Software solutions have never been easier to buy. However, they’ve also never been more difficult to sell. While at first glance that may sound confusing, when you consider the fact that software is typically sold through traditional distribution channels that only roughly 25% of SaaS businesses sell through – it starts to become more clear.
Complicating things further is something known as “SaaS pollution“, which is a term commonly used to describe the increasingly crowded and competitive SaaS landscape. With G2‘s 2018 study revealing there were 34,727 SaaS tools available in 745 different categories at the time of the report – it’s not hard to see how competition could be fierce.
“SaaS pollution” is the increasingly crowded and competitive SaaS landscape.
These days a buyer’s attention is difficult to grab, and nearly impossible to keep. So how do you sell to the well-informed yet overwhelmed software buyer of today? These 10 SaaS sales strategies will help.
1. Keep free trials short and sweet.
Regardless of the size of your company and what you sell, there is only one purpose for a free trial: conversion!
While it’s widely agreed that trials shouldn’t be more than 30 days, there has been much debate over whether even this is too long. In an article published on Close.io‘s blog a little while back, the company’s CEO Steli Efti stated that a whopping 99% of B2B SaaS products should limit their trials to just 14 days, maximum. Efti backed this concept up pretty well, and since then, this approach of limiting trials has become increasingly more common.
Keeping your trial period short makes sense from a sales perspective too, as shorter trials contribute to shorter sales cycles and drastically decrease the chances of prospects getting lost in the funnel.
The whole point of a free trial is to allow prospects to sample your product and make a decision on whether or not it can deliver the results they’re looking for. And if we’re really honest, even 14 days is way more time than is needed to make that decision. Many will argue that there are SaaS products which receive more consistent lock-in from longer trials, and even some that increase sales by offering a free version. While these companies do exist, the examples are few and far between and when asked to name them, most will mention Evernote and Dropbox but struggle to come up with many others.
Again, we’re focusing on the 99% percent here.
Keeping your trial period short makes sense from a sales perspective too, as shorter trials contribute to shorter sales cycles and drastically decrease the chances of prospects getting lost in the funnel. If your trial is 30 days long, it will take at least 30 days to move the sale forward in the pipeline, and that’s assuming the prospect doesn’t drift away during the long trial period.
When it comes to free trials, shorter is better.
2. Automate your emails.
Whether you decide on a 14 day trial or a 30 day trial (please don’t go longer than that!), it’s important that you use the trial period to actively communicate with your prospects. The whole point of having a trial in the first place is to hook interested prospects before converting them to customers and passing them down the funnel.
You should send your prospect at least 4-6 emails during a 14 day trial, aiming to engage with them in any way possible. To help with the high volume of emails this tactic demands, don’t be afraid the rely heavily on email automation. Automating these emails will ensure that no prospect slips through the cracks formed by a hectic schedule, and is especially helpful as the number of prospects increases.
Most people sign up on a whim and briefly use the product once or twice before losing it in the shuffle of their work week. Make your automated emails as personal as possible, using them to remind prospects to use the product and inspire them to ask you questions about it or schedule a demo.
Anything that stimulates further engagement during a trial period is good.
3. Call your prospects. Quickly.
Speaking of increasing your engagement, phone calls go a long way. And the sooner you call, the better. But how soon? Probably sooner than you think. Calling prospects within the first 5-10 minutes of sign up is an incredibly powerful tactic that converts customers faster and more consistently than any email ever could.
You know that your product is fresh in their minds. You also know that they are sitting in front of a computer. You know that their need for your product is at an all-time high, and their interest is still quite strong.
The reason we call in the first 5 minutes is because when you wait, you typically won’t reach them. They’ve either already made their decision, or simply forgotten about you. When you call prospects somewhere in the first 7 days, you typically reach 15%-20% of them.
Companies shy away from making these calls because it’s clearly a large time-waster, and salespeople get discouraged by the endless sea of dial tones and voicemail greetings. This is another reason why we call as fast as possible. When you call in the first 5 minutes, the chances of you reaching the person your calling goes up to 40%-50%.
Another benefit to calling right away is that you immediately know a few things before you dial. You know that your product is fresh in their minds. You also know that they have their phone in hand and are sitting in front of a computer. You know that their need for your product is at an all-time high, and their interest is still quite strong.
When making these calls, keep the script straightforward. Simply see if they have any questions. If they don’t, at least you’ve opened a dialogue and put a friendly human voice to the company name. Speaking with them also allows you to qualify them. Not everyone is a good-fit customer, and this method helps you determine whether or not they’re a real opportunity.
Additionally, disqualifying them saves both your time and theirs, and helps them understand why your product may not be the solution they’re looking for. This honesty is powerful, and it will make them advocates of your product for those who are a good fit while simultaneously saving yourself from a nasty battle with customer churn later down the line.
It only takes a little bit of time to avoid this problem, and there are a ton of things you can learn if you just ask the right questions.
4. Be persistent.
This is a tricky one because you don’t want to be overly aggressive here. There’s nothing more annoying than an overly persistent salesperson beating down your door when you don’t want what they’re selling. However, you also don’t want to let opportunities slip away by being too passive. And even getting a no is better than leaving a deal in the pipeline to take up space and drain resources.
So while it is extremely important to follow-up persistently, there is a method to it and as long as you’re polite, respectful and not annoying – there’s no reason to stop until you get an answer. Start with a follow-up email or a call once a week. After four weeks, do one every two weeks. Then maybe just one a month. But always pursue them until they give an answer.
Remember, they were interested at one point and most likely still are. People typically don’t reply because they’re busy or haven’t decided yet. Our natural self-conscious instinct tells us that they don’t want to talk to us anymore, but that’s rarely the case and there’s usually no reason it would be. Most of the time they will eventually respond and when they do, many will appreciate the you kept pursuing them until they had the time needed to address the purchase properly.
It’s all about the follow-up.
5. Demo quickly.
15 minutes or less. Always. The number one thing that most demos have in common is that they’re way too long and they usually don’t sell. And why don’t they sell? Because the person typically spends 45 minutes showing every single bell and whistle before even qualifying the person, only giving them 10 minutes to ask questions at the end. That’s too much presentation and not enough communication. Their issues, interests and concerns are not specifically addressed and the person demoing often doesn’t even know what they are.
First, don’t demo to people who are not a good fit. Make sure you do your research on the prospect, qualify them first to make sure it’s worth your time and theirs.
A demo is a sales activity, not a product training activity.
Second, don’t show them ALL of the features. There’s no need to waste that much time and frustrate everyone in the process. Ask them for the key features that they’re looking for and show them the two or three features that will help them solve those objectives best.
Nobody can compute 60 minutes of complex information at one time and especially when it doesn’t necessarily apply to the problem they’re trying to solve.
A demo is a sales activity, not a product training activity. Start by getting them excited about the product, then use that excitement to turn them into a customer and move them into the success part of the funnel. That’s when the actual product training can start. Learn more about giving a great SaaS demo here.
6. Base prices on value.
Most SaaS businesses price based on cost instead of value. This is a flawed approach to pricing, and one that will jeopardize the entire success of your company.
When pricing your SaaS product, start by asking two questions: How much money will you save them? How much money will you generate for them?
The benefit of a sales team who calls, sends emails and communicates with prospects is that you have people to explain this value to potential customers and make them understand why your product is worth what it costs. This value needs to be communicated clearly and succinctly, without overpromising or underselling yourself.
Sales teams will never economically work unless you can hit your goal MRR per contract and keep your CLTV above the $3K mark.
If you’re selling SaaS products in the B2B space, you need a sales team to sell and your product has to be priced high enough to support this structure. Simply put, if your highest plan is only worth $10/mo – you need to reconsider your product from a value perspective.
Charge based on the value the product generates for the business you’re selling to. If they’re a good-fit customer, they won’t have a problem recognizing this value.
7. Compensate and incentivize properly.
Sales people are expensive. Especially good ones. And while recurring revenue is great from a business point of view, from a salesperson’s point of view this billing structure can be frustrating and compensation can be complicated.
It’s extremely important that you give this issue the attention it deserves because your sales team is what is going to make or break your company in the long run, and you absolutely need to incentivize and compensate them properly.
How you develop your particular SaaS sales compensation plan will depend on a lot of factors and this process is a little too complex to dive into here. However, Anna has written a fantastic guide to creating a SaaS sales compensation plan that covers just about every aspect of this topic beautifully. Read that article here.
8. Discount lightly.
Discount lightly. Discount carefully. There are many variables here, but the bottom line is that discounts can get out of hand really quickly when not carefully regulated. Sales people want to close the deal. Any deal. And while this is great in theory, you need to be careful because this can lead to them throwing discounts around like a football.
Besides the obvious financial impact of this (don’t forget, everything in SaaS compounds over time!), being loose with discounts also conveys that your product isn’t really worth as much as the website and marketing says it is. Additionally, being too free with discounts will attract the wrong kind of customer, and you don’t want buyers who only look at price. In the B2B space, you want customers who are looking for real results and who understand the value that your product offers.
Don’t forget, everything in SaaS compounds over time!
Offer discounts for annual prepaid customers of course. Discount even better for two year prepay and beyond. But don’t discount for just anyone and don’t use them to close a deal with someone who doesn’t really see the value your product offers. Always remain friendly and address their pricing concerns, but don’t undervalue your product. Rather, educate them on why it costs what it does and make the benefits clear. If at the end of this process they still want a discount, explain that discounts are offered on annual contracts and don’t be afraid to hold the line there. This customer is most likely not a good fit and is probably a big churn risk.
Remember, if you’ve priced your product based on value – it’s worth what it costs.
9. Never close a bad deal.
As sales people, we typically want to close every deal. The need to close deals is in every salesperson’s DNA, and this compulsion can run rampant if not carefully controlled.
But not every customer is a good fit. We’ve hinted at this many times throughout this article, but it’s so important to understand. Customers who are a bad fit for your product will eventually churn, and churn will eat you alive. Churn is the grim reaper of SaaS, not only in terms of revenue, P&L and annual projections but a high churn rate is a kiss of death for companies looking to be acquired.
Combat this by carefully qualifying prospects, making sure each one is a good fit before you pass them along the funnel and close the deal.
Be really strict and only sell to people who are unlikely to cancel, even when tempted otherwise. New SaaS founders often struggle to understand why any deal should be turned down. It’s all money, right? Wrong!
According to Sixteen Ventures, bad-fit customers can cost an average of $400K/ARR and sometimes even as much as much as $1.2M/ARR in the long run. If those numbers don’t scare you, nothing will!
10. Target the decision makers.
Up until fairly recently, IT professionals were known to be the SaaS sellers’ target. However, as the SaaS industry has grown and changed over the years, the role of an IT professional has shifted to that of an influencer and nothing more. So who’s in charge of purchasing now?
These days it’s typically business-unit stakeholders and C-level executives who occupy the primary buying positions within a company – and selling to them isn’t quite as straightforward. Each stakeholder will define value differently, and each one will have a different set of priorities. Selling to them will require the ability to address each of their needs and drive them toward an agreeable consensus.
To be truly successful in this process, salespeople will have to do their research and tailor their approach to the people involved in making the decisions.
Bonus tip: Don’t underestimate referrals!
I’m including this as a bonus tip because there isn’t really one way to approach this strategy. However, that doesn’t mean it should be overlooked! In fact, there are entire industries built on this tactic. Referrals are a little more open-ended than other strategies due to the fact that each referral plan must be tailored to the company and the product they’re selling.
For example, Dropbox gained 4 million users in just 15 months by simply offering existing users extra storage space in exchange for referrals. This incentive proved extremely effective and lifted them to the $10 billion+ empire that they are today. Never underestimate the power of a good referral incentive. It can make a bigger difference than you think!
Thanks for reading!
I hope you found these tips helpful. Have you tried any of these sales strategies? Which ones have worked best for you? Let us know!