With the SaaS industry growth of 500% in the past seven years, there is little doubt that companies need to strap in and focus on generating consistent revenue growth.
Such uninterrupted growth, can only be achieved by ensuring that your SaaS product pleases customers, and exceeds expectations, time and again. Indeed, your profitability too is a crucial factor.
However, that one factor that can make or break your SaaS business is sales. And this is unsurprisingly, the one aspect that many companies get wrong. Be it because of the wrong sales strategy, inadequate resources or the incorrect sales model — you need to find the reason and fix it.
With that in mind, let’s narrow down one of these factors and understand more about SaaS sales models and why it is important to find the right one for your business.
With SaaS sales at an all-time high, if your startup is not generating revenue, it is probably because you have opted for the wrong sales model. Even worse, this wrong choice can drain your business of funds.
The right choice of sales model can in fact propel your startup to that first round of funding and beyond. It is thus crucial that you find the right sales model for your SaaS business.
If these reasons are not convincing enough, imagine having answers to these questions at your fingertips:
Equipped with these answers, you can truly maximize your brand performance and make it consistently exceed expectations.
On that note, consider the following factors when selecting a sales model for your SaaS business.
Now for the important part — what are the options that you can choose from?
Let us now look at the primary sales models you should consider for generating sales in your SaaS business. You can consider these models for sales irrespective of your business model.
For SaaS businesses, the predominant costs incurred can easily be attributed to features and service points as part of the sales. You will easily spend more if your product is complex and requires training new customers/users.
However, to maximize their revenue, many SaaS companies prefer a simpler approach — a customer self-service model. However, a precursor to this model is ensuring that your customers are willing and able to navigate your product on their own. They should be able to do so with minimal effort and risk.
Productivity tools such as Todoist or Asana, serve as great examples of this sales model. These tools are easily accessible by customers, and they can easily navigate and use them to their advantage after purchasing the product.
The educational content, walkthroughs, and automation drive business through the sales process in such a model. The customers would also expect the support team to provide enough automated features and content to guide them with onboarding to query resolution.
If your SaaS product is jam-packed with features that can be useful to businesses and individuals, it is not wrong for you to charge a higher price. But remember, that with premium pricing comes the need to establish trust and convince customers of your product quality.
With a higher average sales price, comes higher expectations from your customers. You will need to have signed business contracts, a standard invoicing process, premium SLAs (service-level agreements) and human customer support to aid your customers with any issues they may face.
Tools that automate a specific business process or function, such as Zendesk and Marketo are perfect examples of this model. These software products automate certain aspects of business processes and support internal or external processes.
Some of the primary features of this sales model are higher efficiency, high-volume sales and support operations, shorter sales cycles, and speedy onboarding processes. Automation supports the sales representatives, and the educational content help removes product complexity.
Most SaaS startups fall into the first two categories that we just discussed, however, others have complex products and offer higher value per customer. These are enterprise products built to address a business problem and charge customers higher than most other SaaS products.
SaaS products like Netsuite, and BrightEdge are perfect examples of the enterprise sales model. So, we are talking about big brand consumer marketers, or companies looking to automate strategic business processes.
In the Enterprise Sales Model, territory sales reps generally lead the product sales supported by product marketers and sales engineers. The marketing for such SaaS products is focused on increasing brand awareness, educating customers, and building strong transactional relationships.
More importantly, you would need to provide high-tech customer support, and even provide onsite resolutions when necessary. The customer support process, of course, needs to be supported by educational tools and training materials. So, the content production for your SaaS company needs to be top-notch.
High stakes equals high-quality marketing and sales processes. Makes sense, right?
By now, I am sure you have a good idea of everything these sales models offer for your business. With that, let us now look at how you can leverage them to your SaaS company’s advantage.
When you are a SaaS company, it is hard not to come across competitors who are offering free trial periods or freemium plans. You may even feel like copying the strategy right away to reel in some customers quickly. But wait — a lot of strategic thought goes behind this decision.
Offering a trial period is definitely a great way to highlight the true value of your product to customers, and whether it can solve problems for them. Some of the common trial period lengths that are often adopted by SaaS companies are —
Simply offering your customers a free trial or freemium plan does not suffice if you want to convert them.
To prevent this, you need to stay in touch throughout the entire period and get to know the kind of experience they are getting during the trial. You can also fix challenges in real-time and keep your customers engaged in the product.
A survey suggests that 85% of customers will pay more for a SaaS product as long as they get a high-quality customer experience.
By staying in touch with your customers during the trial period, you can also derive valuable insights into customer usage and behavior. Doing this would also give you a better idea of which plan they are likely to buy and the features they are most likely to use after the purchase.
For most SaaS providers, providing important information effectively is one of the most important considerations while creating any kind of content. You need to strike a perfect balance between providing valuable information about your premium features without getting redundant.
Your demos will work best when you can use relevant hypothetical scenarios and walk your customers through it. Remember to make your demos simple and clear, and give them some room to come up with questions that you can address.
Finally, ensure to highlight any or all features that can help customers make the best of your product.
You have surely come across many SaaS brands offering monthly plans, haven’t you? Can’t blame them — monthly subscription plans make for great sources of recurring revenue. But offering annual plans can be equally beneficial.
For starters, you will retain more customers. Plus, you will also be able to generate more revenue upfront. By ensuring that you offer an annual plan to your customers at a discounted rate, and reduce the number of cancellations.
Have a SaaS product that is jam-packed with features and is useful for organizations of all sizes?
You can maximize your recurring revenue with the help of your pricing plans. That’s where upselling and cross-selling comes into the picture.
By adopting this simple strategy, you can boost the average recurring revenue with the help of existing customers. As customers use your product regularly, you will see them asking for additional features and services.
This is where upselling another premium plan that includes these features could be the right way to go. However, do not use a recycled upselling pitch for every customer and instead try to tailor a fresh one for each prospect.
Let’s admit it — SaaS sales are a tad bit complicated.
Since the sales cycle in SaaS companies is often quite long, it is susceptible to important conversations and follow-ups getting missed. Plus, as your product pricing becomes more premium, your customers will also expect your service to be at par.
In such a situation, losing out on important customer interactions will adversely affect your ability to retain them. The customer churn rate for SaaS was benchmarked at 5.9% in 2022, yet some experienced churn rates as high as 15%. For this reason, you would want to use a CRM to maintain all the important details and communications with your customers.
Maintaining and nurturing these relationships will not only pay off in the long run but also reward your company with contract renewals.
Now that you know all there is to know about SaaS sales models and how to navigate them, we are sure that you will choose the right one for your business. Remember, choosing the right sales model and taking the right approach toward the sales of your product can put your company on the path of uninterrupted growth.