How to address SaaS startup sales challenges

01 October 2015 Karan Vidal

SaaS start ups are in a race against time to be profitable. The heat is on to achieve monthly goals to satisfy investors. It’s a business model where the number of customers you have won’t count for much if they’re on a freemium plan.

Sales are an integral part of growing a SaaS user base and revenue. However, the SaaS business model has peculiar challenges, especially when selling to enterprise organisations.

You’ll need to deal with issues like internal politics and cumbersome procurement processes to land huge clients. Celebrations of acquiring one of the ‘big boys’ can be short-lived if your sales process isn’t geared to cross sell and up sell. Acknowledging and addressing the challenges your SaaS business might face will go a long way in avoiding common pitfalls.

The wrong sales model

The right sales model will be one of the main ways to preserve your cash whilst you grow your business. Choose right and you’re ‘quids in’ but a wrong move here can see you returning to investors ‘cap in hand’ begging for funds.

There are three popular sales models for SaaS start ups. They are:

  • Customer self service is focused on high volume and low price. This model works on the premise that customers are able to complete all tasks themselves with no hand holding.
  • Transactional sales arises from SaaS businesses where higher costs are involved. Due to the increased financial outlay, customers want the assurance of having a relationship with a human being in case things go awry. Transactional sales requires more dedicated business relationship nurturing.
  • Enterprise sales is where the brave dare to tread. The complexity of some SaaS models and the huge amount of value offered to customers makes them suitable to be marketed to large organisations.

Whichever sales model you believe is right for your startup, you also need to provide the appropriate level of support. The right systems should be in place to ensure you’re not spending too much time and resources teaching people how to use your software. The rule of thumb when addressing the sales model challenge is to remove as much complication as possible. Not only will this save you time and money but your business will grow, by word of mouth ‘singing the praises’ of how easy your software is to use.

Benefits vs. features

What differentiates your shiny new software from the others out there? It’s natural for you to want to ‘shout it from the rooftops’ about the excellent features of your software. If you train your sales team to sell on features alone, then you may be sorely disappointed with the results.

To overcome the challenge of selling based on features, the focal point should be on the benefit to the customer. Think about answering the question “what’s in it for me?”. You need to express every feature as a benefit. How is your product going to make their lives easier and better? Train your sales team to paint a picture for your customer about how your software will solve their problem and change their pain into joy. As far as possible, your sales team should quantify the savings that will be made by the customer.

New vs. existing customers

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SaaS businesses have to keep their fingers in two pies when it comes to sales. The first is to acquire new customers and the second is to persuade existing customers to scale up. Getting new customers can be expensive but it will pay off if you can get the maximum revenue from them.

To address the challenge of winning new customers and scaling up with current users, you need to have a plan for after the sale has been secured. Once a new customer has ‘showed you the money’ your sales team has to nurture that relationship. A high premium needs to placed on customer loyalty, as not only will they remain with you when new SaaS companies come to market but they’ll also be evangelists of your software.

Time allocation

It has been reported that:

“only 33% of inside sales rep time is spent actively selling.”

The remainder of the time is allocated mostly to data entry. The more time spent on activities that don’t directly generate revenue, the more missed sales opportunities. Although most of the non-sales tasks are necessary, you should rise to the challenge of decreasing non-revenue activities wherever possible.

Merging your email marketing and CRM is the way to go, to cut down on repetitive admin tasks. Whilst on the topic of email, you’ll also want to drive productivity through your sales team’s inbox. Here are some gmail plugins that will help you to do just that.

SaaS startups sales can be tricky. However, choosing the right sales model from the outset and following through by taking care of both new and existing customers should get you on the road to SaaS sales heaven.