Selling SaaS is far more challenging than selling lemonade.
First of all, everybody likes lemonade on a hot summer day (try it warmed up in the winter time, too). If you don’t, then you don’t have a soul, but the point we are making is that a physical, well-established, and universally enjoyed commodity does not take much effort in selling. How often do you hear of a lemonade stand going bankrupt?
Enough with the absurd mental images we are forming for you, but SaaS is a challenging market to prove successful in. It has a lot going for it, but also against it. Like any concept, service or commodity new to market, it took some time until customers became rather familiar with, and most importantly, have faith in SaaS vendors.
Still, SaaS presents unique challenges for CEOs when it comes to getting their software subscribed to, and renewed. This isn’t just selling a video game.
Above all else, when it comes to increasing your company’s sales, keep in mind that your SaaS company is not in fact selling software, but selling customers a service, not software. The difference here is that in order to thrive, and for customers to keep coming back to you for your service, you need to develop a relationship with them beyond the initial lead-to-customer conversion.
The SaaS industry is booming, and will continue to grow in global revenue, but one cannot ignore that 90% of SaaS startups fail within a few years. If you are the CEO of a younger company (which you likely are, as SaaS as a business model is only about 15 years old), you would be wise to heed our words. No matter how great your SaaS is, if you cannot sell it you might as well cut your losses.
Today we are going to go over four largely ignored SaaS sales strategies that will make or break your sales and customer retention rate.
1. Cross-functionality; CEO, sales, marketing, and customer service teams
Why settle for 2 when you can make 1 + 1 = 3?
Cross-functional company arrangements are greater than the sum of their parts. Being that a successful SaaS sales experience is a continuing relationship between customer and company, rather than a one time deal, cross-functional teams are able to provide greater value to customers than those with clearly defined, individual roles (read: limited).
Each member of the team should be aware of and concerned with sales as if it is the responsibility of everyone, and it is, being that sales keep everyone employed. However, what we mean by the value of cross-functionality is that the buyer needs to be nurtured well through every step of the process.
Many users will take SaaS products for a spin (usually for a free-trial) and not convert to dedicated user. How to fix this?
The CEO should convey the vision of the company’s cross-functionality to the team, that long-term renewing users are the top priority. The marketing team is for getting the name out there, sales team for closing the deal, customer support team for keeping customers satisfied and happy to come back for more.
However, between each department the CEO should reinforce a vision for synergistic operation, which is what drives the strongest long-term sales. Customer service needs sales, which needs marketing, so by blurring the lines between departments the collective ability is multiplied for gaining long lasting customers, who feel valued every step of the way.
As seen above, vision delivered from the top-down has an even greater impact on company performance that sales training.
2. The human experience; adding a personal touch
Sometimes it is easy to become distracted with sales metrics, product development, sales training and whatnot, and end up losing sight of the larger picture regarding sales. Ask yourself, what are your customers?
If you answered “managers” or “medical researchers” you are wrong. Well, not exactly 100% wrong, but the right answer is “people”! No matter what service your software is providing, it is being purchased by people first, and users second.
The most successful SaaS companies personalize the buying experience for their customers. After all, the vast majority of buyers make their purchasing decision based on their experience with the human selling it to them, rather than on the strength of the company.
There are any number of ways to personalize the SaaS sales experience. Take a look at this excellent example from Intercom:
See the language that they used? First names, a message in the first person, a personal photo, etc. This is not the only way to increase a personalized buying experience. Piggy-backing on our previous point, many CEOs think that the customer support staff should be the only ones to take care of emailing customers who are using a free trial. Not so.
A personalized email from the CEO to a customer is worth its weight in gold regarding free-trial-to-paying conversion rates, and only takes a couple minutes. There really is quite little that can match the power of the human touch, but too often SaaS companies overlook this factor.
3. Speed up the sales cycle; don’t hunt for only the big fish
Fish of all sizes need love, not just the whales, and this especially rings true for the SaaS industry. A measly 15-20% of free-trial users will convert to subscribers, and many more drop off after a few months.
In traditional, on-premise software sales strategies, the company would focus on developing software and hoping to land a handful of lucrative purchases from a few massive accounts. That is where the real money was at. However, that business strategy is suicide for SaaS companies, especially startups.
The question is, how to get your SaaS into the hands of everyone it’s appropriate for, quickly, and without excessive marketing costs?
One of the swiftest ways to speed up your sales cycle is to go to where the fish are: identify which channels your target audience is frequenting the most, and invest the bulk of your time and marketing resources there. It isn’t just about casting a large net, but where you cast it.
For example, if you provide project management software, it will likely be wiser to frequent marketing and/or architecture blogs instead of Pinterest or Twitter. Remember how we told you the value of the human touch? If you incorporate that along with rapid-fire communication with your leads, you can effectively shorten the sales cycle and keep churn to a minimum.
4. The power of the referral; incentivizing customers
One of the most frequently overlooked sales strategies is the power of a referral program. Of course, every company knows how valuable customer testimonials are for your landing page, but many don’t yet know that SaaS empires have been built on incentivizing customers to refer their contacts.
One of the most famous of SaaS company referral success stories is Dropbox, who in 2008 grew their customer base by 3900% over the course of 15 months, 35% of which was through their referral program. Let that sink in for a minute…
Referrals will only happen if your customer is incentivized to take the time, and doing so involves as little friction as possible. This was a challenge in Dropbox’s case, as their product is not the sexiest or warranting of much customer engagement. So what did they do to get customers to let their friends and family know to sign up?
Dropbox offered users added storage space when they referred contacts to use Dropbox. That’s a nice incentive, but more importantly, the company made it super easy for customers to import contacts into the referral request prompt. Piece of cake, and the company is one of the most widely used in its industry today.
The example with Dropbox is just an example, but there are a plethora of other methods you can employ to get referrals. Remember, the easier you make it for your customers the more they’ll get your customers for you.
Strategize before you sell
Your company likely has a “try before you buy” trial period, so why not have a strategize before you sell (emphasis on before) policy as well? Your referral program, customer communication language, and other under-utilized sales strategies should be aligned prior to launch. However, if you have already launched don’t worry too much, as it is never too late to improve your sales!