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Sales Strategy
SaaS sales 101 - A beginner's guide to selling software
Noel Bouwmeester
May 4, 2024
May 4, 2024
|
7 min. read
Noel Bouwmeester
LAST UPDATED
May 4, 2024
READING TIME
7 min.
The SaaS market is projected to be worth $232 billion in 2024.
If you want a slice of that, knowing how to sell SaaS is important.
In this guide, we’ll dive into the world of SaaS sales. We'll explore its unique challenges, the skills required to succeed, and the strategies to help you close more deals and generate more revenue.
What is SaaS?
SaaS stands for "Software as a Service."
Remember the old days when you just had to pay a one-time fee for an application?
Well, with the rise of SaaS, those days are mostly gone. Today, most apps have monthly subscription plans.
For software users, this may initially sound like a disadvantage.
However, there are some key advantages to this approach:
Accessibility: Use the software where and whenever as long as you have an internet connection.
Constant improvements: Most SaaS have a team behind it that constantly works on improving the software, adding more features, and fixing bugs.
Easily updatable: Since the SaaS provider hosts the software, it's easy to update with the latest versions.
Backups: The user doesn’t have to worry about backing up their files. A good SaaS app automatically and regularly backs up user accounts.
For providers, the SaaS model is also highly attractive. Here are some of the reasons why:
Recurring monthly fees: Instead of selling software for a one-time fee, SaaS providers can continue charging customers for as long as they remain subscribers. An app that used to bring $99 can generate $1000 or more.
Scalability: SaaS software tends to be really scalable. The cloud infrastructure most SaaS providers use can be adjusted based on the resources needed. Additionally, adding users to the platform is really cheap.
SaaS challenges
Despite its many advantages over traditional one-off sales, SaaS comes with its unique set of challenges:
Intense Competition: With its relatively low entry barrier and practically limitless profit potential, SaaS competition is fierce! Differentiating yourself is no longer optional.
Lead generation cost: Since the lifetime value of software customers has shot up due to SaaS, generating leads has also become much more costly. Try lemlist’s 450+ million leads database as a low-cost starting point for finding quality leads and generating more revenue.
Market information: To effectively compare their products to their competitors, salespeople need to know not only their own product inside out but also that of their competitors. As products evolve, the sales rep’s knowledge needs to stay current.
Lengthy sales pipeline: Selling subscriptions for more SaaS products for enterprises is usually a lengthy process that involves multiple departments and decision-makers. SaaS subscriptions can be a liability for these companies, and thus, they want to ensure that they make the right decision. That inevitably means that more sales touchpoints are required to make the sale. For lower-priced solutions, the sales process is shorter.
Creating and providing product demos: Creating demos that address prospects’ pain points takes time and skill.
Churn rate: Since SaaS uses a subscription model, it’s important to retain customers. It's more expensive to acquire new customers than to retain existing ones, so improving the churn rate is of the utmost importance.
The SaaS sales process
As stated above, the length of the sales process can vary based on the purchase cost.
Here are the general steps to the SaaS sales process:
Lead generation: In this stage, you identify potential customers to whom your product could be a good fit. Usually, the initial lead generation phase is followed by the sales team evaluating the leads, filtering out the weak leads, and keeping the leads that most qualify as potential customers.
Outreach: Now, it’s time to reach out to the leads found in the lead generation step. Some options at your disposal are cold emailing, cold calling, and leveraging social media to attract customers (LinkedIn for B2B).
With lemlist, you can do multichannel outreach utilizing email, cold calling, LinkedIn, and manual tasks/steps with reminders.
Coming at your prospects through multiple channels ensures a higher conversion rate than traditional outreach.
Evaluating interested leads: Once you've got positive engagement on your outreach and people seemingly interested in what you offer, it's time to assess those leads. Why? Some people might be interested but not be a good fit for your product and ICP. This could lead to dissatisfied customers and a higher churn rate.
Product demonstration: Next, you can show a product demo to the most qualified leads. Ideally, the demo is adapted to your ICP, and the leads fall into that specific bucket. However, it’s always good to make some small adjustments that most address the pain points of the prospect you’re talking to. It’s this level of personalization that generates sales.
Closing stages: This is the proposal and negotiation phase. It may also involve addressing the prospect’s final questions and objections.
Onboarding and customer satisfaction: Whether you are responsible for onboarding or not, it’s actually an essential extension of the sales process. Unhappy customers equal high churn rates.
Key skills for SaaS sales 🗝️
Making a killing with SaaS sales requires a specific set of skills.
If you recognize yourself in the list below, you may be a great fit for a SaaS sales role. ;-)
Strong communication and listening skills 📡
Strong communication and listening skills are essential for any job requiring much human interaction.
In sales, you need to be really attentive to your prospect's needs and their (perhaps not so obvious) objections.
You need to be able to put yourself in your prospect's shoes and see their perspective.
An especially useful method for sales is Active listening.
Active listening means fully engaging with your prospect's words and needs during a sales conversation.
It’s all about giving your prospect your undivided attention and demonstrating a genuine interest in what your prospect is sharing with you.
Active listening doesn’t only apply to spoken conversations either.
The same principles apply even if you're reading your prospect's email.
Read with complete focus. Don’t skim over the email.
Relationship building
During the sales process, the ideal scenario is to create a relationship with your prospect.
It can’t be all about your bottom line. Instead, become their most trusted advisor, as marketing guru Jay Abraham used to say.
If your product really isn’t a good fit for them, just let them know. The lost sale will return to you manifold through word-of-mouth about your trustworthiness.
And if the relationship does lead to a sale, customers are less likely to cancel their subscription, leading to lower churn rates.
Up-to-date product and industry knowledge
For starters, and this is a no-brainer, you need to know the product you're selling inside out.
But it doesn’t stop there.
You also need to learn about your competitors' products to explain why your product is (hopefully) better than the competition.
Remember, you cannot be your prospect’s trusted advisor if you lack industry knowledge.
So do your homework and come in prepared.
Problem-solving
If you can identify your prospect's pain points and challenges, you can offer them tailored solutions that fit their needs.
In other words, your prospect's pain points, challenges, and objections are problems that can be solved with an intelligent, customized solution of your SaaS product.
Does that mean you have to change your software? Not necessarily.
Perhaps, it’s as simple as offering them a 3-year subscription because one of their objections is paying monthly.
Negotiating and closing
These skills allow you to maximize value for both parties.
If you understand your prospect's needs and budget limitations, you can find mutually beneficial solutions that comply with customer requirements while also generating revenue for the company.
When it comes to closing, it's essential to take the lead and constantly suggest the next steps. No ambiguity is allowed here.
We’ll discuss some specific techniques in the next section.
Resilience
Except for selling water in the desert, in sales, you will face rejection… a lot.
If you can't deal with that and let it get to you, you'll be better off looking for a job in your local library (does it still exist?).
Rejection is excellent feedback. It’s a learning moment. It’s your perspective that makes it either good or bad.
Having a growth mindset is what gives you resilience.
After all, if you see losing as a learning moment, how can you even lose at all?
Time management ⏱️
Sales can be a chaotic and somewhat reactive job.
If you’re not good at managing your time or organizing yourself, you won’t be efficient.
The good thing is that it can be learned.
A warning, though: There's a plethora of time management methods online.
It's easy to go down the rabbit hole and change your time management system every three days, which completely defeats the purpose of time management because you lose all the time implementing and tweaking the new systems.
So please stick to one approach and give it a good run for its money before considering changing it.
Adaptability
“Intelligence is the ability to adapt to change.”
Stephen Hawking
In SaaS, things change… fast.
You need to update your knowledge and strategies…constantly.
So, either you adapt or stay behind.
Imagine this:
All of a sudden, your primary outreach method becomes obsolete! What do you do now?
Well, you’ve got two options:
Stress out about it
Adapt to the changes and try something new
Ideally, you’re one step ahead because when things were still going well, you were already trying new things. In that case, you already have an idea about what to do next.
SaaS selling techniques that work
Know your product inside out
As alluded to earlier, knowing exactly how your product works is essential.
You don't want to be left speechless after a straightforward question about how your app handles user privacy.
Again, it comes down to doing your homework, sharpening the axe, so to speak.
This knowledge should include common objections that prospects raise.
You want to be armed with the correct answers to make your sales process more efficient and generate more revenue.
Know your prospect inside out
But the homework doesn’t stop at knowing your product.
You must also learn what makes your prospects tick.
This used to be hard, if not impossible, but fortunately, we’re living in 2024! Almost everybody is online and leaves traces of their personalities.
Take some time to identify their pain points and the language they use and reflect them back to them in an empathic way.
Benefits over features
Yes, this is getting old!
But the reason this advice persists is that it works.
I don't really care about my TV having 4K HD, but I love how the glowing picture quality enhances the experience of watching Netflix.
Customers don’t really care about your real-time analytics dashboard, but they love how it gives them insights that lead to more revenue.
Really we can summarize it in a single sentence:
Show your customers how your product can help them!
Contact prospects after they sign up for a free trial
Want to impress your prospects and convert them to customers?
An excellent way to do so is to contact them just after they sign up for a trial.
Whether you can contact them by calling or emailing, this will surely convince them of your commitment to their satisfaction with your product.
Let them know you are there in case they need help with anything.
Think about upsell opportunities
Would you like fries with that?
Who hasn't heard McDonald's famous upsell line?
Upselling works as long as it’s not done too aggressively.
If your prospect is about to purchase your cheapest plan but a higher plan actually better fits their needs, explain the benefits of the superior plan to them.
Or maybe they’re about to subscribe to a monthly plan while a yearly subscription is more advantageous to them price-wise.
Upsell opportunities are everywhere, but ensure you only offer them if they make sense for your customer.
Show, don’t tell
Which one is more cliché? 'Benefits over features' or 'show, don’t tell?'
Who cares? ;-) They both work!
Show your prospects what your product can do for them.
Don’t say: “Our service is awesome!”
Instead, tell them how your service can help them generate more revenue through case studies of successful users.
SaaS sales metrics to keep an eye on
CLTV (Customer LifeTime Value) - The net profit a customer generates for the company during their entire relationship.
CAC (Customer Acquisition Cost) - The average total customer acquisition cost.
Churn - The dreaded churn rate. The rate at which customers discontinue or stop using a product or service.
MMR (Monthly Recurring Revenue) - A key metric. It’s the predictable and recurring revenue for subscription-based businesses.
Start your SaaS sales journey today
Selling SaaS can be incredibly profitable.
And if it’s raking in the dough, that means that competition is fierce.
The tips shared in this post can help you gain an edge.
Using a multichannel outreach approach can also set you apart from the competition instead of just using a single channel, as most sales teams do.
With a tool like lemlist, not only can you do multichannel outreach, but you can also personalize at scale due to its advanced personalization features that can help you increase your conversions and revenue for your company.
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