Selling SaaS is kind of a big deal.
How big of a deal, you ask?
Well, SaaS is projected to be a $200 billion industry by the end of 2023.
This means that in such a competitive space, understanding exactly what makes SaaS sales tick is a must if you want to get ahead.
(Or even if you don’t want to get ahead but are just sort of content with staying in the middle, you should still get to know a bit more about SaaS sales.)
Which brings us to our main point: You’ve come to the right (virtual) place to learn pretty much everything there is to know about selling software.
But we’re gonna warn you: This blog is a doozy.
- What is SaaS?
- What is SaaS sales?
- Selling SaaS vs other sales
- What is unique about SaaS sales?
- B2B vs B2C when selling software as a service (SaaS)
- The most common SaaS sales models
- Self-Serve / Product-Led Growth (PLG)
- Transactional Sales
- Enterprise Sales
- Deconstructing the B2B SaaS sales funnel
- Top of the funnel (ToFu)
- Middle of the funnel (MoFu)
- Bottom of the funnel (BoFu)
- What is an average SaaS sales cycle?
- Nailing the product demo in SaaS sales
- What’s a product demo?
- Here are 8 ways to make sure your software demo is amazing:
- Choosing the correct SaaS sales methodology
- Here are some of the most common sales methodologies for selling SaaS:
- How to measure success in SaaS sales
- What are SaaS sales metrics?
- Understanding the SaaS sales benchmarks
- Get to know the roles in SaaS sales
- Here are the most common positions in a go-to-market (GTM) or sales organization:
- SaaS sales compensation models
- Making B2B SaaS sales less complicated
What is SaaS?
Think about all your favorite software, like Zoom, Walnut, Slack, Walnut, and even Salesforce. Did we mention Walnut?
These are all examples of SaaS offerings.
What is SaaS sales?
SaaS sales is the process of selling SaaS-related products and services. (Ok, that was maybe a bit obvious.)
Besides for the roughly one billion sales terms and abbreviations that you probably should know, SaaS sales is pretty straightforward.
(We kid. It’s really not.)
Like any business, you’ll need to sell your SaaS to generate profit and achieve growth. But because software is not a physical object that requires manufacturing for each individual customer and shipping, you can very quickly scale your sales and sell to millions of people across the world.
Which is why there is a huge demand for SaaS sales professionals, sales influencers, sales tools, sales research, and even sales memes.
Selling SaaS vs other sales
Due to its nature, the SaaS sales lifecycle can look different than that of other conventional products and services.
What is unique about SaaS sales?
First of all, there are different avenues available for selling SaaS products:
- Converting new prospects
- Once-off licenses
- Subscription-based/recurring licenses
- Upselling and cross-selling to existing prospects
There are also several unique challenges when selling SaaS (particularly B2B):
- High lead-generation costs
- The difficulty of qualifying B2B leads
- A complex and lengthy sales pipeline
- Creating and providing product demos
- Onboarding and post-sales support
Learn more about personalizing SaaS sales, by watching our on-demand webinar: Generic Sales Suck
B2B vs B2C when selling software as a service (SaaS)
If you thought we were done with the abbreviations, you were very wrong. In fact, we’re just getting started.
B2B stands for “Business to Business” whereas B2C stands for “Business to Consumer”. So B2C refers to selling to individual customers while B2B refers to selling to other businesses.
As you’d imagine, B2B sales requires adopting somewhat of a different approach than B2C sales.
For one, it involves a shift from typical sales intelligence to account-based marketing. That’s because a business prospect usually has a number of buying decision-makers to convince instead of just one.
Doesn’t that sound fun?
The differences between B2C vs. B2B sales also have important implications for managing customer relations. For all of these reasons and more, B2B sales is a lot more complex for both buyers and sellers than B2C sales.
The most common SaaS sales models
As with anything this big and important, there are many opinions, perspectives, and sales tips about the best way to sell SaaS. Plus, what works great for one software company may not work for another.
The SaaS sales model you choose to use dictates how your sales team will approach selling to prospects and what role your sellers and buyers play in the sales process. It has important implications for your day-to-day sales activities and long-term sales strategy.
It also determines:
- How many salespeople you’ll need
- How you find and identify your target customers
- How you interact with prospects and customers
- How you qualify your leads
- How you’ll approach closing sales
It’s particularly important that your sales model matches your customers’ expectations. Any mismatch will lead to many lost opportunities.
Typically, you’ll encounter three sales models in the B2B SaaS space:
Self-Serve / Product-Led Growth (PLG)
A self-serve model works when you have a highly motivated target market. Prospects actively seek out your SaaS solutions and have high intent to buy even before you get to work nurturing leads.
This model is typically used for SaaS sales, where prices are low and the sales volume is high. So, this is a popular model for consumer-focused services.
This type of self-service is also referred to as “product-led growth” or “PLG” because the product itself is the primary driver of customer acquisition.
This PLG trend is also helpful so that teams can scale their sales to sell effectively at volume.
Learn more: What is product-led growth?
Transactional sales models are used for SaaS with a higher price point and lower volume, although it’s not as exclusive as enterprise sales, which we’ll talk about in a second.
Your typical target market would be highly motivated individuals, startups, or SMBs (small and mid-sized businesses). In a way, transactional sales cover the spectrum between mass-market SaaS and enterprise-grade solutions.
Effective transactional sales require a more extensive and multidisciplinary sales team that can shift between sales and account-based marketing and who can effectively upsell as the needs of each individual customer grows.
Enterprise sales is the most expensive, highly involved, and time-consuming SaaS sales model.
Enterprise customers are discerning and typically have a large buying group whose concerns must be satisfied. Closing an enterprise deal will usually require you to multithread your deals, which means you garner relationships with multiple parties within the organization.
Enterprise customers also expect a high level of support that’s highly available and personalized. Marketing, sales, engineers, support managers, and every other stakeholder must have an aligned approach for each enterprise customer.
Learn more about how to optimize your SaaS sales strategies.
Deconstructing the B2B SaaS sales funnel
If you want to make more SaaS sales, the first step is to make sure you build your SaaS sales funnel productively and smartly.
At the most basic level, a SaaS funnel maps out how you’ll guide your prospects through the sales journey, from the moment you first generate a lead to the moment you are ready to close the deal.
A well-planned and optimized B2B sales funnel will lead to a more efficient, streamlined, and effective sales process.
There are obviously many differences between SaaS marketing and SaaS sales, but they also are tightly linked, with marketing being responsible for many (if not most) of the leads that the sales team follows up on. These leads are generally referred to as marketing qualified leads or MQLs.
This means that there needs to be a seamless, frictionless transition between your marketing and sales teams. The process of providing the sales team with everything they need to sell better is called sales enablement and can be a crucial part of optimizing your sales process.
Top of the funnel (ToFu)
Affectionately known as ToFu, this stage involves your first interactions with a prospect. It’s primarily concerned with marketing tactics aimed at raising product awareness, outreach, and attracting prospects.
ToFu sales reps should be well-versed in social media, elevator pitches, walkthroughs, cold emails, software demos, and product tours.
Learn more about the top of the funnel (ToFU).
Middle of the funnel (MoFu)
The middle of the sales funnel is when you start engaging with a customer and providing them with information about how your product can help solve their pain points.
As we mentioned, a B2B SaaS sales cycle can be a long and winding road. (**We’ll pause here so you can add that song to your Spotify playlist.)
Your mid-funnel tactics must be on point to keep the customer interested and move closer to a potential closing.
This is where highly engaging interactions that showcase your product’s real-life capabilities can be priceless—for example, case studies, eBooks, interactive product demos, and product tours. There are many presales tools that can help you here.
Learn more about the middle of the funnel (MoFu).
Bottom of the funnel (BoFu)
As you approach making a deal, you’ll need to settle your prospect’s last remaining objections and start contract negotiations. During this stage, you must remove any barriers that prevent your customer from signing off on your product.
You’ll need to engage with them individually to address their specific concerns via Q&As, webinars, case studies, sales demos—whatever it takes. If a prospect is proving particularly stubborn, it might be time to whip out extra incentives, such as discounts or free trials.
Closing the deal is an art. (Got that, Picasso?) So mastering various closing techniques can help you turn more prospects into customers.
Learn more about the bottom of the funnel (BoFu).
That’s not the end.
SaaS sellers must continue to refine and optimize their sales funnel as they go. What works today might not work tomorrow, and your sales funnel needs to evolve with your product, market conditions, customer expectations, and current trends.
Using tools to build a sales flowchart can help a lot to visualize your entire sales journey.
What is an average SaaS sales cycle?
So far, we’ve discussed SaaS sales in terms of models, strategies, and overarching stages.
But running a sales team requires a lot of optimization of your strategies, pitches, messaging, demos, negotiations, and more. Here’s a short overview of the 14 main events in the average SaaS sales cycle:
- Understanding outside vs inside sales strategies – In SaaS sales, it’s very rare that there will be a need for outside sales, but the practice is still not entirely extinct.
- Creating your outbound sales strategy – Crafting the perfect cold emails and sales pitches can help your sales team align their messaging and attract more prospects.
- Personalizing your inbound sales strategy – An inbound sales strategy that is customized to your prospects will improve their sales experience and help you sell more.
- Writing a sales presentation outline – Put down the structure of your sales presentation ahead of time to keep your messaging consistent and stay on track.
- Qualifying leads – Some of your leads are great and can really use your solution and some of them are garbage and will never buy. You need a strategy to differentiate between the two.
- Making discovery calls – Understanding your prospects’ needs can help your team refine their sales pitches to match each individual pain point.
- Creating content for buyer enablement – When your prospects get interested in your product, assist them with learning more about its value with content that’ll help them buy.
- Nurturing leads – Make sure you have a plan in place to help interested leads become potential buyers.
- Scheduling demos – The demo is often what makes or breaks the sale. Take great care with all the steps preceding it.
- Preparing a software demo presentation – No matter how good your demo is, if your demo presentation is boring, you’ll lose your prospects’ interest.
- Writing demo follow-up emails – The demo may have gone really well, but you’re not done yet. Create a plan to follow up and make sure the deal keeps moving forward.
- Handling objections – Most prospects will say ‘no’ multiple times before saying ‘yes’. Get to know the most common objections and how your team intends on handling them.
- Negotiating sales – There are various tactics to negotiate the deal. Make sure you’re all on the same page about where there’s leeway and where there isn’t.
- Closing deals – Make sure you have all of the tools you need at your disposal so you can close the deal as quickly and efficiently as possible.
Nailing the product demo in SaaS sales
When it comes down to improving your SaaS sales and closing more deals, no stage of the sales process is as crucial as the demo phase.
Our survey of B2B prospects found that 97% of buyers admitted that a bad demo could lead to them not buying. So no pressure, but this is your make-it or break-it moment.
But first, let’s cover the basics:
What’s a product demo?
Here’s the product demo definition:
And while this may sound simple enough, don’t be mistaken: This is no easy feat. Creating good product demos has been notoriously difficult, with some of the biggest names in the world experiencing embarrassing live demo fails.
Because of the trickiness of live demos, SaaS sales teams will usually create sales demo environments where things are more sturdy and less can go awry.
Here are 8 ways to make sure your software demo is amazing:
- Choose an interactive demo software – Let your prospects try before they buy. Like normal sales should be.
- Avoid demo no-shows – There’s nothing worse than preparing a demo and the prospect simply doesn’t show up.
- Use a product demo checklist – Even the best in the biz can make mistakes. So keep track of what you need with a checklist.
- Create a clear sales demo structure – Break down how you’re going to present your product in a way that’s engaging and useful for your audience.
- Write a product demo agenda – Make a plan of what you want to cover and get everybody on the same page.
- Write a product demo script – Get a clear understanding of what you want to show and talk about.
- Optimize your demo experience – Give them an experience that’ll leave them on a positive note.
- Avoid common demo mistakes – Sometimes even a silly mistake can ruin the perfect demo.
Choosing the correct SaaS sales methodology
Hold on a sec. We just wanted to check in with you because we’ve really been rambling for a long time.
Are you still with us?
Oh right, we can’t hear you.
While we discussed what goes on in SaaS sales and even the types of sales that occur, let’s get into the different philosophies and methodologies there are when it comes to selling software. Hint: there are a ton.
Here are some of the most common sales methodologies for selling SaaS:
- SPIN selling – Use these four types of questions to gain a deep understanding of your prospects: Situation, Problem, Implication, and Need Payoff.
- Challenger Sales model – Challenge your prospect’s preconceived notions about their problem and potential solutions.
- Solution selling – Focus on the value your product can bring to your prospect rather than focusing on the features themselves.
- Gap Selling – Understand where the prospect is and where they want to be. Then explain how your product can help them fill this gap.
- MEDDIC sales process – Understand what your prospect hopes to achieve by asking them about the following: Metrics, Economic Buyer, Decision Criteria, Decision Process, Identifying Pain, and Champion.
- Sandler Selling method – This set of rules helps sellers through these three stages of the sales process: Building a relationship, qualifying leads, and closing the sale.
- Customer-centric sales – Instead of focusing on your own needs, make the sales experience entirely focused on the customer.
- Conceptual Selling – Instead of explaining the product to your prospects, explain the concept behind it and the value it brings.
Learn more about the best SaaS sales methodologies.
How to measure success in SaaS sales
Ultimately, SaaS sales is all about improving your business’s bottom line. And to know whether your efforts are actually working, you need to track your performance.
You must consider and track various metrics and existing benchmarks to get the complete picture. So, pull out your calculator watches from the ‘90s, because we’re about to punch some numbers.
What are SaaS sales metrics?
“SaaS sales metrics” refers to the data needed to track the wellbeing of your SaaS sales and to drive revenue growth.
SaaS sales metrics use sales data to quantify the performance of your sales teams and the financial health of your company so that your businesses can make informed decisions in a highly competitive marketplace.
Plus, it allows you to track your sales trends and sales capacity to accurately forecast your sales and set up for future success.
8 SaaS sales metrics to track performance:
- Monthly recurring revenue – How much money is coming in each month?
- Customer churn rate – At what rate are your customers leaving you?
- Revenue churn rate – How much revenue is being lost over a given period?
- Annual recurring revenue – How much money is coming in each year?
- Customer acquisition cost – How much money are you paying to acquire each customer?
- Customer lifetime value – How much revenue do you earn from each customer over the entire lifetime?
- Months to recover – How long will it take to make back the money you spent on acquiring the customer?
- Lead velocity rate – What’s the speed in which you are gaining new leads?
Learn more about SaaS metrics.
Understanding the SaaS sales benchmarks
“Wait a second!” you may exclaim at this part of the blog. “I thought we already covered the boring numbers bit!”
Well, we did, it’s true, but we’re not quite finished yet. Because while benchmarks can lead you to many of the same conclusions as metrics, there is a subtle difference between them: Whereas metrics focus on your own business growth, benchmarks allow you to compare your business to the competition.
It helps you to see in which areas you are over or underperforming compared to your peers.
You can use this information to prioritize areas you need to improve your performance or where you might be experiencing a bottleneck.
Here are 5 of the most telling sales benchmarks to measure your sales performance:
- Cold call to conversion rate – How many cold calls does it take to get one converted lead?
- Conversion to appointment rate – How many converted leads are actually willing to meet?
- Appointment to opportunity rate – How many of the people you meet with are qualified by the sales team?
- Opportunity to conversion rate – How many of the opportunities actually convert?
- Demo to close ratio – How many of the demos you give leads to closed deals?
Learn more about the SaaS sales benchmarks.
Get to know the roles in SaaS sales
As you can probably guess by now, SaaS sales is not a one-person job.
(Can you imagine? We can vouch that even writing about SaaS sales is not a one-person job.)
On top of having to manage multiple prospects and customers simultaneously, it involves various stages, activities, processes, and methodologies,
That means that tackling SaaS sales requires a diverse and multi-disciplinary team that works together.
So, what does a SaaS sales “A-team” look like?
Glad you asked.
Here are the most common positions in a go-to-market (GTM) or sales organization:
- Sales development representatives (SDRs) / Business development representatives (BDRs) – They are often tasked with cold outreach and qualifying leads.
- Presales – This role assists with everything that goes on before the sale.
- Demo engineers, sales engineers, and solution engineers – As the name suggests, they focus on the product demo and make sure it is ready and customized for each prospect.
- Account executives – They manage the relationship with the buyer and are responsible for closing the deal.
- Sales managers – They’re responsible for the team and hitting the company quotas.
- Customer success managers – Once the sale is done, this role helps the customer utilize the product and can assist with upselling and renewing contracts.
To learn more about the presales and sales engineer role, watch this Nuts About Presales episode with Rishi Kapoor, Lead Sales Engineer at Alteryx:
SaaS sales compensation models
Because of how difficult SaaS sales is, it’s no surprise that SaaS sales reps tend to demand higher salaries than those in other verticals.
This is partly due to the fact that SaaS sales reps need in-depth technical knowledge of their product. The other part is due to the comparatively complex and competitive nature of the SaaS industry.
Of course, SaaS companies also want to incentivize reps to make as many sales as possible. That’s why SaaS salaries typically depend largely on commission earnings.
However, SaaS salaries vary greatly depending on the business, product, experience of the sales rep, and the typical target market (e.g., SMBs vs. enterprises).
According to various sources, such as ZipRecruiter, Glassdoor, and The Bridge Group, the calculated average salary of a SaaS sales rep is between $24,000 to $158,000. However, the majority of sales reps earn a salary of between $70,000 to $100,000 per year.
There are three main compensation models used for SaaS employees:
- Basic + commission – With lower commissions and higher basic pay, expenses will be more stable, but the incentive will be lower.
- Profit-based commission – Based on the net value of a deal, this incentivizes sales reps to make bigger deals using more efficient practices. However, it does eat into company profits.
- Tiered commission – Using this model, sales reps can earn bonuses or higher commission rates hitting certain sales targets. This is the least stable approach expense-wise but offers the greatest incentive to close more deals.
Making B2B SaaS sales less complicated
We imagine at this point you’re probably thinking: “Lord, please make it stop! SaaS sales is way too complicated!”
Between all the stages and metrics and methodologies and roles and sales jargon, we’re honestly exhausted as well.
But for that reason, sales tech like Walnut exists. So, we are grateful we have a reason to wake up in the morning.
Because instead of endless sales cycles that confuse prospects who are just trying to buy software to make their lives easier, Walnut lets reps deliver personalized interactive software demos that show value quickly.
This way, prospects can quickly get what your product does and quickly decide if they want to get it for their business.
(Did you get that wordplay?)
So what are you waiting for? Simplify your SaaS sales process by signing up for Walnut today.