If you work in SaaS sales, you might have one job title but many jobs. You’re an expert on the software product you’re selling. You know the ins and outs of your client’s needs. You know what business challenges they might face before they tell you about them, and you know how to solve them.
If this sounds like a lot, it is. But that’s SaaS sales.
With the rise of subscription-based software, this complex sales role is taking center stage in many software companies. Yet, SaaS sales work involves many more layers than traditional sales roles, thanks largely to a different set of challenges.
So, what sets SaaS sales apart from other sales verticals, what does it take to be successful in this field? Explore those questions and more below.
How SaaS sales differs from other verticals
SaaS sales involves selling software as a service (SaaS), or software that lives in the cloud rather than on a company’s servers. Unlike the traditional sales model, SaaS entails selling a subscription and a long-term support relationship. This makes for a fundamentally different type of sales approach than traditional models because the entire sales funnel takes a nonlinear shape. In this approach, the customer journey may take several rounds of nurturing and engagement, even after acquiring leads.
SaaS salespeople thus serve as consultants for their prospects. They must learn the objectives, pain points, and potential sales objections of each would-be client and speak to how the software can address these challenges. Reps have to look for ways to upsell and tailor additional features to each customer, and they must be adept at addressing the security concerns that come with moving critical business software and data off-premises.
The transaction doesn’t end with the initial sale, either—far from it. SaaS account executives must continuously nurture the new relationship, and assist with client onboarding and ongoing optimization as new features roll out. Churn is always a looming threat, and SaaS companies are never safe resting on their laurels. Customer success is an ongoing priority, and renewal must be top of mind, as a short-term subscription doesn’t hold nearly the same value as a long-term relationship.
SaaS sales models
The SaaS industry is not a monolithic enterprise. Numerous approaches work for closing deals, and the ideal model for your SaaS business depends on its size, the type of service you’re selling, and the nature of your sales pipeline. Here are three of the most common models for SaaS sales.
Self-service sales
A self-service model demands little, if any, involvement from a SaaS sales rep. This works well for simple, intuitive systems like basic cloud accounting or invoicing software. When there’s not a large investment on the line or the need for extensive training, customers can largely get themselves up and running. Sales reps may only get involved when potential customers have specific questions or as a way to upsell or nurture the relationship for the long haul.
Self-service SaaS examples:
Mailchimp
Semrush
QuickBooks Online
Transactional sales
As software becomes more complex, so does the sales cycle. A major investment in enterprise resource planning (ERP) or customer relationship management (CRM) software typically calls for product demos, training, and customization.
SaaS products in this model are more expensive and thus involve more decision-makers in the review process. Sales teams may work hand in hand with marketing teams to facilitate sales prospecting, connect with qualified leads, and offer deeper product demonstrations or Q&A sessions.
Transactional SaaS sales examples:
Stripe
HubSpot
BambooHR
Enterprise sales
This is the transactional model at scale, involving larger companies and corporations that may purchase software subscriptions for entire departments across the organization. This may entail a major investment in customized communication software for a staff of thousands or full-scale HR and payroll management for a multi-state enterprise. At this level, large sales and support teams are essential for providing long-term training and customization to suit a large organization.
Enterprise SaaS customers often sign sizable long-term contracts, and it’s the role of the sales team to continually nurture the relationship with renewal in mind. In other cases, they may onboard one department or aspect of the company with a “wait and see” approach, requiring the sales team to work for a larger commitment.
Enterprise SaaS software examples:
ADP
Asana
Microsoft 365
The SaaS sales cycle
Although the SaaS sales cycle is generally longer than in traditional sales, the specifics of that timeline vary significantly depending on the software involved. More expensive enterprise solutions typically produce longer sales cycles. According to HubSpot, an account with an annual contract value (ACV) of under $5,000 has an average sales cycle of 40 days, while one with an ACV of over $100,000 has an average cycle of 170 days. But it’s not just about the price tag.
The level of complexity and customizability of the product plays a significant role. Software with more features and tailored options requires multiple demos to showcase how it can solve a potential customer's specific problems. Sales teams need time to demonstrate these solutions and guide prospects through the various options. Additionally, more complex software often demands thorough lead qualification upfront to ensure the right prospects are targeted for demos.
The number of departments and potential users involved will also make a difference in the sales timeline, as sales agents must overcome objections from many different angles and viewpoints. If prospects are offered a free trial before making a commitment, that will also extend the cycle.
That said, the SaaS sales cycle doesn’t have to be needlessly long. Techniques for shortening the cycle include:
Trimming your free trial period
Reworking sales content to communicate value faster and more personally
Reworking marketing content so education happens before outreach
5 impactful SaaS sales strategies and techniques
Given how the SaaS sales model and cycle differ from traditional sales verticals, it’s critical to leverage sales tactics that fit. Here are five SaaS-specific sales strategies that can help you find success with this model.
1. Focus on the relationship
The most effective sales approaches are always relationship-oriented, but this is especially true when selling SaaS products. You’ve put in the effort to grow your pipeline through sales prospecting, and now you must play the long game of establishing and cultivating those relationships, no matter where they are in the sales funnel.
Fortunately, the longer sales cycle in SaaS offers more time to understand your customer's business and needs. Even when the cycle is shorter or culminates in self-service, your goal must be to comprehend a prospect’s needs in depth—and how your product can address those needs. This effort continues after the sale, as long-term customer retention should be your ultimate goal.
2. Lead with your product
Your product is the hero of any SaaS solution, and this should be abundantly clear throughout the sales cycle. In your outreach, focus first on solving a prospect’s problems with your software, not closing the deal.
This starts with building effective demos showcasing features that directly address specific prospect pain points. This doesn’t have to be a complicated task—you can use a video recording tool like Loom to quickly capture a product demonstration, then send that demo to prospects to start the conversation.
Don’t overload them with more information than they need. Instead, highlight the ways in which the product will immediately support their business goals or solve problems.
Once they try the software for themselves, it must be easy to use from the get-go. For instance, you can work with product development teams to record simple tutorials on Loom and integrate them directly into the user interface. That way, new clients can quickly get the lay of the land without navigating to another page or calling you for support.
3. Provide a strategic free trial
Nothing demonstrates the value of enterprise software like hands-on experience. That’s why free trials are so integral to the SaaS sales model.
But not just any free trial.
Your trial length should be designed with your prospects in mind. How long do they need to get familiar with your product and find value in it for their day-to-day work? The answer depends on the complexity of your prospect’s business and your product. For instance, an AI-powered imaging API for X-ray techs might require a longer cycle than a product that adds captions and emojis to Instagram videos automatically.
Whatever you decide, the ultimate goal should be to integrate the software into a potential client’s workflow just long enough that they can’t imagine living without it. Stay in touch with a sales cadence throughout their trial to offer insights and guidance.
4. Offer annual pricing
Many SaaS providers offer a discount for customers who prepay for a year of service in advance. According to research by Recurly, 68% of SaaS companies offer both monthly and annual options.
The logic is clear: Annual plans reduce total costs for your customers and may even better fit their business model, while you secure a larger commitment and an immediate cash-flow boost. Of course, you still have to nurture the long-term relationship, but an annual deal may help by taking the pressure off of you to work for a monthly renewal.
Wondering how much of a discount to offer for annual pricing? Based on Recurly’s research, a total of 16.7% off the monthly price is the most popular choice.
5. Incentivize referrals
Referrals are a huge asset in sales. Satisfied customers have essentially already done a lot of the work for you, creating an invaluable inbound sales pipeline. And SaaS models easily lend themselves toward referral incentives.
Recording a Loom video showing existing customers how to refer new customers and get a discount or free month of your SaaS product can work wonders for your sales cycle.
An even better strategy in the SaaS landscape may be to offer customers a free upgrade for successful referrals.
This tactic could convert them to a higher-paying customer in the long run. Creating a simple Loom video showcasing a feature they would get access to might be just enough to prompt a timely referral.
How to build a successful SaaS sales team
SaaS companies grow quickly—anywhere from 15% to 45% annually, according to recent estimates. That means a strong sales team must scale quickly and collaborate seamlessly to facilitate effective conversions.
A typical SaaS sales team should have the following:
Sales managers to lead the team, develop strategy, assign reps, and more
Sales Development Representatives (SDRs) to generate and qualify leads
Account executives (AEs) to conduct sales calls and demos, close deals, establish new accounts, and nurture long-term relationships
Technical support (or Solutions Engineers) to educate the sales team on using the product and addressing user questions
A strong connection between sales and marketing to facilitate collaboration between these two critical departments
As you build your sales team, it’s tempting to hire and scale as quickly as possible. But you must add team members with the distinctions of SaaS sales in mind. Can they dedicate themselves to fostering relationships and working toward long-term ROI and customer success rather than jumping from one urgent sales call to the next? Do they demonstrate a knack for collaboration with other sales, marketing, and tech support reps? Can they go deep in developing product and customer knowledge? Are they able to adapt in a fast-changing business?
How to measure SaaS sales success
Like any sales initiative, it’s critical to track the performance and return on investment for your efforts. There are various ways to gauge the success of your SaaS sales program, and the ideal numbers are defined differently by industry. A few of the most common sales metrics include:
Churn rate: Perhaps the most important SaaS sales metric, churn rate measures the percentage of customers who cancel their subscriptions during a specific period. Take the number of customers lost divided by the number you had at the start of the period and multiply by 100.
Customer acquisition cost (CAC): This tallies the total costs involved, on average, for each customer who signs up. Add up all your sales and marketing expenses for a specific period and divide this by the number of new customers.
Monthly recurring revenue (MRR): Because of the SaaS subscription model, monthly or annual revenue forecasts are critical for evaluating the results of your sales program. Multiply the number of active customers by the average monthly or annual subscription cost to forecast total revenue.
Net promoter score (NPS): This metric solicits direct user feedback to gauge customer success and assess the overall satisfaction level with your product. Users typically answer a simple question (e.g., “How likely are you to recommend our product to others?”) on a scale of one to 10.
Customer lifetime value (CLTV): This is the average revenue you gain over the entire life of a customer relationship. Understanding the long-term revenue potential of each prospect helps you know what to invest in sales efforts and how you might improve long-term to support and increase lifetime value.
The power of video in SaaS sales
One particular piece of modern technology can provide essential scaffolding for the SaaS sales process: sales video software. Given the need for ongoing communication and demos throughout the sales cycle, asynchronous video messaging offers an invaluable way to highlight product features and provide personalized support.
Loom, for instance, radically simplifies the complex communication involved in selling SaaS products. There’s no need for another in-person demo or a convoluted email or text chain. And gone are the frustratingly ineffective phone calls spent trying to describe what your software does.
With Loom, you can send clear video walkthroughs in minutes. Record your screen, voice, and face all at once, to share clear explanations and demonstrations that help close deals faster. You can even use features like Variables to quickly replace audio snippets, such as a prospect’s name, without re-recording entire videos.
Loom videos support every critical aspect of the SaaS sales process—fostering relationships, demonstrating value, and shortening the sales cycle. Ready to see how it can boost your SaaS sales? Give Loom a try Loom today.
