The SaaS sales cycle
There are several factors at play when it comes to determining your sales cycle. For instance, the more expensive your SaaS product, the more decision-makers are involved in the purchasing process. This can significantly lengthen your cycle.
So, first things first, consider the pricing of your software.
Next, consider how long you’d like your contract to run for. The average length of a sales cycle is 84 days, so you’ll need to factor this in when calculating your annual contract value (ACV). Other factors you’ll need to consider are:
- One-time fees (e.g. training costs)
- Upsell and cross-sell revenue
- Customer churn rate
- ACV of all contracts added together
- ACV of all contracts for an average revenue number
Thirdly, if you find your sales cycle is too long, you can take steps to shorten it by:
- Consider offering a free trial from 30 days to two weeks.
- Rework your sales content with the help of a lead generation specialist.
- Encourage your SaaS marketing team to share educational content across new market channels before conducting outreach.
Lastly, if you can’t shorten your sales cycle, build it into your budget from the start. If you don’t, it will affect your sales goals, and you’ll struggle to reach your target.
Getting started selling SaaS
You’ve got your fundamentals down - a well-defined sales process and a realistic sales cycle. Now what?
You’ll need to choose a SaaS sales model.
A SaaS business model will help you decide how many people you need to hire, how you’ll progress customers down your sales funnel, and what steps your company needs to evolve.
There are 3 SaaS sales models you can choose from:
1. Self-service model
A self-service sales model works best when your team is small, and your average selling price is low because it’s more affordable and a good option for selling lower-priced SaaS at a higher volume. This model uses free trials to encourage users to sign up without the help of a sales rep.
If you’d like to incorporate the self-service model, you’ll utilise B2B marketing to promote your solution and its value.
2. Transactional sales model
A transactional model is the most common sales model as it’s the most scalable. A larger sales team typically needs to implement a more personalised selling approach.
Outbound lead generation teams will contact small and medium-sized businesses to encourage a sale on a tiered pricing model.
If you’d like to include a transactional model as part of your sales strategy, then you’ll need an aligned sales and marketing team, in-depth SaaS sales training, and to encourage discounts to convert more hot leads.
3. Enterprise sales model
The third and final model is enterprise SaaS sales. This model is expensive and requires the most customisation and sales support.
There are an above-average number of decision-makers, resulting in a longer SaaS sales funnel - but the incoming revenue is well worth it.
To implement an enterprise sales model in your SaaS business, ensure alignment among your product marketers, salespeople, accountants, and engineers. This alignment is crucial for improving customer service, building better client relationships, and boosting the number of signed contracts and invoices sent.
In other words, you’ll need a whole RevOps team to ensure a streamlined selling process.
Defining your SaaS sales strategy (+ free guide)
Now, on to your sales strategy!
A SaaS sales strategy uses various sales techniques to close as many deals or upsell to as many clients as possible.
But there’s no ”one size fits all” approach. You need to find what works for your business and where it is in SaaS adoption and development.
A SaaS Sales strategy plays a huge role in your ability to grow and position your company for long-term success.
To reach the ultimate goal of generating revenue, your strategy should focus on:
- B2B lead generation - generating customer interest in a product to turn that interest into a sale.
- B2B prospecting - directly reaching out to your target customers to introduce your company, product, and services.
- Closing deals - the final stage of the transaction involves signing agreements and completing the sale.
🔥 Tip! You might also be interested in SaaS demand generation, the best lead generation strategies, lead generation for technology startups and SaaS llead generation.
Creating your SaaS sales super team
You can’t sell SaaS without a well-rounded sales team, and according to Tomasz Tunguz’s report on benchmarking SaaS startup efficiency with revenue per employee metrics, the fastest-growing SaaS companies grow their teams by 56% each year.
That means you need to scale and fast!
But how do you build a SaaS sales team?
There are many factors at play when it comes to hiring a winning sales team, including:
- Discovering reps who know how to sell software to companies
- Whether or not an SDR will fit in with the company culture
- Deciding on the expectations you’ll set for potential hires
Our Head of Global Sales, Jon Ilett, treats the hiring process like a sales call. Here’s his guide to hiring exceptional SDRs.
Why it’s a good idea to start a career in SaaS
If you’re new to SaaS sales and wondering if it’s a good direction to move into - it is!
Here are three reasons why:
- According to PR Newswire’s Valuates reports, analysts expect the SaaS technology market to double by 2026, with a projected worth of £307.3 billion.
- You can have any skill set if you want to sell SaaS, plus it opens your career up for growth across many departments, including marketing, product, software engineering and project management.
- SaaS sales is vibrant and refreshing with loads of learning and networking opportunities.
Since software sales is such a rapidly growing industry, it makes sense that it will create many opportunities for anyone willing to put in the time and effort to master it.
Which brings us to our next point:
How can you get into software sales?
There are several ways of getting into SaaS sales. It helps to have previous sales experience, but if you don’t, start searching for entry-level positions.
Since the SaaS tech sales are taking off, there are many startups advertising SaaS sales jobs, and often, they aren’t looking for anyone great on paper. Rather, SaaS leaders are looking for passionate individuals with a passion to learn and grow. Positions for women in tech sales are also growing and an important part of expanding companies.
Of course, it does help if you have a formal education to add to your resume, but don’t worry if you don’t. There are loads of informal courses online that can help prepare you for a career in SaaS sales, and your employer will love that you took the initiative.
It’s handy to add a tailored email signature when you’re talking to SaaS leaders. That’ll show you’re professional and help you leave a lasting impression during the hiring process. For example, have a LinkedIn CTA so recruiters and leaders can connect with you with one click in an email.
Now, depending on your SaaS sales experience, you can expect to land one of the following roles:
Sales Development Representative
You can apply for a junior SDR role with 0-2 years of experience. SDRs need excellent written and verbal communication skills and a strong desire to learn. SaaS sales is a fast-paced, challenging industry and meeting and exceeding sales goals and targets will be what advances your career.
Account Executive / Manager
2-5 years of selling experience can help place or promote you in a managerial or mid-level sales/account executive position. Sales Executives take ownership of qualified opportunities. They must understand CRM systems well, have strong analytical and communication skills and have experience leading or mentoring others.
Sales Manager / VP
Senior sales reps have 5-7 years of experience. Suppose you’re looking to advance toward a senior SaaS sales role. In that case, you’ll need to know your company’s software inside and out, have strong consultative selling and C-level experience and a sharp focus on your personal goals. Ambition is vital for landing a VP sales position. You’ll also need excellent analytical and problem-solving skills and outstanding leadership qualities.
This sounds fantastic, but what can you expect to earn in a SaaS sales role? Software as a service sales is commission-based.
When a rep closes a deal or renews a new account, they’ll get a percentage of the deal as commission. There are different ways to structure SaaS commission, from the accelerator model that increases commission for every dollar a rep brings in towards their goal to a tiered commission rate.
A tiered commission looks at percentages of attainment whereby reps have to hit milestones to move on to a new tier. Then, as their performance increases, so does their commission.
Every company will follow the commission structure that works for them, but one thing that remains the same throughout is that they will add your commission to a base salary.
So, how much can you expect to earn or pay junior, mid and senior reps? According to Glassdoor, the average base salary for a junior SDR is $48,217, while Mids can earn up to $79,000 and seniors $93,000 to $114,000.
Tracking your SaaS sales metrics
Once you have your sales team in place, you’ll want to start measuring their performance, and the only way to do that is to track Key Performance Indicators (KPIs).
Lead generation KPIs are incredibly important for SaaS sales professionals as they sign deals and calculate revenue on an ongoing, monthly basis.
The most essential SaaS sales metrics to start with are:
SDR KPIs
The KPIs tracked by your Sales Development Representative team should include:
- Productivity metrics - the number of emails sent, direct dials made and LinkedIn activity an SDR generates (e.g., the volume of InMails and connection requests sent to prospects).
- Success metrics - the number of meetings booked and attended by potential customers and the number of Sales Qualified Opportunities (SQOs). Sales Development Representatives (SDRs) qualify for these opportunities based on the BANT criteria, which assess Budget, Authority, Need, and Timing.
BDM KPIs
The KPIs tracked by your Business Development Management team should include:
- Personal metrics - the average dollar amount of each BDM’s deals and the number of demos attended vs the number of opportunities won.
- Monthly recurring revenue (MRR) metrics - Includes the dollar amount of MRR booked by each Business Development Manager (BDM), the MRR target for each BDM, and the percentage of the target achieved by each BDM compared to their respective targets.
Monthly recurring revenue (MRR) metrics include the dollar amount of MRR booked by each Business Development Manager (BDM), the MRR target for each BDM, and the percentage of the target achieved by each BDM compared to their respective targets.
- Demo metrics - the number of demos booked vs the number of demos attended.
Pipeline metrics - a variety of KPIs tracking the SaaS sales pipeline, including the total number of open opportunities, the total number of opps moved to demo and to contract, plus the total number of lost opps vs the total number of closed-won opps.
Inbound vs outbound
The final SaaS sales metric to look at. This involves:
- Compare your inbound and outbound metrics by comparing the percentage of inbound and outbound conversion rates and the monetary value of inbounds and outbounds won.
- Finally, comparing inbound vs outbound revenue won (in dollars). This comes together to determine the total revenue generated from inbound and outbound SaaS sales.
What tech can help with SaaS sales?
Adopting sales technology can significantly improve the SaaS sales process. Sales teams can implement various software sales tools at all stages of the sales funnel.
Through selling SaaS, it’s clear that technology has changed how businesses and their sales teams interact with prospects. Sales automation software can help maximise productivity, streamline the sales process and make prospecting more efficient.
The most important sales tool a B2B SaaS team should invest in is a good CRM like Salesforce, Hubspot or Pipedrive, and a sales intelligence tool to help connect with the right leads at the right time.
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