Senior Writer: Hiba Ali
SaaS sales is the process that involves selling clients your company’s web-based software. The SaaS industry is worth billions of dollars, and it’s only going to grow. According to Statista, the SaaS market value was 152 billion dollars in 2021, and research estimates it to reach 208 billion dollars by 2023.
Now is the time to be in SaaS, but more opportunities mean more competition. To attain a competitive edge, you must know how to sell SaaS. SaaS industry selling techniques, metrics, and sales process activities differ from those in traditional physical product sales.
With this complete guide, you’ll learn everything you need to know about selling software as a service, whether you’re new to it or want to improve your sales skills in an ever-changing software world. As a result, by the end, you should have a clear roadmap for achieving your sales or company goals.
What Is SaaS Sales?
The SaaS sales process involves selling software that customers can access online through a portal or website and use to solve business problems. You want to make your existing customers more successful, whether saving them time, saving money, or improving their revenue generation.
In addition to being more complex to use than physical products, SaaS products require much more education and training from sales reps before prospects feel ready to buy. The SaaS sales model is also distinctive in that customers effectively become repeat customers every month, quarter, or year since the product usually has a subscription-based pricing model.
In the SaaS selling process, your sales team must be ready to interact with multiple decision-makers within the target company and offer a high-touch, personalized customer experience due to its high stakes.
You should also be aware that SaaS packages have a high degree of customization in terms of features that can further prolong the sales cycle as prospects negotiate which components they need. In addition, there are three SaaS commercial models to choose from – the self-service model, enterprise sales model, and transactional sales model.
What Is the Average SaaS Sales Rep’s Salary?
According to Glassdoor, ZipRecruiter, and the Bridge Group, the average base salary of SaaS salespeople is $68,705. The commission is usually included in the base salary and awarded when a salesperson meets the quota.
Due to their training, expertise, and high level of motivation, SaaS reps have a higher base pay than other salespeople. SaaS representatives can expect their paychecks to increase due to commissions, typically added on top of their base salaries.
Commissions vary based on individual compensation plans. SaaS salespeople usually earn 7-10% commission on new revenue, but renewal commissions and bonuses/accelerators can make their total compensation even more lucrative,
What’s the Length of a SaaS Sales Cycle?
SaaS sales cycles vary in length depending on the annual contract value (ACV), but they usually last around 84 days regardless of the ACV. For an ACV of less than $5K, the cycle will last about 40 days. While for $100K and up, the process will take around five and a half months.
There is little control over the length of the sales cycle for sales reps, but if you own a SaaS business, you can take some steps to shorten it. If your sales cycle takes too long, cut the free trial period from 30 days to two weeks. It is crucial to hire a professional writer or storyteller to help you communicate your complex software offering more clearly.
It would benefit if you worked with your marketing team to educate new markets before engaging them. Lastly, if your sales cycle will be lengthy because of enterprise clients, add that time to your budget. No salesperson will be able to perform well under unrealistic objectives.
SaaS Sales Metrics
A SaaS sales metric is essential to monitor since the first sale is only the beginning of a customer’s journey. But why is this important to know?
Because this factor is significant, a salesperson cannot only generate new sales; they must also generate recurring revenue – attracting new users and making them use an app for a long time. Here are six leading indicators to look for when it comes to SaaS and cloud sales:
Customer Acquisition Cost or CAC
Using this specific metric, you can measure how much it costs to acquire a new user, how marketing costs are related to the number of unique users, and if your current strategy and product are scalable.
Lead Velocity Rate or LVR
The LVR calculates the growth of the number of Sales Qualified Leads in your business over time. That’s important since it proves a market need for your solution. The LVR calculates the growth of your business in terms of leads.
The customer’s lifetime value or LTV
LTV refers to the amount the user spends on your SaaS, it represents the number of revenue per account per usage time, and it indicates the viability of your business model. A higher LTV indicates a growing business, while a lower CAC suggests a need to change the SaaS sales strategy, or maybe it’s time to emphasize customer success and customer service.
A win rate measures how well your sales team closes contracts. You can calculate the win rate by dividing the number of successful sales cases by the total number. Nonetheless, it would benefit if you were careful when using this metric. For example, your sales team may close the most accessible deals instead of testing business hypotheses in new market segments.
Monthly Recurring Revenue or MRR.
MRR is a complex metric consisting of just-joined users’ revenue, upselling, and users’ churn. We recommend you use an MRR calculator to understand your business’s current state. However, many companies take an alternative approach by using Annual Recurring Revenue.
The churn rate is the number of customers who leave your service during a specific period. Churn rate is an important indicator that shows how disappointed users are after using your app. Sixteenvetures discovered that a 5% annual churn rate is okay for SaaS products. If the percentage is higher, analysis is necessary.
What are the Unique Challenges of the SaaS Sales Process?
If you are transitioning from a non-SaaS sales role to SaaS sales, you can’t expect to find success right away. The fundamental aspects of SaaS selling take some time to get used to, and even veteran SaaS salespeople sometimes find it challenging. So listen up to what SaaS sales experts think is the most difficult aspect of selling software as a service:
Having many competitors pop up in your space is the greatest challenge, so you need to be able to differentiate yourself from them. When you have a customer, you must stay vigilant that another company does not swoop in. Heavy competition isn’t just a challenge when a buyer first evaluates solutions.
The right sales team can sell customers a solution that meets their needs. Providing your customers with the right solution and ensuring their onboarding with your product is critical because what if your customers don’t adopt it and it doesn’t work? They’ll walk away.
Selling SaaS requires a lot of upfront education, but there is also a risk of overexplaining. It is incredibly challenging to get sales reps to streamline and only discuss essential tools for the customer.
In SaaS selling, over-focusing on product features can also be a trap because any unique element you have will soon be replicated by a dozen other solutions. Instead of simply conveying a list of features that may seem similar from moment to moment, explain why you do ‘it’ better.
Lastly, SaaS salespeople have to deal with constant distractions as startups move incredibly fast, and there are high expectations both internally and externally for them to succeed.
Best SaaS Sales Techniques
With a list of metrics to track, a list of challenges, and a knowledge of what to expect from your sales cycle, these SaaS sales techniques will help you achieve your goals:
Custom/Live Setup Call
SaaS customers want to know how your product works and precisely how it will work for them. Therefore, the highest-converting sales tactic is the custom or live setup call, during which the CRM experts help potential customers configure their CRM to meet their needs.
In a “1-to-many” demo, a SaaS sales representative presents a live overview of your product to a small group of interested prospects, and they have the opportunity to ask questions. With the free trial and 1:many Demo, SaaS customers can experience your product without speaking to a sales representative.
You should subscribe users to an automated email sequence when they sign up for a trial to provide resources, demo videos, or other forms of support so they can get the most out of their experience. Sales representatives can also use this opportunity to offer one-on-one guidance, which you can also use to qualify prospects.
Automated Follow-Up System
Your sales reps will never have to guess the next step if you have a documented and thorough follow-up system. In addition to making your sales process easy to follow, a customer relationship management (CRM) platform with sales automation features will also automate follow-up email sequences, so your reps never miss an opportunity.
Customers sense that they are getting a deal when they pay the entire year’s bill at once instead of paying monthly, so many SaaS products offer a slight discount. As a result, the company receives substantial cash and doesn’t have to worry about churning customers anytime soon.
Stages in a SaaS Sales Process
Below are stages involved in a typical sales process:
The SaaS industry caters to tech-savvy audiences constantly looking for information online, so inbound marketing is a very effective way to capture leads. You can reach your ideal audience in several ways, including:
- Online ads
- Blog posts
- Social media
You can also find SaaS prospects at trade shows and conferences. These events allow you to meet potential buyers in person – a rare opportunity in the SaaS industry, where most prospect communication happens via email, phone, and videoconference.
All incoming traffic to your blog and trial subscribers is not worth pursuing. Instead, it would help if you had a way of qualifying them to follow up with the right people. For example, a lead scoring system allows sales reps to automatically modify leads to follow up with the best prospects.
You can qualify leads with a call or email shortly after they’ve started using your software. A quick five-minute phone call can be enough to determine if they’re interested or not.
Following the flow of qualified leads, your next step is offering your product to your prospects, presenting it as the solution to their main pain points. A SaaS sales cycle can vary widely depending on which product you’re offering.
Demonstrations are significant for complex and expensive products, especially for enterprise customers who might require a guided introduction, but you can also arrange free trials with your sales manager.
An effective SaaS salesperson overcomes objections. Most people don’t realize that you don’t have to talk nonstop to deal with your prospects’ objections. You can be a much more effective listener.
Listen to all their goals, motivations, and concerns rather than interject immediately when you hear an objection. You can better respond to their complaints if you understand where they may be coming from; if you take the time to know where they may be coming from.
There’s still more to the sales process than just signing up. You’ll have to get them onboarded, retained, and set up the ongoing upsell. Still, closing a new customer will bring revenue in for years to come, knowing they’ll be good customers.
If your prospects are yet on the fence after their free trial or product demo, you might consider offering them a 10-20% discount until they commit. It can be highly effective since it can tap into their FOMO.
If they decide to bill annually, you might offer them one or two months free since this longer lock-in period will prevent them from churning before their AHA moment. Also, you might ask them probing questions to help them decide.
To optimize for customer success, you’ll need to get the user through onboarding and at the bottom of the user journey, regardless of whether you used a hard or soft close.
The Bloomreach study from 2021 reported that 56% of customers would pay more for a better customer experience. Therefore, implementing a self-service support system could bring an ROI through SaaS sales compensation since they can solve problems independently.
A shorter resolution time might not seem like much, but it can make the difference between having a stagnating LTV and generating expansion revenue. Similarly, ensure that your onboarding flows have sufficient in-app guidance to ensure new signups don’t hit too many obstacles before they activate.
Essential Software Tools for SaaS Sales Reps
What tools do SaaS sales professionals use to sell their products? Of course, the SaaS management software sales stack of every team differs, but there are a few basic and essential elements.
Your CRM is your most important tool, and you should choose one that integrates well with all your other software. You’ll also need a lead generation tool, which can save you a lot of time finding prospect data.
Seamless integration between your email automation tool and your CRM is critical since we spend so much time on email.
The advantages of live chat for an organization are many. People are communicating in a very different way from even three to four years ago. It is not uncommon for buyers to browse a website until they find all the information they need. They’re window shoppers, and a website without live chat might lose many interested visitors.
Therefore, this is a very inexpensive way to attract new prospects and customers you probably weren’t even aware of.”
Automatic Phone Dialing & Recording
Automated phone dialing and recording offer the following benefits: Better time management through automated dialing and improved productivity by reducing call connection time.
Communication tools often have a built-in data gathering feature that lets your team observe data, trends, and more in real-time. Data can assist businesses in refining their strategies and decisions by using the data.
Contract & Proposal Tools
These tools allow you to stay on top of critical milestones and provide automated tools and alerts that let you know when you need them. It is easier to manage your process and workflow efficiency if you eliminate manual processes and centralize your document repository.
Lead Source Analysis
This helps you identify where your leads and opportunities are coming from. It is essentially the first touchpoint in the sales process where users interact with your marketing materials before becoming leads in your sales process.
Despite the differences between selling SaaS and other products, the essence remains the same: you must provide your prospects and customers with immeasurable value.
As long as your product fits the company’s sales process combined with the target market, you can generate recurring revenue regardless of whether you have a sales team.
With the tips and strategies we’ve shared, you’ll be sure to start a lucrative career in SaaS software sales — or, if you’re planning to create a SaaS product, you will boost recurring revenue year after year.
The necessary thing to remember is to choose a pricing model that fits your product best, do your research, look for qualified leads, and provide continuous nurturing to turn them into loyal customers.
Are you ready to supercharge your SaaS sales model for your target customers and improve the key metrics? Get your free ControlHippo demo today!
Frequently Asked Questions
The SaaS sales meaning is quite clear from the name, i.e., to sell SaaS. SaaS sales mean selling your company's web-based software to clients. Your clients can be individuals or organizations.
Direct or channel sales typically involve selling physical products or services delivered directly after purchase. SaaS, however, doesn't work that way. Due to SaaS being supported, preserved, and engineered by an external company, the cost is usually high, demanding a longer sales cycle and more marketing and sales touch points to get the customer to buy.
Here are the most common misconceptions about SaaS software sales:
- The key to becoming a great salesperson is reading sales books, blogs and listening to sales podcasts.
- You get more meetings if you are more active.
- Participant Alerts
- If your product isn't perfect, you can't sell it.
- Until you have a large sample size, data doesn't matter.
- The only way to succeed in sales is to be consistent.
Soft selling is an indirect method of persuading a customer to purchase a product. Salespeople use soft-sell techniques to build trust with prospects instead of pushing them to buy. In contrast, hard selling asks for a sale directly, where a sales representative tries to close a deal as quickly as possible. When you tailor your sales approach to engage with your prospects, you can land the sale in any scenario, and a good sales rep knows how to close a deal.
Below are the six simple SaaS software sales strategies:
- Make your software's value proposition clear to your target audience
- Give brief and value-centric Demonstrations
- Keep the trials short
- Get on the phone with prospects
- Offer discounted annual plans
- Create a robust customer support program
Here are some of the actionable ways you can increase sales and lead generation:
- Take advantage of software discovery platforms
- Make use of SEO to attract new users.
- Create lead magnets and interactive tools
- Demonstrate tangible results with case studies
- Create data-driven content to build authority
- Ask for referrals
- Diversify your LinkedIn network