Structure of Successful Sales Companies

Part
01
of four
Part
01

SaaS Sales: Best Practices

SaaS companies should select an appropriate sales model and structure that befits their operational size, product complexity, customer demographics. Additionally, SaaS sales teams should factor the importance of product differentiation, aligned organization structure, compensation policy, and sales personnel management to enhance their sales efforts.

SALES MODEL

SALES STRUCTURE

Customer self-service structure

Transactional Sales Structure

Enterprise sales

  • Extensive complexity and value of SaaS product can drive some SaaS companies into traditional enterprise sales. In this regard, the enterprise sales model is a low volume, high price sales strategy.
  • SaaS teams engaging in enterprise sales model have a larger sales team whose focus is on product marketing and sales engineering with limited automation tools. Sales teams require in-depth product and customer knowledge to align product features with organization needs.
  • Enterprise sales model is popular for feature rich suites targeting mid to large enterprises.
  • The strategy is employed at SaaS providers such as Netsuite, Workday, and Passkey.

PRODUCT DIFFERENTIATION

ALIGNED ORGANIZATION STRUCTURE

  • A SaaS sales team must have a cross-functional operation structure with other organizational departments to develop a brand reputation.
  • Given the many SaaS software are on the market, consumers face multiple software investments that do not meet their intended reputation or return on investment. As such, customers are wary of purchasing SaaS software.
  • The sales team work with the product development team to ensure their product must be top-notch.
  • Further, sales teams should position their customer reviews as well as case studies of SaaS implementation as evidence of product use success to prospective customers.
  • Importantly, SaaS sales teams should focus on developing consumer trust in the brand driven by a commitment to meeting customer needs. In this regard, the sales team must work with support and product development divisions to reduce customer complaints and improve customer retention.

COMPENSATION

SALES PERSONNEL MANAGEMENT

RESEARCH STRATEGY

In order to determine best practices in SaaS sales, we researched insights across industry reports. Importantly, we determined best practices in SaaS sales based on multiple mentions as the best SaaS sales practices by several credible sources. Additionally, we sought to include statistical data on the identified best practices.
Part
02
of four
Part
02

SaaS: Sales Structures

The success or failure of a SaaS company, largely depend on how successful its sales structure is. Customer self-services, transactional sales, and enterprise sales are three common sales structures used by SaaS companies. This report analyses this structures in details.

Customer self-service

  • Also known as the higher-volume, lower-price method, the customer self-service SaaS sales model uses free trials and freemium offers to achieve high revenue at a low average selling price (ASP).
  • This model is mainly used when selling high volumes of lower-priced SaaS like Spotify subscriptions, a Medium membership, or a phone plan.
  • However, customer self-service is not comprehensive and often can't support a sales team. To compensate for this limitation, SaaS companies usually encourage users to sign up online.
  • This model's success largely depends on customers' ability and willingness to serve themselves as well as fully understand the value of the products.
  • Examples of companies using customer self-service model Dropbox, Zoho, Yammer, Basecamp.

Transactional sales

Enterprise sales

  • Also known as the lower-volume, higher-price method, the enterprise sales SaaS structure is software sold at low volume and high price. The software involved are often full-scale, highly specialized, or cutting edge.
  • In this model, enterprise salespeople spend months working closely with prospects to answer questions, test and demo the software, as well as meet with executive stakeholders. Sales teams are often organized by territory and focus on a targeted set of prospects.
  • This structure only makes business sense when applied on complex or niche SaaS that benefit larger companies or corporations with the budget to support the high cost of these solutions.
  • SaaS companies that make this model have well-trained sales personnel who can explain the product’s concept in depth in order to show the customer why such a high outlay is expected on their path.
  • This biggest advantage with this model is high-value sales due to the complexities of the software involved.
  • Examples of companies that are using this model include BazaarVoice, BrightEdge, Netsuite, Workday and Passkey.

Research Strategy

To answer this question, we found all the data directly available. We selected the most common sales structures used by SaaS companies in the US from those that appear in multiple credible sources that we searched. All sources surveyed highlighted only the three models listed above. We therefore concluded that these are the most common. For this research, we mainly used digital marketing websites like Hubspot, Marketo and Incredo, among others.
Part
03
of four
Part
03

SaaS Sales Channels: Best Practices

SaaS companies can employ sales channels best practices across referral programs, search engine optimization, content marketing, product trials, advertising, and distributors.

CONTENT MARKETING

PRODUCT TRIALS

  • Product trials offer prospective customers with the opportunity to utilize a product for a limited time rather than engaging a sales representative.
  • As a sales channel, product trials generate leads without marketing investment. When combined with sales support, product trials are an important sales channel to SaaS companies as it tackles client on-boarding while providing information on product features.
  • Nutshell found when trial users added a trail member during their trial, sync user data or import customer data they are 20 times likely to become a paid customer.

SEARCH ENGINE OPTIMIZATION

REFERRAL MARKETING

  • Referral marketing involves the promotion of leads through referrals. It improves sales success by attracting high-quality referrals. Importantly, companies should not over incentivize as it would only generate low-quality leads.
  • 56% of SaaS sales representatives identify that referrals are very important but only a third have a referral marketing in place.
  • Importantly, 71% of B2B companies with referral programs have higher conversion rates than competitors.
  • Word of mouth is an important referral marketing strategy but it is unpaid and organizations have no control of its direction. However, SaaS companies can build word of mouth on their products by enhancing good rapport with customers as well as through the promotion of client feedback/recommendations.
  • Each day, consumers engage in 2.4 billion conversations regarding brands, products, and services which, SaaS sales representatives can target.
  • Importantly, 77% of consumers are likely to commit to a new product after hearing from friends.
  • Depending on geography, Xero SaaS receives 6 to 31 customers as a result of referrals from its own users

ADVERTISING

  • Popular online advertising channels that SaaS companies use include Google AdWords, re targeting, and social media marketing.
  • Google AdWords is an important sales distribution channel as it involves investing in pay per click advertising on the google search platform. Essentially, organizations should focus on testing promoting search advertisements on a small scale before scaling investment.
  • Page 1 search results on Google attracts 91.5% of traffic, Google AdWords can position SaaS companies on this page.
  • Re-targeting involves tracking website visitors by displaying online adverts as they visit other websites. As such, it lures website visitors back to the SaaS website.
  • Social media marketing involves enhancing content marketing strategies through the promotion of content on social media platforms.
  • Offline advertising is an important sales channel that is available to larger SaaS companies rather than startup SaaS.

DISTRIBUTORS

  • Co-marketing : Majority of SaaS businesses focus on specific businesses segments. Co-marketing delivers collaboration opportunities with complementing SaaS companies. Consumers benefit from co-marketing as they can receive packaged SaaS services. Importantly, it is cost-effective for SaaS companies.
  • Affiliates: Affiliate partners are a powerful referral marketing channel as it provides an opportunity for SaaS companies to reach out to clients through the sales network of an affiliate partner. As such, it is a low cost sales channel.
  • Value added resellers (VAR): VARs purchase SaaS software and resell to the end user with added markup covering extra features, integration, configurations and support.
  • Managed service providers (MSP): MSPs operate similarly to VARS. However, MSPs have a longer end user relationship as well as providing operational and maintenance services that are not available at VARs.

RESEARCH STRATEGY

In order to determine sales channels utilized by SaaS companies, your research team engaged in extensive search across industry sources such as Hub Spot. Your research team presented sales channels that were identified from multiple credible sources. Importantly, we not only provided statistics on the effectiveness of the identified sales channels but also provided examples of SaaS companies implementing them.

Part
04
of four
Part
04

SaaS Sales: Case Studies

Two case studies that are proper examples of successful sales-forces in SaaS are presented by the companies Aventri, Drift and Hubspot. Drift's conversational marketing significantly contributed to Aventri's reduced response time, improving their customer experience and increasing lead visitors by 270%. Hubspot's sales team development program created a methodology to measure sales team development and improved the team's sales skills by approximately 20%.

CASE STUDY #1: AVENTRI AND DRIFT'S CONVERSATIONAL MARKETING

About the company:
  • Drift is a marketing and sales company that introduced conversational marketing as a strategy to allow easier communication with businesses and facilitate real-time conversations.
  • Based in Boston Massachusetts
  • Conversational marketing creates relationships and enables authentic experiences with customers and buyers.
Case study:

  • Aventri, a customer-centered company, recognized the need to capture their consumers' opinion/feedback and how satisfying their demand for a real-time experience would positively impact the number of leads and customers.
  • The company is located in Boston, Massachusetts.
  • By implementing Drift's conversational marketing strategy, companies can enhance the response rate and improve their customer experience.

  • Outcome:
    • After five months of conversational marketing, Aventri reduced their response time by 44% also increasing their leads by 270%.
    • Conversational marketing enabled them to increase their monthly booking of sales meetings by 20%.
    • The company was able to generate a pipeline of over $6 million and signed a $1.7 million business deal with Drift.
    • Approximately 30% of Forbes top 100 SaaS companies have already embraced Drift's conversational marketing.
    • 15% of the companies are already using it and applying this marketing to texts messaging and 32% are already applying it to video marketing.
    • Conversation marketing is now a mega-trend and a must-have for all Cloud 100 companies.
    • According to Twilio, Drift is eyeing 90% of consumers and uses this information to build communication with businesses through text messaging, email chat bots, videos, and more.

    CASE STUDY #2: HUBSPOT'S SALES TEAM DEVELOPMENT NETWORK

    About the Company:
    • HubSpot is a leading inbound marketing and sales software company with salespeople all around the world.
    • The company is located in Boston, New England, US
    About the Case Study:
    • Hubspot realized that they didn't have a metric for assessing the effectiveness, strengths, or weaknesses of their sales team members.
    • The CEO needed to determine the attributes and skills required to achieve great salesmanship.
    • Hubspot and CommercialTribe researched to develop a systematic method that would help them identify the skills gaps or recognize a salesperson that needed improvement among other metrics. This method was called the Sales Team Development Program.
    Sales Team Development Program:
    • Through discovery calls that focused on high-quality they could ensure their sales representatives understood the needs of their prospects and position HubSpot to solve their issues.
    • With the business' growth it became important for HubSpot to also focus on their IGA.
    • They began by focusing on the improvement of his sales team's Inbound Growth Assessment (IGA).
    • HubSpot worked on creating a broad solution that would help them transition from their automatic selling marketing system to a new sales platform.
    • The hypothesis was that by integrating IGA and creating a personalized assessment to recognize their salespeople's strengths and areas of improvement, they would be able to enhance the team's market readiness and their conversion rates.
    Outcome:
    • The Sales Team Development Program enabled a comprehensive definition of assessment from coaching by management.
    • The management team received a positive response and increased the chances of having coaching dialogues with their sales team.
    • The sales team improved their IGA by 22%.
    • One team improved its IGA by 44%, and another was above 50% in its IGA.
    • By providing the IGA and having a clear definition of their teams' attributes the company knows where or how to coach.
    Sources
    Sources

    From Part 02
    Quotes
    • "This model works best when selling lower-priced SaaS at a high volume (i.e., Spotify subscriptions, a Medium membership, or a phone plan). It assumes your average selling price, or ASP, is low while allowing you to bring in significant revenue."
    Quotes
    • "Achieving substantial revenue at a low price means removing complexity and cost from the purchase, in order to prepare a ground for high volume. Complete customer self-service can be the ideal sales model, but in this case, customers need to be able or willing to serve themselves, understand the value of the products themselves, including things like purchase, use, support, etc. However, even if your product is so simple that it can provide a 100% self-service purchase, you can never get away with 100% self-service support, as your customers need you in order to solve their problems, or you risk ruining your brand image and reputation."
    Quotes
    • "The self-service sales model is thus all about low-priced products accompanied by a fully automated customer journey. Most commonly, startups that employ it sell their products completely via ecommerce, so that they can remain focused on quality of the product and design."
    From Part 04
    Quotes
    • "For the second year in a row Forbes, in partnership with Bessemer Venture Partners and Salesforce Ventures, released its Cloud 100 list of the top private SaaS companies in world. "
    • "We analyzed the marketing and sales practices of this year’s top companies and found that more businesses than ever are implementing conversational marketing to engage with prospects and buyers directly on their sites."
    • "Our 2017 findings were eye-opening. For example, we found that only 15 companies in the Cloud 100 were using messaging and only 14 offered free, ungated content, like ebooks or white papers. Meanwhile, the remaining 31 companies that offered long-form content forced people to fill out lead capture forms before they could download it."
    Quotes
    • "For Mike and Jake, the idea of using Drift stemmed from adding real-time messaging to their site to engage with their visitors and get them the answers they were looking for as quickly as possible. They also wanted to be able to know when their target accounts were on their site and engage them with an amazing, personalized experience that would differentiate Aventri from their competitors."
    • "n just five months after choosing Drift, Mike, Jake, and the Aventri team have seen their pipeline continue to grow with leads directly influenced by their chatbot – more specifically their account-based bot – they put on their site. Overall, Aventri has cut their response time by 44%, increased lead conversion by 270%, booked 20% more meetings month-over-month, influenced over $6M in pipeline, and closed $1.7M in new business with Drift."
    Quotes
    • "Though his team works hard and he deals with the constant pressures of reaching monthly quotas with a young and developing sales team, he is still committed to carving out time to develop his people. "
    • " More specifically, the team’s IGA improved by 22% overall. The team saw huge gains in setting an effective agenda, focusing on differentiation, and delivering an insight. Mike used this opportunity to pause and celebrate with his team, calling out a few cases of exceptional improvement. One team improved by a whopping 44%, three sellers received perfect marks, and five achieved over a 50% lift in their IGA delivery."