission for SaaS salesperson? [Really 10%?]
SaaS Sales & marketing alignment
Inbound sales methodology: What it is and how it works with inbound marketing
How marketing and sales synergy model works for SaaS companies
SaaS Sales Strategy
Do you also ignore these 5 sales strategies like most of the SaaS CEO’s do?
8 Smart tactics for your SaaS customer acquisition strategy
What are the most successful SaaS pricing models and what you may be doing wrong
How to optimize your SaaS pricing page? (Best Practices + Examples)
YOU KNOW 3 MOST POPULAR SAAS SALES MODELS? CHOOSE THE RIGHT ONE FOR YOUR SAAS STARTUP
Your startup has finally landed on its feet, but something still seems off?
No wonder, since the SaaS industry is expected to reach a whopping $157 billion by the end of 2020. The cloud application service market remains a huge challenge for all newcomers. A question may arise, what is the sales model and what’s the difference between it and the sales process. Well, we will keep it short and simple and let you know that the sales process is how your prospects become your customers (from awareness to decision-making stages). While the sales model is your company’s fundamental approach to sales.
We’ll introduce you to the three main SaaS sales models and share some tips on how to choose and what challenges to expect.
When you’re looking to generate significant revenue as a newbie in the SaaS market, your product prices shouldn’t go above $5000.
In fact, recommended prices for the self-service model are between $1 and $1000 since that’s how much your target audience is ready to pay. The self-service sales model is thus all about low-priced products accompanied by a fully automated customer journey. Most commonly, startups that employ it sell their products completely via e-commerce, so that they can remain focused on the quality of the product and design.
Focus: Product and Customer Journey
In order for this model to work, both your product and your customer acquisition strategy need to be absolutely frictionless. The product itself should be developed with single user persona or small teams in mind, while every touchpoint between the potential customer and the actual purchase should be lean and optimized for self-service. The same goes for the website, customer support, and user onboarding.
With such low SaaS product prices, you should be more careful with your large investments in lead generation and control your resources even more effectively. That means that the customer experience you provide should be streamlined and infallible enough to generate leads and convert customers on its own.
If you have decided to be more economical with your marketing as well, a viral message or an outstanding content marketing campaign can help you a great deal.
Being a hybrid between self-service and enterprise, the transactional sales model requires a product that’s more expensive than $1000 and a provenly efficient lead generation strategy. Typically, the price point for this model is can reach up to tens of thousands of dollars not higher than $3000. The product price is not the main difference between these models, though.
When compared to those that employ the self-service model, SaaS companies with a transactional sales model offer expert customer onboarding as well, in addition to an automated e-commerce site.
Focus: Customer Onboarding and Face-to-Face Conversion
Thanks to the higher-priced products, SaaS startups that choose the transactional model to have more money to spend on customer acquisition. This means that such companies are product-oriented as well, but also include a small inside account management team to help them catch and convert by providing real-time assistance during the software purchase process.
That way, potential customers can browse the website and make a decision on the spot, but they must reach out to a company’s dedicated account manager or a sales engineer one-on-one face-to-face in order to complete the purchase.
The transactional model will suit your goals if the target audience you’re addressing is comprised of medium-sized and large businesses, and if the product you’re trying to sell has a high revenue expansion potential (if a customer is likely to pay more and more over time).
With this sales model, a SaaS service provider can earn more than $100,000 per year for a product, but only as long as the company is equipped to meet all the requirements of enterprise B2B sales. By definition, this includes a number of things, all equally important for making this model work. First, both the product itself and the customer service that comes along should be enterprise-grade. Then, your company’s sales team should be skillful and experienced enough to handle the delicate, long-cycle sales process that’s usually associated with enterprise B2B sales.
Focus: B2B Enterprise Sales
Selling to enterprises is never easy, simply because these businesses have longer decision making time, and sometimes not until a majority of board members feel confident enough to give their vote. As salespeople have a whole lot of work to do, it’s easy to understand why they have to be nothing but experts in their niche.
It’s also the reason why SaaS companies that employ the enterprise sales model have to be able to rely on both in-house and field sales reps, which doesn’t come cheap.
On top of that, dealing with high-class clients means that your company’s website content and customer service should be spot-on as well. For startups that are still making their way, the enterprise model is for all of these reasons considered to be too expensive and risky.
How to Choose the Best Sales Model for Your SaaS Company?
With the enterprise sales model being so unsuitable for self-funded SaaS startups, your decision should fall somewhere in between the self-service and the traditional model if you don’t plan any.
WHICH SAAS SALES MODEL TO CHOOSE FOR YOUR COMPANY?
(3 EXAMPLES FOR YOU)
For a SaaS company (and almost any business), both success and failure depend on decisions that founders make: team members, target groups, product functionality, and of course business models. In his “SaaS Sales Models: Strategic and Organizational Choices” report, Joel York said that choosing the right software sales model would help SaaS companies to smoothly grow from seed funding to A route to B round and beyond. Choosing the right model can set your business in the success path and choosing the wrong model can leave your SaaS company with nothing.
There is no single “right way”
If you are walking down the right path and you are willing to keep walking, then eventually you will make progress. However, this does not mean that there is only one path to success for SaaS companies.
According to Jeffrey M. Kaplan, one of the most commonly accepted myths of the SaaS industry is that it is inherently a high-transaction business. This view has been fostered by the rapid growth of many commodity-oriented SaaS companies and public cloud services.
However, just as the overall technology and software industries have different paths to success, so are the SaaS and cloud-computing segments evolving in a variety of directions, requiring different sales techniques and models.
As an example, Kaplan mentions Passkey, a SaaS company that provides group-reservation systems to major international hotel chains. While the majority of SaaS companies offer free online trials in order to win leads and customers, Passkey starts at the top of the corporate level, catering directly to CEOs.
This is a unique SaaS sales model and the benefits are stark. Besides selling a high-priced SaaS software, Passkey also makes multi-year deals that can be worth millions of dollars. Even more surprisingly, Passkey is able to convince its customers to pay for their multiyear contracts upfront. Though It may be challenging and difficult for many SaaS companies to operate like Passkey, to charge high prices and target large, established corporations, it could perhaps be exactly what your SaaS software requires.
This example shows that there is no one right way to SaaS sales models. It is important to have an open mind and make sure that you have considered all the options, rather than going straight for a high-transaction model.
Picking the ideal software sales model
In general, there are three main software sales models: customer-self service, transactional and enterprise. While mature SaaS companies may employ all of the three models, a SaaS startup will likely only have the resources to master one of them at first.
So, which one is the best choice for your SaaS company? Let’s go deeper into each of the models.
1. Customer Self-Service sales model
The customer self-service SaaS sales model is also known as the higher-volume, lower-price method. It is a model that is designed to achieve significant revenue at a low average selling price (ASP) with the help of free trials and freemium offers.
Achieving substantial revenue at a low price means removing complexity and cost from the purchase, in order to prepare a ground for high volume. Complete customer self-service can be the ideal sales model, but in this case, customers need to be able or willing to serve themselves, understand the value of the products themselves, including things like purchase, use, support, etc. However, even if your product is so simple that it can provide a 100% self-service purchase, you can never get away with 100% self-service support, as your customers need you in order to solve their problems, or you risk ruining your brand image and reputation.
The customer self-service SaaS sales model typically breaks down across customer-facing functions in the following way:
- Sales: None.
- Marketing: Full responsibility for the revenue, for the creation of awareness, educational content, and automation capable of driving business through the entire purchase process from awareness to close.
- Support: Provides automation and tools for easy on-boarding; provides templates and educational content that lets customers resolve any issue that they may experience.
2. Transactional sales model
The transactional sales model is a scalable one, with solutions that are typically sold over the phone or messaging service to medium-sized or large companies.
As for pricing for certain SaaS products increases, customers become less willing to spend their money without at least knowing that there are real live, actual trustworthy human beings behind the company’s website URL. Higher average selling prices bring higher expectations for these business relationships, such as signed contracts, premium service-level agreements, invoicing and the ability to speak to a staff member whenever problems arise.
The risk-driven needs for a more interpersonal business relationship drive the SaaS sales model away from customer self-service into a transactional sales model, which is characterized by efficient, high volume sales and support operations, short sales cycles, and rapid onboarding. Some SaaS companies that make use of the transactional sales model include Marketo, Zendesk, and Xignite.
The transactional SaaS sales model typically breaks down across customer-facing functions in the following way:
- Sales: Sales representatives are supported by online content, automation, necessary tools, training, incentives and other metrics that enable higher efficiency and many transactions per sales representative.
- Marketing: The marketing team feeds highly qualified leads to the sales team in order to build the sales pipeline. The marketing team improves efficiency by removing possible roadblocks with the help of educational content and automation that drive complexity out of the purchase.
- Support: Support representatives must meet a range of SLAs from limited pre-sale support, through premium post-sale support with tools, training and metrics that enable high efficiency and many transactions per support representative, complemented by customer self-service tools, templates and educational content.
If your SaaS product is suited for it, the transactional method can deliver to your company the best of both worlds in terms of customer communication during the sales, marketing and customer stages for highly desirable, highly useful yet pricey SaaS products. For mid to high-level SaaS agencies who would like to choose the right SaaS sales model for their company, transactional sales model is the right decision.
3. Enterprise Sales
While most of the SaaS companies out there today gravitate toward transactional sales or customer self-service, some SaaS startups have products that provide so much value per customer and are so complex to implement and master that their natural starting point is traditional enterprise sales.
The enterprise sales SaaS model is also known as the lower-volume, higher-price method, as it focuses on providing sophisticated, cutting-edge solutions that justify their high price tag. SaaS companies that make use of this model have exceptionally well trained sales teams, who can explain the product’s concept in depth in order to show the customer why such a high outlay is expected on their path. They have an intimate knowledge of the software, and can explain all that it can do, demonstrating its entire value to the user.
Two good examples of product categories that this model is suited for are cutting-edge Internet marketing tools, that are employed by brand consumer marketers such as BazaarVoice and BrightEdge, and feature-rich suites that automate strategic, core business processes for mid-to-large enterprises, such as Netsuite, Workday or Passkey.
The enterprise SaaS sales model typically breaks down across customer-facing functions in the following way:
- Sales: Sales reps are focused on a narrow set of target prospects and they are directly supported by product marketing and sales engineering resources at the deal level.
- Marketing: In this model, high-end marketing that facilitates brand awareness, education and trust-building is used. It is then supported by the sales team, including telemarketing spending to target prospects and detailed marketing tools such as product roadmaps, ROI calculators and so on.
- Support: Highly engaging support up to on-site issue resolution is used, which is complemented by educational tools and training tailored to the specific needs of individual customers.
Customer self-service, transactional, or enterprise – choose your software sales model wisely…
Choosing the right SaaS sales model for your SaaS company is a make or break decision. Choose the right model and you will grow smoothly; choose the wrong model and you will end up having horrible sales results. The guide mentioned above is a simple but powerful strategic framework, one that hopefully can answer questions like how to choose the right software sales model for my SaaS company.
6 ESSENTIAL SKILLS FOR SAAS INSIDE SALES TEAM TO BOOST PRODUCT’S SALES. (AND HOW CEO’S CAN MEASURE THESE)
In the world of SaaS, there is a common belief that great products sell themselves. While this is true to some extent (and there are a few very vivid examples of such cases as DropBox), a skilled sales team still plays a very significant role when it comes to growing the business. Your SaaS company may be able to achieve fast growth with the help of enthusiastic early adopters at early stages, but at some point, your inside sales team will need to assist in closing more deals.
Sales and marketing teams are there to show potential customers how innovative and valuable your SaaS product is and, as a result, to boost the product’s sales. The best SaaS sales teams are able to do this with ease, yet, such teams are few and far between. For the success of your SaaS company, you need to have the right inside sales team. Here are the six essential skills for SaaS inside sales teams to boost the product’s sales.
1. Being tech-savvy
Any sales rep selling a SaaS product must be comfortable with both using and discussing technology. Though traditional sales teams usually have an understanding of only their product, this cannot be the case with SaaS. Besides the technical aspects of the products, software sales reps should also know how it fits in with and complements other technology in a business’ software stack.
In other words, besides their industry’s specifications, SaaS sales teams need to also pay attention to the general technology trends and development. A good sales team needs to be technologically fluent, easily understand/adapt to new technology and learn to use it quickly. The reason is that high-performing sales teams are the first to embrace technology:
2. Understanding the value of the SaaS product
It does not only matter how innovative your product is because there will still be many people who don’t fully understand the value of your offer at first. Many people will believe that they are fine with managing their current workflow, and they don’t need your SaaS software for better effectiveness. Potential customers often either do not have the budget or don’t see a need for changing the status quo. This is where your software sales team should come in.
Qualified SaaS sales teams should be able to easily present the value of your product and fully understand how it can revolutionize companies from within. A great sales rep will be able to easily prove the high ROI of a SaaS product and convince prospects that they will lose out on a huge opportunity if they do not make use of the software. Good sales teams know that a powerful value proposition is a key to success for SaaS products.
3. Knowing customers inside and out
Naturally, analyzing and understanding the ideal buyer persona is a must for any sales team, but it’s much more important in the SaaS industry than most others. The reason is that in traditional sales, in order to hit the monthly quota, reps might be able to sell their product to a customer who is not exactly the right fit. However, in SaaS, sales teams might actually hurt the business if they close a deal with the wrong customer. Those customers who don’t truly need the SaaS product are likely to waste the resources and investment the company makes while onboarding them.
Qualified sales teams clearly know who are their potential customers. If the prospect is not the right fit, sales teams should be able to quickly disqualify them and shut down the sales process before it goes too far.
4. Customer centricity
The keyword in SaaS is not “software” but “service”. The main difference between traditional software vendors and SaaS companies is that instead of just selling a tangible piece of software, SaaS companies provide services, assist their customers in the implementation and usage of the product, etc. According to Mike Arenth, former executive vice president of customer success at Ariba, “The difference between selling SaaS and traditional enterprise software is that with SaaS you are selling an outcome to your clients instead of just selling them the tools to get to the outcome themselves.”
Being customer-focused for a sales team means that each of the reps should clearly understand what their customers are hoping to achieve and how they can help them deploy the product for maximum effectiveness. Selling SaaS is not a one time deal. SaaS sales teams should maintain close customer relationships over the long term and act as a consultant for their products.
5. Data mastering
The SaaS model gives sales teams the opportunity to implement and use data analytics to gain direct insight into how their clients use their product, what works, what difficulties there are and what efforts should be done in order to maximize their customers’ long-term value. A good sales team should have data mastering skills in order to take advantage of this.
Data analytics allow sales reps to pinpoint any problems, highlight successes and adjust their strategy accordingly. It is known that high-performing sales teams are 3.5 times more likely to use sales analytics than underperforming teams. So, companies who are hoping to advance their SaaS offering need to be sure that they have an inside sales team, whose reps are experienced in data analytics.
Companies striving to advance their SaaS offering need to be sure they find an executive who is experienced in data analytics.
6. Strong networking skills
In today’s SaaS companies the traditional traveling sales reps don’t exist. Because most SaaS companies focus on inside sales teams, there are many situations where reps need to call and email prospects daily. Very often, sales teams need to close deals without even meeting with the prospect in person. This means that sales reps need to have robust communication and networking skills in order to build strong interpersonal relationships using just email, phone calls and/or video chats.
Qualified sales reps have great written and spoken communication skills and understand the inside sales challenges very thoroughly. The best sales teams are able to engage prospects through email and phone calls, just as well as traditional reps close deals with customers in person.
The following are the most essential skills for SaaS inside sales team to boost their product’s sales. To make sure that your sales reps master these skills, CEOs need to continuously measure them and see whether their product’s sales increase thanks to the sales team. Here are four ways to do so:
- Measure the speed of deals through the pipeline
This is all about the average time that it takes to close a deal. Let’s see the comparison of two salespeople in order to see why this is useful:
Let’s say that John closes deals in 6 weeks on average and Kate does it in 3 weeks on average. At this point, we can see that they must have huge differences in their communication skills and work methods. Based on these numbers, we can see that John does not have the habit of gaining small agreements during the sales process. Velocity is low because John is always hunting for the “big yes”. Therefore, we can infer that Kate continuously uses confirmations and checks in order to see if even a small buying decision has been made by the prospect.
Deal velocity should increase over time and higher velocity means that the sales team is more skilled and experienced. Here is the formula for sales velocity:
- Measure the size of a sale
Like deal velocity, the average size of deals should also increase over time. Average sale size is an excellent indicator of the sales team’s negotiation and communication skills. This measurement can show how good a sales rep is at finding out the real needs and preferences of prospects and matching them to more premium products.
- Measure the number of leads
Probably the clearest way CEOs can measure the skills of SaaS inside sales teams is by measuring the number of leads in the pipeline during a specific time period. If the number of new leads is low, this means that either the sales team is not very good at initiating the first contact or they simply don’t put much effort into it.
An increasing number of sales can speak volumes about the skills and work ethic of the sales team and is a good indicator of sales success.
- Measure total win conversion and conversion by stage
Most CEOs measure win ratio and in this case, as well, the information is much more useful if you look at it by the sales stage. For example, if Kate has a 70% conversion from the “first meeting” to “proposal” stage and John has 35% conversion, this probably means one of the following two things: either Kate is much better at turning the prospect’s needs into identifiable “pain” or John wastes time with hopeless cases. This is why you always need to look at this metric by comparing one sales rep to another.
We are done here, as we have the six essential skills for SaaS inside sales team to boost your SaaS product sales, along with four ways CEOs can measure the success of the sales team. If you have other points on your mind that you would like to add, please share them with us.