A Definitive Guide to SaaS Sales in 2022
SaaS solutions may have been around for decades, but the sector has seen rapid growth in recent years. According to one source, 99% of organizations are now using one or more SaaS solutions in their business. And, no surprise, this growth has led to plenty of SaaS sales opportunities.
However, with so much competition out there, it can be difficult to know where to get started. Whether you’re interested in getting your first SaaS sales role or you’re planning on launching your own business in this niche, this guide will cover everything you need to know about SaaS sales. Let's start with the definition of what is SaaS sales.
What is SaaS sales?
Not too long ago, if you wanted to use a piece of software, you’d have to buy a physical copy (maybe on CD or, for those with a particularly good memory, floppy disk). Then, with the rise of high-speed internet, it became possible to download a digital copy.
However, with Software as a Service (SaaS), users could now “rent” software with a subscription model rather than having to buy it outright. Instead of having to install apps on individual computers, users could use them in the cloud, accessing them anywhere with an internet connection.
This means SaaS sales requires a significantly different approach. Rather than simply trying to close a sale and moving onto the next lead, SaaS sales effectively means asking prospects to keep on buying, either on a monthly or annual basis. While we normally talk about a sales funnel, for SaaS services it might be better to think of it as a continuous sales cycle with no designated end.
Thanks to the popularity of B2C services such as Netflix and Spotify, people are far more familiar with the idea of subscription-based services. As a result, salespeople rarely have to convince prospects about the benefits of SaaS. Instead of paying several hundred dollars for a CRM package that will be out of date next year, they get access to the latest version of the software with ongoing support for a (comparatively) low monthly fee. In return, SaaS companies can enjoy a consistent income. What’s not to like?
But the popularity of SaaS has also led to an increase in competitors, and your prospective customers can jump from one solution to another without any commitments or costs. For SaaS business owners, this means your solution has to offer high long-term value. If you’re working in SaaS sales, you need to effectively convey that value and explain why your solution is the best choice.
What’s it like working in SaaS sales?
SaaS sales covers a wide range of duties, but the exact responsibilities will vary depending on the company and the job title. As an example, one recent job opening for a SaaS sales executive listed the following duties:
- Defining and executing territory and account sales plans for your assigned geographic territory
- Prospecting, qualifying, managing and closing sales opportunities within the assigned territory
- Developing and managing multiple opportunities through the sales pipeline
- Managing and tracking customer interaction and transactional information in a CRM system
- Coordinating presales resources throughout the sales cycle
- Providing presentations, product demonstrations, and general support to prospective customers
- Executing a land-and-expand sales strategy with well thought out enterprise sales strategies
- Regular reporting of prospecting, pipeline, and forecast through the CRM system
- Staying current on competition, competitive issues, and products
- Effective, excellent communication with management, customers, and support staff.
- Traveling to customer locations in support of sales efforts.
- Other duties as assigned.
As you can see, SaaS sales involves more than just selling, something that all types of salespeople have to deal with.
According to Pipedrive’s State of Sales, only 53% of salespeople spend most of their day actually selling. Other tasks can include sales-related work, such as prospecting and qualifying leads, to more mundane jobs like admin work and IT support. SaaS sales isn’t immune to this, and you’ll likely find yourself assigned many more different duties as part of your day-to-day activities.
If you’re looking to take your first steps in SaaS sales, you’ll most likely begin your career as a Sales Development Representative (SDR), also sometimes referred to as Business Development Representatives (BDR). As an entry-level position, employers won’t typically require SDRs to have any previous SaaS sales experience, with training provided as part of the SDR onboarding.
Instead, employers are more likely to be interested in seeing whether you have the right mindset and attitude to be an SDR. For example, how have you previously shown confidence, persistence, empathy, and other similar qualities? Of course, experience and knowledge of sales or SaaS will give you an advantage in the interview process.
The SDR’s main responsibility is usually to generate new leads and handle the initial outreach, serving as the first point of contact between the company and the prospective customer. They’ll then be handed over to an Account Executive (AE) who in turn will continue to build and nurture that relationship, potentially doing demos and holding meetings, until they’re able to close the sale.
Depending on the SaaS company structure, the AE will either continue to look after the account after the initial sale or hand them over to a dedicated Account Manager.
As you move up the career ladder, you’ll find other sales roles such as Sales Managers who are responsible for their team's performance, up to VP of Sales, responsible for the overall SaaS sales strategy and and performance of the entire sales organization. At the very top, the Chief Revenue Officer (CRO) is responsible for all the revenue-generating activities.
According to the latest figures from Payscale, average salaries for these roles in 2022 are:
|Sales Development Representative (SDR)||$45,505|
|Account Executive (AE)||$56,772|
|Regional Sales Manager||$83,355|
|VP of Sales||$146,182|
|Chief Revenue Officer (CRO)||$186,438|
It’s important to note that these figures are for the base salary, excluding bonuses and commissions. Skilled salespeople can make much more, depending on the company’s bonus and commission structure. If you’re looking to learn more about the sales commission structure for SaaS, check out our Commission Calculator.
Before taking on any SaaS sales role, find out if you’ll be paid just a base salary, just commission, or a combination of the two. If you’ll be paid commission, confirm how that’s worked out. Is it tiered, with a higher percentage paid out the more you sell? Is it based on total sales or just profit? Do you get commission on the initial purchase or also when a customer renews their subscription?
The commission structure can have a massive impact on your take-home pay, so don’t be afraid to ask exactly how it’s structured.
The three main SaaS sales models
While every SaaS business involves subscription-style pricing, there are still different sales models within SaaS to consider.
If you’re looking to create your own SaaS company, understanding the right model for your business ensures you’re using the right resources without leaving money on the table. For those looking for a role in SaaS sales, knowing the different models and how they operate will help you understand the different requirements for the sales team.
From a business point of view, customer self-service is an ideal solution with (theoretically) no sales team is required. However, this requires that your customers are both capable of and willing to serve themselves. To assist them in this process, you can offer an in-app onboarding flow or detailed guides on getting started. Yet, this option is only suitable when you have a SaaS product that’s simple to understand and easy to use, with minimal risk to the customer.
Think back to those B2C subscription services. When someone signs up for Netflix, they don’t have to speak to a salesperson to understand the features and pricing or to get help logging in to watch their first show. Likewise, if a customer can sign up for your B2B SaaS by themselves without needing to be walked through the process, the customer self-service model can save businesses a lot of resources.
As product scope and complexity increase, a transactional model will be required. This is where customers will deal directly with a sales representative before making a purchase. Not only does this give customers the opportunity to ask any questions they may have, it also increases their confidence in the service.
When you’re handing over hundreds of dollars a month, it’s reassuring to know that there are people behind that service who can help in the event of any problems.
At the top end of the scale, the SaaS enterprise sales model involves one-to-one service. While the transactional model will still use set prices and automation to communicate basic messaging, enterprise customers will often have packages tailored to those unique needs (requiring a custom quote) and dedicated account managers caring for their needs through a long sales cycle. While this is difficult to scale, these services can bring in thousands of dollars each month.
Depending on the product, customer, and average selling price, businesses may choose to focus on one sales model or opt to use a combination of them. For example, individual users can sign up for Reply with a self-service model, business users are more likely to use a transactional model, and our enterprise clients can reach out for a custom quote.
Selling SaaS solutions
Hopefully you’ve now got a good idea of how SaaS sales works, but what does the actual process of selling a SaaS product look like?
If you’ve had experience with general sales processes, then you’ll be familiar with most of the stages, but the exact procedures must be adapted to consider the different requirements of a SaaS customer. While exact duties will vary, you can expect to handle the following stages of the sales cycle in SaaS:
Leads have to come from somewhere. In general, there are three possibilities: inbound leads that are nurtured and qualified by the marketing team, inbound leads that go straight to the sales team, or leads that you go out and find yourself. Rather than sitting around waiting for leads to come to you, it’s common for SDRs to have to handle lead generation themselves when selling SaaS solutions.
If you’re tasked with generating leads for your SaaS product, the first step is to have accurate buyer personas that describe your ideal customer. What’s their job title? What industry do they work in? What size company do they work for?
With this kind of information, you can use tools like LinkedIn to find prospects who would benefit more from your solution.
Whether you’ve sourced all those leads by yourself or they’re handed to you on a silver platter, you’ll still need to qualify those leads to ensure you’re not wasting your (or their) time. Just because they match all the criteria in your buyer persona doesn’t necessarily mean they’re going to be a great customer.
We’ve already covered the best ways of qualifying your leads on the Reply blog. But to summarize, it comes down to learning more about their unique situation and how it relates to your SaaS product. One common framework for understanding this is BANT:
- Budget - how much is the prospect able to spend?
- Authority - does the prospect have any purchasing power?
- Need - can your product actually solve the prospect’s problem?
- Timing - how soon does the prospect need the solution?
Some of this information may be difficult to confirm. Prospective customers may be reluctant to share budget details or have unrealistic timing expectations. However, it’s essential to know these details before you move any further with your SaaS sales process. If any of these criteria don’t align, you’ll only end up wasting both your time and your prospect’s.
Engaging with prospects
While you may have already spoken with the prospect during the qualification phase, the next step is to actively engage with them, presenting your SaaS product as the ideal solution for them.
First of all, you’ll need to decide what channels to use. Ideally, engagement will be carried out over multiple channels, depending on your prospects’ preferences and the stage in the process. Phone calls are a great way of having a real-time conversation, establishing a connection, and learning more about the prospect.
If you want to scale your outreach, you can use email automation software to personalize email outreach templates based on the recipient’s details. Similarly, social media and SMS messages can be used to engage with prospects in a convenient and conversational manner.
As the prospect moves down the sales funnel, you’ll need to provide them with more detailed information, showing them exactly how your solution would work for them. This might mean sharing tailored content (such as whitepapers and case studies) or running a product demo.
Whatever form your engagement takes, do your research to make it as personalized as possible, building on the information you learned in the qualification phase to tailor your outreach.
For example, if you were selling a CRM SaaS solution, you might already know that your prospect needs a way of managing their growing number of customers. However, by digging a little deeper you can learn more about the resulting challenges.
Maybe your prospect has to spend hours every day checking customer data, taking time out of more important tasks in their day. Or maybe inaccurate customer data has caused expensive mistakes, leaving your prospect feeling embarrassed. The more you understand the prospect and what’s going on in their professional lives, the more relevant your engagement will be.
Bonus tip: As you progress in your SaaS sales career, build up your own personal sales playbook. This can contain the email templates and call scripts you find most effective, as well as answers to the most common or complicated questions the prospect might ask.
Handling objections and negotiating the terms
When done correctly, your engagement will preempt many of the potential objections that prospects may have. But it’s impossible to anticipate every single objection that might come up at different SaaS sales stages.
Handling these objections means really listening to what the prospect has to say so that you can understand them better rather than bulldozing your way through the same script regardless of what they have to say.
Depending on the model, particularly for enterprise SaaS sales, you may also need to negotiate the contract terms. Rather than a zero-sum game with winners and losers, negotiation should always aim for a win-win solution where both teams feel like they got what they wanted.
It’s helpful to think of this negotiation as a series of steps, not a broad jump. Mike Schultz, president of the RAIN Group, recommends using the following four-stage negotiation process:
- Prepare - Set the agenda in advance with a clear idea of your desired outcome.
- Engage - Take the lead and set the tone for the negotiations. Where possible, take the initiative by raising the subject and confidently discussing the different options.
- Facilitate - Rather than trying to dominate the situation, make it clear that you’re open to collaborating to find a mutually beneficial outcome.
- Commit - By the end of the negotiations, both parties should be clear on the outcome and the next steps. Rather than relying on verbal agreements, get the terms in writing as soon as possible.
Once you have that commitment, this leads nicely to the next step…
Closing the sale
While all the work you’ve done up to this point increases the chance of you closing the sale, it’s important not to leave this bit to chance and risk falling so close to the finish line. For larger contracts, this means getting face to face with the prospect.
While many SaaS companies offer a free trial or freemium plan to get users to sign up, that’s not the same as getting a paying customer. Rather than just relying on your free plan to convert users, be proactive. This will almost certainly involve following up with them to ensure that you remain top of mind and are able to answer any additional questions that might come up.
If your prospect is still hesitating at this point, try giving them different options. For example, rather than committing to an annual plan, a monthly plan might be an easier sell. On the other hand, if they want the best value, then offering a discounted annual plan might be enough to seal the deal. You might also have different tiers you can offer with different features and benefits, so you can offer the one that best suits their needs.
Bonus tip: Still struggling to close deals? Check out our top closing techniques for SaaS.
Nurturing customer relationships
Unlike traditional sales, it’s essential that you think beyond the close with SaaS. Even when a prospect has converted into a happy customer, you want them to stay a happy customer for as long as possible — certainly for more than just the month or year they’ve initially signed up for.
Rather than sending them login details and leaving them to it, make sure your new customers are getting the most out of your product. This might be through an email onboarding sequence that talks them through the first steps, or jumping on a video call and helping them set up the software for their exact needs.
In some companies, there will be a dedicated customer success team handling this. However, you should still look for opportunities to show initiative and ensure the customer has everything they need. At the very least, familiarize yourself with what the customer success team does, so you know your customers are in good hands and you are ready to fill in any gaps.
The most important aspect of this is that you’re proactive. Rather than wondering how your customer is getting on (or worse, waiting for things to go wrong), regular communication is essential. When done correctly, this will also allow you to suggest upsell and cross-sell opportunities that provide your customer with added value.
Key metrics in SaaS Sales
Understanding how your performance will be measured allows you to focus on the right activities and improve your approach. While other business models are more likely to prioritize general sales metrics (such as win rate and quota attainment), SaaS businesses are more likely to be concerned with metrics that reflect long-term value.
- Monthly Recurring Revenue (MRR) - How much revenue are you generating over the month? For customers on annual plans, these should be broken into monthly values to give you an accurate idea of consistent revenue. This can also be measured over the year with Annual Recurring Revenue (ARR).
- Customer Satisfaction (CSAT) - The more satisfied your customers are, the more likely they are to stick around. Usually derived from customer surveys, they are calculated by dividing the number of positive responses by the total number of responses. Multiply the result by 100 and you have your CSAT score, expressed as a percentage.
- Net Promoter Score (NPS) - Similar to customer satisfaction, NPS aims to measure customer loyalty. By asking customers how likely they are to recommend your SaaS solution to a friend or colleague, you can get a better idea of how customers really feel about you. According to figures from Retently, the average NPS for SaaS is 30 (out of a potential 100).
- Churn - Also known as customer churn rate and rate of attrition, this refers to the percentage of customers who drop off and stop being customers over a defined period of time.
- Customer Acquisition Cost (CAC) - Every sale comes with its own costs. Even in a self-service model, you have to create and maintain the sign-up process. To find out how much it’s costing you to acquire each customer, divide all the sales and marketing expenses over a given period by the number of customers acquired in the same period
- Customer Lifetime Value (CLV) - Once you’ve acquired a customer, how much revenue do they bring in? This can be calculated by working out the customer value (average monthly payment), and then multiplying that by the customer lifespan (how long a person stays as a customer before churning).
The sharp rise in remote work over the last couple of years has led to an increased demand for cloud solutions that can be rapidly deployed. In turn, rapid advancements in internet access and speed have made it possible to deliver high-quality service around the world. As a result, SaaS solutions have become more popular than ever.
For SaaS businesses and the salespeople who work for them, it’s essential to understand that SaaS sales requires a different approach from other models. Rather than trying to close the sale at all costs, you have to research your prospects and nurture relationships to build long-term customer relationships. By delivering ongoing value, you can create a win-win solution for you and your customers.
Reply makes it easy to handle every aspect of the SaaS sales process. With the ability to automate and scale multichannel outreach, you can generate more leads, acquire new customers, and grow revenue faster. Try it out for yourself with a 14-day free trial.
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