SALES MODEL

• Popular SaaS sales team models consist of the Island, Assembly Line, and Pods.
• The Island structure is preferable for startups making their first sales hires as it has a direct reporting structure for the sales team whereas sales representatives have autonomy over the sales process.
• The Assembly Line structure is popular for growing startups that can employ larger sales teams. It involves segregation of the sales process into a lead generates team, lead qualification team, and a customer success team.
• ​Pods sales model are an iteration of the Assembly Line structure with the sales team being grouped into units that have a lead generation, lead qualification, and customer success staff. In this regard, pods can be allocated to different regions and can compete against each other.
• Pods sales model foster efficiency and scalability. As such, are highly recommended for SaaS companies.

SALES STRUCTURE

Customer self-service structure

• The sales structure is also known as the higher volume, lower-price. Its focus is on achieving a low average selling price through trials and freemium offer.
• To achieve low price and high volumes, the model focuses on customer self-service. As such, it requires the removal of the complexity of product use, purchase, and support.
• The model requires limited sales personnel only because 100% of customer self-service is impossible to achieve.
• The strategy is employed at SaaS providers such as Dropbox, Zoho, Yammer, and Basecamp.

Transactional Sales Structure

• Unlike the customer self-service structure, transactional sales strategy requires higher sales support.
• Essentially, the increase in sales support is driven by increasing product complexity and pricing. As such, customers have higher expectations as well as more exclusive relationships such as signed contracts, premium service agreements, and invoicing.
• The sales team engages customers with support from automated tools, training, and online content.
• The strategy is employed at SaaS providers such as Marketo, Zendesk, and Xignite. 

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

• In the United States, there are over 10,000 private SaaS companies that include over 6,500 marketing SaaS companies and 800 sales SaaS companies.
• Consumers of SaaS tech have multiple options whereas SaaS software often offers similar services. As such, customers face decision fatigue as they receive multiple SaaS service offerings yet it is quite hard for them to differentiate between products.
• Considerably, over the last four years, the willingness to pay for core features, single sign-on, integrations, and analytics has dropped by at least 50%.
• Sales team have to engage consumers with clarity on their product brand. Importantly, consumers should easily understand product features while being consistently engaged by empathetic and honest sales personnel.

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

• The average base salary of a SaaS salesperson is $51,040. However, according to Glassdoor and Indeed the lower limit of SaaS income is $34,613 and $44,705 respectively.
• SaaS sales teams must be effectively compensated considering the higher training, expertise, and motivation needed to succeed in comparison to non tech salespersons. It is essential to have a clear the base salary/variable split.
• Effective sales compensation policies, such as tiered commission models, will drive robust sales growth in SaaS while retaining star personnel. It is important that SaaS companies implement a fair compensation policies that do not bleed the company dry through aligning compensation to how the buyer buys.

SALES PERSONNEL MANAGEMENT

• According to a Harvard Business Review study, 50% of high-performing sales teams have a thorough sales process in place for their teams to follow. Importantly, only 28% of low performing sales team had detailed sales processes.
• Only personnel passionate in sales and with expertise in sales should be recruited in SaaS sales department. SaaS companies must have extensive training and mentor -ship program for sales personnel to ensure their success in sales.
• SaaS organizations should have a positive work culture that drives performance of SaaS personnel.
• Importantly, SaaS companies should have a sales acceleration formula. Further, they should implement a bottom-up sales approach. 

RESEARCH STRATEGY

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

• The transactional sales model is scalable and has solutions that are sold over the phone, messaging services or sometimes in person. In this case, the services are sold to medium-sized or large companies.
• The software involved has a high cost and the buyer requires personalised services in order to make a purchase. This necessitates a sales team.
• In addition, the software sold using this model need to be customized to fit the needs to fit a variety of use cases. Contracts have varying prices and sales reps are empowered to offer discounts and share tiered pricing models.
• This model is characterized by efficient, high volume sales and support operations, short sales cycles, and rapid on boarding.
• This method is only economical when dealing with medium-sized and large businesses and products with high growth potential.
• SaaS companies that are using this model include Marketo, Zendesk, and Xignite.

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

CONTENT MARKETING

• As a sales channel, content marketing has a long term benefit to SaaS companies due to its compounding power of return. Essentially, content marketing will continue to generate leads after initial investment whereas pay per click advertising will not generate leads when spending ends.
• SaaS companies engaging in content marketing include Dropbox, Intercom, and Moz. 
• Dropbox has developed content targeted at differentiated customer demographics. It has Dropbox, Dropbox Business, Dropbox Tech, and Dropbox Developer blogs that reach out to prospective clients.
• Intercom content marketing involves targeted content across Inside Intercom blog, podcast, and books.  
• Moz publishes a blog post each day in addition to authoritative guides and Whiteboard Friday videos.
• Hubspot SaaS receives 1 million blog visitors that generates significant sales leads to its products.

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

• Search engine optimizations work in hand with content marketing. Essentially, search engine optimizations make content marketing discoverable on search engines.
• On-page SEO refers to sales promotion through keyword strategy, internal linking, use of titles and descriptions whereas off-page SEO refers to link building.
•  Each second, 60,800 searches are undertaken on Google creating an important market that search engine optimization can give access to SaaS companies.

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

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

•  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.

• 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

•  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 

•  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.

• 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.

• 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.