There is no definitive guide that teaches you how to sell SaaS products, but there certainly are ways you should not sell it. Just have a look at all the SaaS companies that have shut shop – you will find plenty of ideas on how NOT to sell.
It’s not easy selling a SaaS product – it’s complicated, messy, and most users don’t know how to use it. These are problems that have no parallel to any other industry. In moments of desperation, sales managers end up selling a SaaS product like you would do for an e-commerce product or a hyperlocal service. That’s a crime!
No matter what the technique, SaaS sales folks end up making mistakes without even realizing. It’s these blunders that raise the question – will that SaaS business see the light of the day?
To get your conversions right and keep your SaaS company profitable, here are the five biggest mistakes SaaS sales managers make that you should avoid:
1. Focusing on customer acquisition over retention
The sustainability of SaaS companies depends on profitability and growth. What that means – for a SaaS business to survive, it needs to make handsome economic profits, and at the same time, needs steady positive cash flows. But none of this will happen if your sales managers prefer customer acquisition over retention.
Just look at successful SaaS companies and see how they have given equal (if not more) attention to customer retention. Here’s a look at how Salesforce and Netsuite, billion dollar worth SaaS companies, make sure that their revenues keep coming in:
- Attention on customer acquisition
- Upselling to existing customers
- Retention of existing customers.
Traditional wisdom dictates – the more customers, the better. This is a fallacy. In fact, it’s actually more expensive to acquire than to retain customers. The number of resources to acquire one new customer will be equivalent to that of retaining five customers – exactly, that’s 5X!
2. Don’t hide yourself behind automation
Don’t get me wrong, what automation has done for SaaS companies is beyond one’s imagination. The sales process has become a lot more effective – lead generation and managing sales pipelines have never been easy.
But, the problem begins when sales managers try to trick customers into believing that it’s a ‘human response’. It’s a deceptive move, that makes users suspicious of your claims. Yes! Automation does provide personalization, but you cannot expect it to replace the human appeal of your sales process.
It’s good to use automation when you have to send a standard reply, but when users want some definitive answers to their problems – sales managers have to respond in real-time. When users feel that there is an actual human behind the machine, it gives them a sense of comfort.
This reminds me of an incident I had read about – how Sumo, a popular tool to monitor website traffic, made an epic sales automation fail. An email was sent, which consisted of a free ebook, and a CTA asking for a sign up. Here’s where the problem lied – the people they send it to were already their customers.
It was an automated email that just made the customers realize how the company didn’t even care to find out who their customers are. What are the chances they are going to stick with that company?
As a SaaS sales manager, you should take two things from this example:
- Don’t depend entirely on your automation software
- Get a better automation software (Duh!), the one which doesn’t embarrass your SaaS product or your customers.
3. Considering feedback a waste of time
Without a doubt, feedback plays an important role in bringing your customers back for more (Retention). But some sales managers who are busy acquiring customers see feedback as inconsequential.
In fact, feedback can help in customer acquisition. When a customer sees that their feedback is being implemented, chances are they will give a good review. Eventually, these reviews will help in getting new customers.
Create a loop, where at each milestone (100th time logged in, one year since started using your SaaS service) you ask for a customer feedback. Take a survey, ask them questions, find out whether they are satisfied with your SaaS product or not. This will give you insights that will further improve your sales strategy.
Say you are a sales manager for a SaaS company, and your product helps in team collaboration. Your initial hypothesis was that your product was being used by teams that comprised of 1-5 members with a revenue range of $100K-$1M.
But, when you carry out a customer feedback survey, you find out that the average team size is 1-25 members and the revenue range is $500K to $20M. Moreover, you get to know, the problems of the smaller team are different from that of larger teams. These insights can be used to redesign your sales pitch that appeals to bigger teams.
4. Lack of hustle after the customer signs up
Sales managers try every possible strategy to get users on the free trial service. Right from email blasting, social media marketing, retargeting campaigns, and everything in the middle. The adrenaline of sales folks to get people subscribe to the free trial is almost infectious. But, somehow this energy fizzles out.
Most sales managers do not have a well-constructed strategy to convert SaaS trial users into paying customers. Getting people to use your product (for free) is just one part of your sales tactic, the end goal needs to encourage users to pay for it. Otherwise, how do you expect your cash flow to have any cash at all?
Free trial users are your cash cow, but you can’t randomly just ask them to pay. You need to be creative in extracting lifetime value from every user.
Here are a few tips on how you can persuade users to move to your ‘Premium’ version.
- Send how-to-use emails and feature updates to free trial users.
- For engaged users, extend the free trial period.
- Create a sense of urgency.
5. Very little emphasis on integration
Did you know that the most popular SaaS products are those that are well integrated? Customers see rich integrations as a high utility factor. Just look at SaaS platforms like Google Docs and Slack.
In any other industry, Slack and Google Docs, popular cloud-based team communication platforms would have been considered competition. Interestingly, it happens to be one of the most integrated platforms in the SaaS industry.
Team members can create and share Google documents right from their Slack channel. This means they can easily communicate, without having to shuffle between both the platforms.
It’s probably the only industry where stiff competition has actually resulted in better opportunities. With each SaaS platform looking at other as a source for a rich integration, the SaaS story could not have been sweeter.
But, sales managers often get carried away in explaining the benefits of their SaaS product that they forget or provide very little attention to the integration aspect.
These mistakes arise because sales managers try to mix and match tactics of other industries into their SaaS sales strategy. To discourage this practice, managers have to start seeing a SaaS product as a separate entity. When it is considered a stand-alone, there is a higher chance that SaaS salespeople will come up with exclusive strategies.
If you are guilty of making one of these mistakes, it should not put you down. Instead, you should learn from them. Always keep monitoring your sales approach, to find out what works and what doesn’t. The more vigilant you are, the lesser your chances of making these mistakes.
About the Author: Niraj Ranjan Rout
Niraj is the founder of Hiver, an app that turns Gmail into a powerful customer support and collaboration tool. When not working at Hiver on programming or customer support, Niraj likes to play guitar. Niraj can be reached on Twitter @nirajr.