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.
- 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.
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.
- 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.
- 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.
- 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.
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.