Understanding the sales cycle for SaaS companies is the first step to experiencing consistent sales success. SaaS marketers aim to convince potential customers to sign up for a subscription plan and continue paying when the time is due. They have to plan well because many companies offer similar products and compete for the same customers. Marketers must understand the SaaS sales process to prevent citations.
What Is SaaS Sales Cycle?
The SaaS sales cycle (also known as the SaaS sales process) refers to the process involved in engaging a potential customer of a SaaS product and guiding them until they sign up to become customers. Because SaaS companies rely on inbound marketing, the visitors to the website are the leads that can become paying clients.
Once you identify the leads, they must be qualified to identify the most promising ones. SaaS companies use inbound marketing tactics and customer support to convince qualified leads to pay the subscription. And since SaaS products require recurrent payment, trust is critical to building a lasting relationship.
New customers have to undergo onboarding to make them understand the software. The process proceeds to offer various options for renewal, from which customers choose depending on their needs.
Since software as a service is a broad industry with B2B and B2C products, the sales cycle for SaaS clients may vary between products. B2C SaaS products have a smaller budget and a shorter sales cycle. The decision-makers in B2C sales are usually few, making the process quicker.
Many decision-makers may get involved in the B2B SaaS sales cycle, slowing down the process. Selling a product to an established company may need evaluation by leaders in every department. If one department cannot agree, you’ll find it difficult for them to accept your product. B2B SaaS products tackle various pain points and help the customer’s business succeed.
Whether B2B or B2C SaaS, customers pay for the product on a subscription basis. It could be monthly, quarterly, semi-annually, annually or any other arrangement agreed upon between the customer and the SaaS company. Customers access the service through an online platform.
What Are The Stages of SaaS Sales?
Since SaaS companies sell subscription access to clients, the sales process differs from conventional sales. The sales team is more concerned with recurrent payments, so they aim to convince and show the value of continuous use of the SaaS product. Because it is a long-term process, we can break the SaaS sales process into several stages.
- Defining your ideal customer
- Qualifying leads
- Follow-up for the upsell
- Dealing with objections
- Closing the deal
Defining Your Ideal Customer
Defining your ideal customer helps develop an effective marketing strategy tailored specifically to these people. It also saves you time, energy, and money marketing to companies with no interest in your offering. Once you define your ideal customer profiles, you can go after prospects that match them.
Since you have a picture of the companies most interested in your product, you can identify their needs. You’ll recognize their pain points and find the offerings that can improve their business. It will help you strategize on how to position your product to provide them with the best solution.
Consider the tips below when defining your ideal customer.
- Narrow it down: Identify a specific group of companies that can find your product helpful. It doesn’t mean excluding other companies that might purchase your product. Narrowing down allows you to market your SaaS product to a market that’s most likely to adopt it. Look at characteristics like industry, customer base, job function, and other properties that may influence decision-making. Once you’ve succeeded with the first group, look at broadening your approach to get more clients.
- Clarify your value proposition: Be clear with what value you can provide to the client. Show how your product helps companies and their bottom line. Companies will only accept a free trial or subscription offer if they can see how your product helps them.
Once you have defined your ideal customer profile, it’s time to take the necessary steps to attract leads. You can use different channels to reach potential buyers, including social media, ads, and blogs. Remember that you are targeting companies, and decision-making may involve several people.
The best thing is to package your product strategically. Ensure that you create compelling content that can convince people about the value of your SaaS product.
Prospecting may take two forms:
- Active prospecting
- Passive prospecting
Active prospecting involves direct outreach to prospective buyers, offering them your product. You can send cold emails, calls, or messages. This type of prospecting is effective when targeting small businesses and solopreneurs because the decision-making process involves fewer people (the sales cycle is shorter).
Sometimes you may target multiple ideal customer profiles and large organizations. It will save you time and energy to create content that all these organizations can see. You will use passive prospecting, which involves inbound marketing tactics, to help generate leads. The sales cycle is long, and you must generate valuable content to win the trust of the key decision-makers. You can reach out to them through webinars, blog posts, video content, research reports, and many other methods.
When prospecting, ensure that potential customers can see your expertise in your focus area. It will help build trust for longer-term engagement.
Every SaaS marketer understands that only some leads will be interested in paying the subscription fee and using the product. Lead qualification is, therefore, necessary to enable you to focus on those most likely to purchase your product. It helps turn leads into prospects.
There are some critical factors to look at when qualifying leads to enable you to identify the leads that move to the next stage in your sales cycle. Check your interactions with the leads and see if they meet the requirements below.
- The lead shows interest in your product.
- The lead can identify how your product helps them.
- The lead can pay for/ afford your product.
- The lead is the key decision-maker or can connect you with the key decision-makers.
If any leads don’t meet the above procedure, they are unqualified. That doesn’t mean you should delete their contact info. They may qualify in the future, so it’s good to retain their contact info. You can share their information with the marketing team to enlist them in email marketing campaigns where they can receive product updates and news.
When scoring leads, look at the following variables:
- Industry: Some SaaS products may serve customers in various industries, while others do only one industry. If yours caters to customers in multiple sectors, sort the leads by industry and decide where to start.
- Company size: Check whether your software is ideal for SMBs or enterprise companies. You’ll want to move on with leads from the companies that provide the most revenue.
- Job title: Can you identify the key decision-makers in the company? Always share your SaaS marketing content with the people most likely to make the final decision.
- Website activity: Check with your marketing team what the leads do before purchasing the product. Some may sign up for a free trial, and others sign up on the freemium plan, visit the pricing page, etc.
Follow-up for the Upsell
Your qualified leads may have agreed to sign up for the trial version or even pay for their first subscription. Those on the free trial version may need additional effort from the company to convince them to pay their first subscription fee. You may also do the same to other clients to renew their subscriptions.
One way to convince qualified prospects is through one-on-one meetings. You understand the prospect’s pain points. You can demonstrate how your product can address the prospect’s pain points and solve every problem. Excellent presentation skills are critical during these meetings.
Note that one-on-one meetings take work in the SaaS sales process. They may not happen at all, meaning you must have more skills to convince the customers. You have to devise other methods to showcase your value to qualified prospects.
For instance, you can contact your customers via phone and convince them to upgrade or renew their subscriptions. Take note of the customer’s tone on the other end of the phone call. It may help you determine whether they are interested or not.
Dealing with Objections
Prospects will raise concerns and ask several questions. They may not have understood how your tool will help them, or you may have given insufficient information. You must address the questions and concerns professionally to avoid losing these customers. You must find ways to talk to them and illustrate how your product can help their company.
The concerns raised may revolve around factors like:
- The product is too costly.
- The product doesn’t have certain features.
To address these concerns, ensure you work with the prospects. Your professionalism will be essential as you explain to them how your product takes care of their pain points. Show them the benefits they will derive from using your SaaS product.
If your customer’s concern is a missing feature, let them explain why the element is critical to them. You can ask strategic questions that will lead them to disclose why they need that feature. Once you have this information, try explaining how your product can solve their problem even without the part they described.
You may also talk to your product team to add the feature to your SaaS product.
Closing the Deal
Your prospects now become customers and sign up for the SaaS product. It may rely on your negotiation skills to make them sign up. Still, signing up may not be the last step because you will still do the onboarding and devise strategies for retention and upselling.
The prospect may still be deciding after their free trial period expires. Evaluate what can make them sign-up. You could be tempted to entice them with a discount or provide an extension of the free trial period. That may not be the best approach because customers are likelier to drop your product for a competitor offering a cheaper option.
The best approach will be to ask prospects questions to establish if they need your product. Ask questions like, “did our SaaS product solve your problems?” or “is there a reason you wouldn’t purchase a subscription package?” Such questions can be the nudge the customer needs to make that final decision.
Once a customer purchases a subscription plan, you must nurture them to increase the chances of retaining them. New user onboarding determines how customers view your SaaS company and if they will renew their purchase.
Your company should offer excellent customer service and attend to customer issues whenever they arise. Recent research revealed that 58% of customers are willing to pay more to companies that offer better customer service. You can also provide a self-service support system to enable customers to solve problems themselves.
It will shorten resolution times significantly, keeping your customers happy. Happy customers are more likely to upgrade their subscriptions to enjoy more features of your SaaS product.
The best way to nurture customers include:
- Provide new members with training
- Ask for feedback from customers. Be sure to address the issues raised in the feedback forms. Customers will be happy when they know they are heard.
- Provide incentives for referrals
- Devise a customer loyalty program to reward the most loyal customers
- Upsell existing customers and provide discounts or other incentives on upgrades
Factors Influencing The Length Of A SaaS Sales Cycle
Understanding how long the SaaS sales cycle may take can help you create accurate revenue forecasts. Some factors may influence how long the sales cycle will last, and they include:
- The type of customer
- Entering new markets
- Type of product or complexity
- The price
- Trial periods
The Type Of Customer
The sales cycle is usually shorter when selling your SaaS product to small businesses. Such businesses make purchase decisions quickly because fewer people are involved. On the other hand, the enterprise SaaS sales cycle is typically long. They follow a structured process when making purchase decisions and may require approval from leaders in different departments. It results in a much slower process.
Entering New Markets
When trying to break into new markets, sales reps will spend most of their time introducing your product and brand. After identifying potential consumers, they must explain the benefits of using your product. It results in a slower SaaS sales cycle. You cannot shorten the process when entering new markets.
Type Of Product & Complexity
For a complex product with many features, you need to provide substantial education to prospects. They need guidance to understand the different aspects and features of the product and how those features can help their businesses. It will lead to lengthy negotiations, causing a longer sales cycle.
Price Of Product
A highly priced product may lead to a longer SaaS sales cycle. This happens especially when selling to enterprises. Decision-makers from different departments will hold discussions to deliberate about the product and evaluate if it is worth the price. They also need to allocate the price in the budget, which may take time.
Many prospects will want to use the trial period before signing up. An extended product trial period will prolong the SaaS sales cycle. Your prospects may also become complacent if the trial period is too long. You should send frequent reminders to keep them engaged and interested in the product.
Understand The SaaS Sales Cycle And Make Your Business More Profitable
Once you understand the SaaS sales cycle, you make strategic decisions that will increase the profitability of your SaaS business. You’ll understand the average sales cycle length for SaaS, making it easier to plan your finances. A proper plan will help you convert more leads and retain existing customers, increasing the revenue for your SaaS business.
1. How many deals does a SaaS salesperson close on average?
A SaaS salesperson can close 20-50 deals a month. It all depends on the product they are selling and the market. B2C products usually sell faster because they are cheaper and require quick decision-making.
2. What are the four pillars of sales?
The four pillars of sales are honesty, integrity, knowledge, and genuine interest. You can purchase this book by Gerry Savage and learn more about the four pillars of sales.