What sets SaaS sales apart from other sales?
B2B SaaS sales is the process of selling subscription-based, cloud-hosted software to businesses. The product or service can be almost anything, as long as it’s valuable enough for businesses to spend money on. The promise is that by investing in your software, their business will improve.
While SaaS involves the traditional methods of prospecting, qualifying, closing and negotiation, there are a few key differentiators that make it different from other sales. For instance, unlike with tangible products, it's hard to sell a software's benefits without the prospect using it themselves. For this reason, it's become commonplace to offer free trials and money-back guarantees.
Most software-as-a-service companies aim to streamline complex business practices. They operate using the subscription model, and with the goal of keeping customers for a long period of time. This is in contrast to traditional methods of customers making an investment right away.
The different models of B2B SaaS sales
Traditionally, sales follows the AIDA model: Awareness, Interest, Desire and Action. The AIDA system is one of the most basic sales principles, and the core of many other sales and/or marketing models.
It states that before making a sale you need to:
- Get attention: Capture your audience’s attention with an ad or post that stands out from the crowd.
- Generate interest: Once you have their attention, give them more information about your product or service so they can begin to understand how it might help them solve their problem or fulfill their desire for something new.
- Create desire: Tell your audience what makes your product or service better than others and why they should buy from you rather than a competitor.
- Generate action: Give your audience an easy way to buy from you — a link to your shopping cart, an order form, etc.
While B2B SaaS sales follows the standards of the AIDA model, there are a few sales models that are distinct for the SaaS industry. Choosing the right sales model for your B2B SaaS is critical. It helps determine how many salespeople you need and who they should be targeting. Depending on the nature of your product, you may need one model or many models for your sales teams.
The following are some of the most common sales models in B2B SaaS:
1. Customer self-service model
A customer self-service model is when you have a website where customers sign up without talking to salespeople. They pay you with a credit card (or some other form of payment). It’s very common for early stage companies. If you offer a free version of your product with an additional charge for premium features, this is also called a “freemium.”
2. Transactional sales model
Transactional sales models are based on lead generation, closing the sale and providing support as needed. This model requires your sales team to be responsible for bringing new customers onboard and supporting them throughout their lifecycle.
A transactional sales model is a great choice if you have an easy to understand service that sells with a low number of meetings. Think of a company like Mailchimp, for example. They are selling a tool that helps businesses send newsletters to their customers. With so many customers, there is no one-size-fits-all solution. However, the product is easy enough to understand that it doesn't take long to get the ball rolling.
If selling an enterprise level SaaS product or something more complex, you might want to consider a different model.
3. Enterprise sales model
The enterprise sales model is the most traditional model of B2B SaaS sales. It’s based on appointment setting and high-touch customer interactions and is intended for high-margin, large-scale deals.
This model is designed to target big markets with huge potential for ROI. Enterprise SaaS companies are often less concerned about growth than their SMB counterparts, instead focusing their efforts on establishing long-term relationships and ensuring customer success.
Enterprise SaaS businesses also tend to have longer sales cycles because they need to build trust over time and prove that they can provide value before closing a deal. Large, complex contracts are the norm in the enterprise model, and it requires dedicated relationship managers to ensure customer success.
The biggest challenge of this model is that it’s very difficult to scale. Sales cycles are long and labor intensive and can be expensive if not careful with your prospecting tactics. There’s also a trust factor involved because it requires a commitment from the customer—usually in the form of a contract—that can be hard to come by in today’s competitive business environment where other companies may not be requiring the same level of commitment.
4. Trials and demos
Trials and demos are the most common model for B2B SaaS companies. This is because the SaaS product is usually complex and requires more than a simple sales page to understand the value.
To qualify your leads, the predominant qualification criterion is their behavior. With a freemium model, it's not uncommon to see a conversion rate of 2% to 5% from trial users to paying customers.
Most SaaS companies using this model offer two types of trials:
Self-serve trials: You sign up on the website and you can immediately use the software. The advantage is that you get people in your funnel, but you also end up with many people who never use the product.
Manual trials: You request a demo or schedule a call with a sales rep, who will lead you through the product and help you get started.
5. Monthly vs annual contracts
The question of whether to charge your customers monthly or annually is one that B2B SaaS founders face quite early on in the journey.
For many reasons, annual billing has been the default choice for many SaaS businesses.
At first glance, charging monthly looks like a better deal for you as a business owner. You get your money upfront, which means you don’t have to worry about having to chase cash from your customers every month.
In reality, however, SaaS businesses that charge their customers monthly often deal with payment delays more often than those who bill annually. When paying a small monthly fee without a contract, it's easier for companies to not feel committed to a product and stay on the lookout for a something better. Whereas if you've paid for a year up front, they're more likely to feel committed and invested in their purchase.
The different stages of B2B SaaS sales cycles
Many B2B SaaS companies will follow some version of a sales cycle like the ones below:
In the beginning, consider focusing on content marketing, social media and online ads likely to attract your ideal client.
To turn leads into sales, it's important to identify the most promising leads from your website visitors and trial subscribers. You might try using a lead scoring platform to rank prospects on their likelihood of closing. As an alternative, you can have your sales reps contact new prospects right after they sign up so that reps can clarify their level of interest.
At this point, the goal is to get prospects on the phone with a sales rep so that they can discuss their needs with someone who can offer the correct solutions.
When the presentation stage ends, your prospect may have concerns about product fit or pricing. Your sales rep first needs to listen and ask clarifying questions if your prospect brings up product fit. If the concern is about price, your rep should clarify how the value of your product outweighs the price.
The most important stage of the customer acquisition process occurs when a prospect decides to become a paying customer. One SaaS sales closing technique is to give them a free month in exchange for an annual fee.
When people buy your product, they aren't always ready to use it. The best SaaS companies use customer support, comprehensive training and a range of useful upsells to keep their customers engaged with the product and on board for longer.
Put it into action: build a scalable B2B SaaS sales process
This primer has given you a better understanding of the different sales stages and how they relate to one another. As you can see, there are a variety of components to B2B SaaS sales, and what works for one company might be ineffective for another. By having a solid understanding of SaaS sales stages, as well as the important components that occur during each, you'll be better equipped to find the right fit for your business—and make sure it works.
For a deep dive into building a SaaS sales cycle from scratch, check out our article on creating a scalable SaaS sales process.