The sales art in B2B is different in many ways than all other types of sales. It’s different from the beginning, so to provide a full explanation of B2B SaaS Sales I’ve covered all the stages the business growth.
Based on suggested approaches from the companies with high credibility you’ll see the proven strategies for B2B SaaS sale.
Also, after reading this article you’ll know what to expect from your customers, how to deal with issues like organizing your sales team and handling objections.
In the end, you’ll find out what are the biggest mistakes in SaaS sales and how to avoid them.
When you start the business, everything will be up to you, including sales. It would be very useful to avoid some common beginner mistakes and save your time and energy.
First of all, you’ll be the one to get new customers and close the deals. That’s a good thing because you’ll get to know the sales process.
The bad thing is that the costs of getting new customer will be higher than the customer lifetime value - CLV.
Early stage: CAC (Customer Acquisition Costs) > CLV (Customer Lifetime Value)
At the beginning, don’t look at startup as a small version of a big company. At early stages, a startup needs to confirm its assumptions from different aspects, including the market.
So, before you get in the position to scale, you need to search in order to define your business model, and then you’ll be ready to scale.
Of course, at this point, the CLV needs to exceed acquisition costs.
Ready to scale: CLV > CAC
After you got 10 or 20 customers, it’s time to grow. Now you’ll see how.
Since we’re talking about the B2B, one of the things you need to have are successful customers.
To identify them, analyze the typical metrics like revenue, product, industry, number their customers and more.
Based on deep understanding of your customers, you can form the profile of your ideal customer.
As the number of your customer is increasing, you’ll get more revenue and more data to set the criteria for your ideal customer profile.
This is where you should start moving from short-term to long-term tactics. Take a look.
The transition to long-term tactics requires considering many things, including your sales team structure.
Here is how the sales team structure in B2B business usually look like.
In this structure, Lead Generation Team, which can be in-house or outsource, is building email lists of the potential customers.
Prospecting is a job of your SDR team while Deal Closing Team is doing meetings in order to close the deals.
Finally, making sure that customers stay happy is the main goal of a Customer Success Team.
Depending on average order value, you can figure out what would be the best approach for B2B SaaS.
For example, if the average order value is under the $1,000 per month, then you’re the entry level where users have zero touches from the company.
Now, let’s see how to choose the right model for your startup. Take a look at the picture of three SaaS Sales Models.
Obviously, with low price and high complexity, you’ll end up in the startup graveyard because high complexity means high costs which require a high price.
So, a different combination of the price and complexity provide three SaaS sales models:
If you can have good revenue at a low price means that you have the best SaaS model. This is customer self-service or zero-touch.
This is where you should use the power of inbound marketing.
Basically, with this model, you don’t need to have a sales team because the focus is on marketing.
Also, you don’t need support team because with low complexity you provide all solutions through the educational content.
With the low price, it’s easier to get customers with zero-touch from the company.
However, in the transactional model, the price is higher so the customers require efficient support and trustworthy human sale.
So, your sales team organization could be something like this.
Majority of startups are in customers self-service or transactional area. However, some are capable of creating high-value products with high complexity and price.
They need to have sales reps focused on narrowly targeted prospects with support team capable of solving very specific and personalized issues.
I found one interesting approach to sales strategy at Intercom.
The idea is that, in case of B2B companies, customer size defines the sales strategy. Here are some parts of it.
Companies with less than 10 employees are spending their own money, which makes them basically a consumer's. They want low price products and we’ve seen earlier that these products are self-service (zero-touch).
Next level is working with companies with 11 - 25 employers. They have CEO, more complex structure and they’ve probably raised funds and became real clients.
Self-service still works, but now they are willing to spend more money and they’ll want support.
In companies with 26-75 employers there is another management layer and with more employers require more fund injected.
This is where you need to have a sales team that will hopefully attach you to the company that will grow.
OK, that would be enough about your clients. Let’s get back to the track and see more about your expansion.
When you get the point of organizing and hiring you’ll want to know what to expect.
Here are some interesting stats.
In Bridge Group 2017 SaaS Metrics Report 2017 you can find the results of responses from managers, directors and team leaders who were asked to identify their two challenges in managing Account Executive groups.
According to these results, nothing has changed significantly in the last five years. Based on this you can see pretty much accurately what challenges you’ll face in managing your team.
According to Ambition, in most companies SDRs stay from 7 to 18 months in the role. On average it’s 14.2 months.
The average length of experience before hiring looks is slightly more than 2.5 years on average. Take a look.
The demand for sales reps has increased but the experience prior to hiring has pretty much stayed the same over the time.
In SaaS sales, the two most common objections are about the price and features. Here is how to handle them.
You’ve probably heard a million times that your customers are buying benefits, not the product or service.
The reason why pricing objections are happening is most likely the fail in communication your product's value.
Here are few tips to handle the pricing objections.
So, talk to your prospects and focus on benefits like better productivity, better margin or ROI.
More often than you think a customer will say that with the feature they think it’s missing they would’ve bought the product.
Behind this, there is a real problem your customers have. Figure out what it is and you’ll be in a much better position to close the deal or keep the customer.
By all means, don’t include the feature just to close that one deal. Instead, find a solution to your customer's problems and deliver it.
Remember, you’re an expert in the niche and the authority. In other words, you are the with the solutions for all problems.
Among the array of factors that can slow your progress, some mistakes can do more harm than others.
That’s why Techcrunch highlighted the three biggest sales mistakes companies make and they are referring to competitiveness, timing, and product.
Also, HipLead pointed to these five mistakes that can break your SaaS Company:
Still, my favorite thoughts about this matter are from Lincoln Murphy who is focusing on SaaS high churn issues.
His articles are based on Steli Efti insights from his experience as CEO in Close.io. Let’s see.
Churn is the major threat for SaaS companies, especially in the long run. Focusing on short-term goals often lead to fogging the long-term implications.
Here are the reasons why is this happening.
Setting the criteria for your ideal customer and following it is the way to avoid this. Otherwise, this mistake can kill your business.
I’ve said before that you need to have successful customers, not only the happy ones. Available metrics such as a number of employers, revenue, and product are usually enough for an assessment.
The most obvious situation where you sacrifice long-term goal for a short-term success is promising what you can’t deliver. Rather leave the future improvements for the upselling when the time comes.
In the previous segment when I talked about objections, one of the pieces of advice was not to lower the price. This is it. Again, don’t let the one sale to lure you into this mistake. It’s probably the request from the customer that doesn't fit the criteria.
Sometimes the reason for canceling is justified and you can’t do much about it. However, in many cases, the reasons are the nonoptimal use of your product or missing out the features. In these cases, it’s you. Talk to your customers and provide them solutions all the time.
In theory, everything looks much easier. You’ll discover that from the very beginning of your SaaS business. Your patience will be tested.
This is where many businesses get lured by a short-term success and then face consequences later.
The best example is when your customers require a discount or additional feature and you accept that. Because of the closed deal, everything looks fine, but only for a while.
Then you get struck by high churn rate and everything starts falling apart.
That’s why you need have a proper strategy from the beginning and to know when to make the transition from short-term to long-term tactics.
You should do this by creating the ideal profile of your customers and do business with those who meet the criteria.
Hopefully, this article gave you an idea how to approach to starting and growing your SaaS business. Let me know what you think.
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