Sales: The Secret to SaaS Success
How Saas is Sold
SaaS changed the old model of buying and selling software to one where customers sign up for subscriptions. Because you can opt out of this model, there is tremendous focus on continuous innovation. As more businesses seek out SaaS solutions for their speed, agility and effectiveness, SaaS sales teams must not only sell but establish relationships with their clients.Two leaders in the field share their extensive experience of creating cultures of success within their teams.
Mr. Bellows (seated on the left) said, “There’s a real partnership between the salesperson and the prospect. Because there’s so much information freely available, and the company’s reputation sticks around much longer now, it pushes more power to the customer. So it’s more important for a salesperson to be authentic, genuine, honest and a long-term partner for success; as opposed to having a transactional mindset.”
When asked about selling licensed software as opposed to subscription software Mr. Powell (center) said, “Selling Saas is a complete shift from the way our licences were sold. We had to ask ourselves, ‘What are we looking for in an ideal sales organization, experience or grit?’ We’re finding that grit is incredibly valuable. Experience comes with a bit of baggage. You want the grit of someone who is willing to do what it takes, and they’ve got the right E.Q. [Emotional Intelligence]; vs. someone doing more of a technical sale. Salespeople with grit undersstand the art of communicating. That’s doesn’t necessarily need to come with a lot of experience.”
SaaS Sales Techniques
SaaS is both a growing sector and an increasingly competitive sector. Building a sales team and implementing an effective sales strategy is crucial for success. It’s important that sales leaders acknowledge, and address challenges head-on with their salespeople to arm them to compete and win. A focus on developing relationships with customers, rather than simply selling a product, is pivotal for any SaaS company.
Mr. Bellows said, “Whether we’re implementing Yesware for a few people at a brand new startup, or the CRO of a publicly held company — like Twitter or Yelp — salespeople are always trying to find a new angle. It’s not about creating a repeatable, scalable model; then pouring money on top of it; as most people have been told. You need to continually iterate and try different experiments with your sales program. That’s what software tries to enable… getting data from your activities, seeing what works, and doing more of that.”
Most SaaS founders like to think a good product sells itself, but an increasingly crowded landscape means it’s easy for even great products to get lost in the shuffle. Building a strong sales team that truly understands a customer’s industry-specific needs is one of the best ways to make sure a SaaS product gets the attention it deserves. But, for many startups there can be mistakes along the way.
Mr. Bellows added, “I was the first salesperson at Yesware. But when I got the board’s approval to hire a salesperson, I hired a kid right out of college who was amazing. He closed Box on his own. And I was like, ‘This is great!’ I went out and hired 8 other sales reps; it was WAY too many. So I coach people, who are just building their team for the first time to go two, by two, by two. Meaning incrementally hire. At least with a slower sales build, you get more feedback and time to correct.”
Mr. Powell said, “We’re working through a shift in the audience. The question that we’re asking, as we go to market with the SaaS model is, who is the economic buyer? We’re trying to be in this ‘rapid failure,’ mode to learn from the changes that are occurring.”
The SaaS “Land and Expand” Approach
In sales “Land and Expand” usually refers to a strategy to land a customer with a small (or free) deal, and then up sell additional products & services. Nowhere does this make more sense than in SaaS. In a typical low-touch SaaS “sale,” an individual user signs up for a free trial, then converts to a paid user. Then you can offer upgrades or tiered pricing for additional services.
Mr. Bellows said, “There are two basic models: One is the top down approach, and one is the bottoms up approach. Bottoms up up more emblematic of Dropbox, or Slack — where you go in and win the hearts of the end user — and then expand out. That’s what Yesware does. When we get a critical mass of users at a company, we’ll call into the VP of sales and say, ‘Hey… 50 of your 500 people are already using this.’ The reason why that’s been helpful for us, is that it prequalifies customers. Unlike the ‘Spray and Pray’ approach.”
Mr Powell said, “We are almost treating the new SaaS model as a startup within the company; even financially. It’s a tremendous shift, that we resisted for quite some time. We were doing very well with the old model, but when we realized that 30% of our market would be shifting to the SaaS model in the next couple of years, it was time for a change from product to service. Everything needs to be reexamined, including the marketing model.”
Converting From Free to Paid SaaS
Moving free users into paid service plans has long been a pain point for SaaS companies and salespeople. On average, only about 15-20% of free users end up upgrading to paid plans and with the increasing popularity and availability of cost-free alternatives, this task has become even more daunting. There are ways to drive conversion rates like: Creating urgency, having promotions, scheduling email drip campaigns, optimizing the company’s message, and making it as easy as possible.
Mr. Bellows said, “If the end-users like our product, and we’re helping the sales people make more money, they’re willing to pay. Also, sales and marketing are much more combined now, and they’re data driven. Both groups are focused on what actually works, as opposed to hypothesis or what worked in their last company.”
Mr. Powell added, “There’s a line between marketing and sales, but the customer doesn’t see that line. I think the free trial example is where sales and marketing begin to become much more intertwined. We’ve found that the discussions have gotten much tighter [about how to convert] using the SaaS model. I don’t even know where the line is anymore, Because it needs to be completely in sync. It boils down to the metrics. ”
There are some other tips to consider when thinking about ways to increase SaaS sales: Keep your trials short, optimize your email campaigns, contact your trial signups immediately, give short demos, follow up relentlessly, set your price based on value, offer prepaid annual plans, don’t give discounts, and never close a bad deal. Now… get out there and crush it!