SaaS sales: what you need to know about selling SaaS
You cannot change the past. That’s why now is your best time to start earning from SaaS sales if you haven’t entered the market yet. By looking at the growth figures, it’s clear that many SaaS companies are killing it, crushing it, and knocking it out of the park right now. Leading the pack is Salesforce with an annual revenue of over $20 billion. There are also SaaS scaleups like Supermetrics that have grown over 100% in revenue on a year-over-year basis while being also highly profitable.
SaaS companies are perhaps best known for their self-service sales funnels. But as the industry gets bigger, along comes increased competition. That’s why it’s also not uncommon for a SaaS business to make use of the sales-assisted and partner/reseller channels. And whether these other channels are used or not, you cannot rely on the product selling itself to the end customer. Typically, in-house sales reps cover the acquisition of new customers, upselling, and retaining existing customers, whereas resellers and partners mostly focus on acquisition.
Here, I’ll explain the characteristics of SaaS sales, including sales cycles, sales models, and commissions. Then, I’ll present a list of tips for selling SaaS successfully to your prospects from the reseller and partner perspective.
What makes SaaS sales different from other verticals
SaaS is not only intangible but it’s also accessed and hosted on the web, which removes the need to install or run applications on the user’s computer. SaaS products are licensed on a subscription basis, which means that SaaS customers typically become repeat customers every month or year, depending on the subscription period.
For example, Supermetrics simply moves data between the marketing channels and data tools users already know. There’s no need for them to learn a new UI. We also never store customers’ data in our systems. All we do is move it. And to make sure the transfers are secure, our customers’ data is encrypted at the source and decrypted at the destination using tokens for authentication.
But since developing, maintaining, and supporting SaaS software and its features and integrations can be expensive, the SaaS sales cycles tend to be long, especially in B2B. From the sales perspective, this requires a lot of nurturing and follow-ups with the prospects. It’s important to go beyond features and focus on the benefits for each prospect separately.
Understanding how the SaaS product works is key, even to the extent of being able to troubleshoot issues your prospect is facing during the trial period. This is why it pays off for resellers and other partners to join a program that assigns a dedicated partner manager to assist you and provides easy access to guidebooks and other useful support materials.
SaaS sales cycles
Aside from the price, also brand awareness, free trials, and the complexity of the SaaS product impact sales cycles. The average cycle length for SaaS sales is 84 days. And this number can go up or down depending on the customer’s contract value. Higher prices usually imply that more decision-makers will be involved, which can extend the sales cycles.
Brand awareness matters since selling a well-known product to an existing market is much easier than selling a product no one knows about and having to educate prospects on the use case and benefits.
Offering a free trial has become a standard practice for most SaaS companies. And the duration of those trials obviously has an effect on the sales cycle. Although, there are SaaS companies like Ahrefs that charge for their trials to avoid trial abuse and attract paying customers only.
Selling complex enterprise-level SaaS products may require the involvement of both technical and legal experts from the prospective company, which also adds to the sales cycle length.
Despite the longer average cycles, there can be quite some variation among different prospects.
Sales sales models
Most SaaS companies use either one or more of the three sales models: self-service, sales-assisted, and partner sales. Any indirect sales models that involve a middleman, for example channel sales and resellers, can be grouped into the wider partner sales category.
One could say that SaaS was made for self-service and using free trials to attract customers. The self-service sales model is all about the product and the marketing team’s effort to build awareness and encourage new users to sign up for a trial. Then automated onboarding with support materials, newsletters, and promotions to keep them on board and avoid churning.
In certain crowded markets like video conferencing, there are companies such as Zoom that even use the freemium model and offer a full-featured basic plan for free. But for many SaaS businesses, offering a free plan is not sustainable in the long run—all costs considered.
Self-service and free trials, on the other hand, are commonplace and favored by most SaaS companies. But this sales model also has its limitations. It’s ideal for selling lower-end products at a high volume but it’s inadequate to serve enterprise customers who need customized solutions.
The sales-assisted model adds a human touch to the self-service sales process. Typically, bigger customers or anyone who needs a customized plan or some assistance with their purchase will book a call with a sales manager who can demo the product and answer questions.
Especially for complex SaaS solutions that require the involvement of several stakeholders, the sales-assisted model is a necessity. If the company has a tiered pricing structure and there’s significant variation in contract size, usually the top and medium tiers are reserved for the sales-assisted model, while smaller customers purchase through the self-service channel.
For sales reps to hit their monthly quotas, they need to know the ins and outs of the product. They attend regular training sessions and work in close collaboration with product managers and engineers to best serve their customer portfolios. Leads and existing customers are usually targeted and nurtured by region and divided based on their need for high-touch or low-touch onboarding.
A partner program can take multiple forms but most often it covers one or more of the following partner sales models: referral, affiliate, and reseller. All of them act as an intermediary between the company and the end customer and receive compensation for the customers they bring on board.
The more complex and higher-priced the product, the more involved the partners tend to be with implementation and onboarding, and sometimes also invoicing. Resellers often sell higher-value deals or larger quantities than affiliate and referral partners. And they sell to their own customers directly, whereas some affiliates can have no direct relationship with the referrals they bring.
The partner sales model is embraced by many SaaS companies owing to its cost-effectiveness. Partners get paid for sales, so the company doesn’t need to invest in something without results. Partner training and support of course require resources but the benefits easily outweigh the costs of running a partner program.
SaaS sales commissions
SaaS companies use a commission-based compensation model for partners. Each partner gets a certain percentage of the product’s purchase price when they bring in a sale. Often, the commission is recurring, which means that partners can receive multiple commissions from one sale, every time when the referred customer renews their subscription.
The modal commission rate is 20% in SaaS partner programs. But some variation exists. For example, it can be somewhat lower in sales-assisted cases, where partners refer prospects to the merchant’s in-house sales team who then handles the sales process internally.
Some programs also use a completely different model, where partners first purchase discounted licenses and then resell them at the regular plan rate. In these cases, that discount is what partners profit as resellers. But this requires some initial investment from the partner.
The commission rate is obviously only one of the factors affecting partners’ earnings. For example, product price, market demand, competition, and sales cycles have an impact, too.
SaaS sales tips
Selling SaaS is not passive income. In fact, it’s far from anything that could be described as a passive activity. It’s only when partners have already brought in customers that subscription renewals can provide them with “passive” commissions. But that initial sales work is always there.
Here’s a list of best practices for selling SaaS products to your prospects:
1. Know your customer’s business
There’s no one-size-fits-all solution when it comes to SaaS.
For example, at Supermetrics, our customer base is so diverse that the value customers get from our products can be quite different. For an enterprise customer interested in our data integration solutions, it can be all about the ETL process of extracting, transforming, and loading data from one or more sources into their preferred destination. But for a small marketing agency, the main value could be the cost-effectiveness that derives from avoiding the manual copy-pasting of marketing data into a spreadsheet. For other customers, the key value might be about connector quality, secure data transfers, or not having to learn a new UI and being able to use the platforms they already know.
That’s why at first you need to understand your prospect’s needs and what they value the most before introducing the product and showcasing what it can do.
2. Switch focus from product to value
Describing the product and its features isn’t sufficient because it’s not equal to what the product can do for each individual customer. Knowing the product and its USP is one thing but selling it requires understanding its value to the customer, which isn’t always tangible.
Selling value starts by learning about the prospect’s challenges and aligning them with the solution. For reseller partners who are involved in the product implementation and onboarding, that support is part of the value proposition they offer to their prospects.
As the middleman, your role is to know both the product and the prospect well enough to be able to evaluate if they match and if the value justifies the cost in that particular case.
3. Promote free trials
Assuming the product you’re selling has a free trial, asking your prospects to trial the product is an effective way to hook them. It also helps if they have access to support materials or can feel free to ask you for advice during that trial period.
The SaaS company should also be strategic about free trials and adjust the trial length according to the complexity of the product. Prospects should get enough time to test the features and see the value. But there’s no reason to make those trials longer than they need to be. Short trials are usually favorable since most users won’t take full advantage of the trial, anyway. Extending the trial rarely has any benefits in terms of conversions.
Promoting short trials has the benefit of attracting fewer but more promising prospects. A short trial period motivates users to test the product right away instead of putting it off. This helps you build better engagement with the prospect and shortens the sales cycle.
You don’t want to waste your time on trial abusers and users who are not willing to pay for the product. That’s why not only short trials can be in your favor but also small pre-qualifiers such as a requirement to use a business email in the trial signup form.
4. Optimize email campaigns
No matter what type of partner you are (referral, affiliate, or reseller), if you’re in the business of selling SaaS, you must be using email marketing in one form or another.
Resellers and many other partners, especially agencies, tend to sell directly to their own customers. But even then, many of your prospects could easily forget about the product after their trial ends. That’s why you need both personalized emails and automated drip campaigns that email your prospects based on their activity and stage in the funnel.
For example, if you set up webinars, organize training courses, or create tutorials, you want to engage your prospects and make them dependent on your help and advice.
Below is Ryan Robinson’s email sequence for people who sign up for his Build a Blog in 7 Days course. Each automated email is sent one day after another and includes useful tips and links to relevant materials and content on Ryan’s website. And on that website, there are referral links to affiliate products sprinkled around his reviews and guides.
You could build triggers on your CRM platform to segment your customers or prospects and then create automated email sequences for those segments. For example, people who clicked a certain CTA button on your website could be targeted by one sequence.
And webinar subscribers could constitute a segment for another email sequence.
5. Follow up with prospects
As a partner, you might not have access to data about your trial signups. This limitation especially applies to those who don’t have a direct relationship with their prospects.
But in many cases, the prospect to whom you’re selling that SaaS product is your own customer. And that allows for more open communication and regular follow-ups. Of course, if you’ve partnered with a good SaaS company, you can usually rely on the merchant checking in with users during the trial period.
For SaaS sales reps, it’s possible to access data about prospects’ product usage and behavior during the trial and use that data for evaluating how likely they’re to purchase. Many SaaS companies also use an automated formula that calculates a purchase prediction score for each trial user based on their behavior and user profile.
6. Provide quick demos
A great product demo will turn prospects into paying customers. As a partner, you can demo the SaaS product during your customer calls for those who express an interest. This could be a quick product showcase at the end of your weekly or monthly call.
But even for a quick demo, it’s worth planning things ahead instead of going it blind. So, first make sure to avoid overloading your prospect with information. Focus on demonstrating the value to that particular prospect and forget about redundant features. Cover only relevant scenarios and show how the product can solve those problems.
In terms of structure, always move from macro to micro level. Give the big picture first so that your prospects understand why they’re watching your demo in the first place. Minimize the use of details as much as possible and reveal capabilities based on the prospect’s interest. Never go at it feature after feature. Keep the introduction part rather short. And reserve time for questions. That’s when you can go into detail if it’s required.
7. Sell annual plans
The subscription-based pricing model allows the SaaS company to charge customers on a monthly basis and therefore maximize its recurring revenue. But selling annual plans also has its benefits.
For the company, selling annual plans means more revenue upfront and retaining those customers at least for a year. Offering discounted rates for annual subscriptions usually brings down the overall revenue but it gives access to higher immediate cash flow that can be used for new hires, product development, and market expansion.
For a partner, it can be easier to convert a prospect with the discounted rate of an annual plan. Anyone who places the time value of money at the forefront will also appreciate the higher upfront commissions. And if the program has tiers for partners, selling annual plans helps you move up to a higher tier with higher commissions faster.
8. Use discounts sparingly
Offering discounts is a double-edged sword. Partners need an incentive for their prospects. Otherwise, why would those prospects need the partner as an intermediary? And sometimes discount is simply the most compelling incentive the partner can offer.
But if it’s possible to sell on value instead of lowering the price, both you and the merchant end up making more profit from the sale. Value-adding partners are able to offer their expertise and help the prospect with implementation and onboarding. Many resellers can also sell the products as bundles together with their own services and even handle the invoicing on behalf of the SaaS company.
The question about discounts is obviously different for partners who are not so much involved in the sales process but bring in large numbers of leads through their website.
9. Create a sales playbook
If you’re a partner who has direct contact with prospects, it can be a smart move to create a sales playbook that contains sales pitch and follow-up templates, qualifying questions and answers to FAQs, popular use cases, and summaries of key benefits.
With this playbook, you can both attract new prospects and nurture existing ones. And once you collect more material, you can start to construct some buyer personas of your typical prospects that convert into customers.
10. Keep track of key metrics
As a partner, you often have limited access to tracking data because the purchases and other user actions occur on the merchant’s website. What you can track is the click data and conversions originating from your referral link and all behavior on your own website.
For example, if you receive a lot of clicks on your referral link but no conversions, you might be targeting the wrong audience or some of your processes may require improvement.
You might also want to keep tabs on metrics such as how many of your referrals end up churning after first purchase, how much revenue each referred customer generates on average, and how much time you spend on average on each prospect that converts.
SaaS isn’t the easiest market for salespeople and partners. You need to actually know the product and the prospect to land those deals. Especially in B2B SaaS sales where the cycles are longer and average deal sizes are bigger, you need to delve into each prospect’s case individually. When you switch focus from the product and its features to figuring out what it is about the product that creates value for your prospect, you’re on the right path and more likely to close the deal.
And if you haven’t started selling Supermetrics yet, you can become a partner here.
About Johannes Rastas
A Partner Marketing Manager at Supermetrics, Johannes focuses on expanding the Supermetrics partner program and collaborating with their existing partners. He also works with SEO and content on a daily basis. Feel free to contact him on LinkedIn.
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